“Socialist” seed money program behind North Dakota boom

North Dakota development agency has many successes and says even innovative failures can pay dividends

When right-leaning Americans want to make a point about the perils of government involvement in the economy, they often level the accusing finger at socialist Canuckistan.

But in North Dakota — which is enjoying an agriculture and oil boom despite serious economic malaise elsewhere in the union — there are two wildly successful “socialist entities.”

“We have the only state-owned mill and elevator, and the only state-owned bank in the United States,” said Leland “Judge” Barth, executive director of the Dakota Pride Cooperative.

At a time when hundreds of private lenders have gone broke and many more are on life support, the State Bank of North Dakota recently announced a $72-million profit, Barth told participants in the recent Capturing Opportunities forum. As well, the North Dakota Mill and Elevator, formed in 1922 to provide a state-owned competitor to Minneapolis grain buyers, booked a $6-million profit.

All of that money goes back into State’s general revenue fund, and some of it is used to support the Agricultural Products Utilization Commission, an economic development agency that offers grants over $5,000 for agriculture-based entrepreneurs, researchers, farm diversification, and ag prototype development.

A $5,000 grant may seem like small change, but the program’s goal is to spur innovative ideas, not fund the establishment of companies, said John Schneider, the commission’s executive director.

New ideas often result in blunders, but failure is a great teacher, he said. For example, when farmers decided to diversify into onions, they planted 200 to 300 acres of the crop, and then realized that there was a lot more to the business than growing the crop.

“But out of that spurred companies,” he said, adding that now onions are bagged in North Dakota for out-of-state markets. The same has been true of ventures into carrots and pumpkins, even elk and buffalo.

Dakota Pride Cooperative is one of the agency’s biggest success stories.

It was formed in the late 1990s, when crop prices were dismal, by North Dakota Farmers Union members hoping to add value to their products. It now has 200 members and two cleaning and processing facilities — one in Casselton handles non-GMO food-grade soybeans and hard white spring wheat and a sister plant in Wisconsin opened in a 2010 joint venture.

Identity preservation and end-use specific traits have been the key to their success, said Barth. Members earn a premium for non-GMO soybeans, which are then cleaned, packaged and shipped in 20-foot containers to Japan and South Korea. Hard white spring wheat is marketed domestically and the co-operative is developing a frozen, whole grain doughnut product.

The Agricultural Products Utilization Commission is helping fund that initiative and has invested in everything from vineyards to agri-tourism. It had a 51 per cent success rate since it was launched in 1979, but is often put on the budgetary chopping block by legislators, said Schneider.

“We are the last granting agency in the state of North Dakota — there used to be seven,” said Schneider. “What has saved us is our success.”

When politicians start making threats, the owners of successful ventures call their offices and remind them of how they got their start, he added.

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