Rural System's
After years of searching among a brush-pile of alternatives, we found the solution to how to gain a significantly improved environment for the people of a mid-Atlantic region ... then other regions of Earth. More than "just another idea", the solution provides an identity for the region and its people, employment, and a new type of social and economic development. The solution is to operate a new, private, modern, sophisticated, philanthropic, for-profit rural-resource-related enterprise. The enterprise is a band of small companies, a conglomerate. The solution uses the power of the people of the region, the scenic and undeveloped natural resources there, and innovations. People of Earth are its market. General Store, a cybercatalog, is its connection between lasting Earth resources and people. Its major dialectic is between sustaining resources and sustaining profit.
It took too long to find the solution. We are now convinced of the answer and willing to invest time, energy, and some money for the good of the region. We share the idea and adjust it for improvements. The time seems right, almost essential, to move to create a high quality of life in the region into the future. The way to do that is to adopt the concept of profit-oriented environmental management. For modest real financial investments by citizens and workers, within 7 years a stable profitable corporation can be created. Later that corporation can be franchized to other regions.
The concept is as basic as agreeing that in order to sustain profits from a factory, you have to sustain the factory. We're not discussing factories but a large, diverse, complex system managed in a sophisticated fashion with the assistance of computers. It is not likely to be a blue-chip operation, just profitable at a steady 3-5 percent. But it can also stabilize the region, saving local people and tax-payers from the costs of unemployment, de-valued land and structures, and emigration that results from business and mine and boat closures. It maintains the grand rural atmosphere while paying real-estate taxes. It is non-governmental and does not add taxes. It does things in the new-fashioned way ... it earns it by smart work! The regional enterprise system is an idea for people who sense the coming fossil energy shortages, who wonder how to improve very difficult decisions, and who want to use the Internet and computer power.
Rural folks have been gripped by the limitations of the single "cottage industry." We have not pondered the potentials of an integrated regional enterprise. We have been independent landowners! But now we are threatened, and some individuals, even whole counties, are begging for help. We can be independent ... and dead. We need some group work. We can ask for major government help, but that has not been forthcoming, and there has been little change after 50 years of spending the little that has been provided. Adults in the western Virginia region for example (only about 300,000 strong and emigrating, even with extra chads or fine legislators), can't vote their way out of a legislative cloakroom, much less a regional problem.
There have been problems in the Southside and Coalfield regions for many years but they now converge with new developments and ideas creating a brand new situation. I got my first glimpse of the potential years ago when I tried to answer the question from a coal-mining company in Virginia: "What do we do with 69,000 acres of mountain land when the coal is gone? (or after tobacco ... or after the factory?)" The answer was to adopt a new paradigm, a new pattern of thought and work, a new way of seeing things useful to people. We need a whole, encompassing paradigm, with consistent linkages of energy and money for looking at the job for the whole region. It is the Rural System paradigm.
The Fuzzy-Boundary Region
Most people can list 20 major problems besetting rural Virginia regions. Some of these seem to breed; some interact. There is no single cause for such problems. Finding one can be satisfying but rarely constructive. We tried to solve the problem for the 69,000-acre tract owner, following a concept of optimum farms and forests. We failed to realized that we couldn't have an optimum farm in a sub-optimum region. There had to be a new design. We had often heard that "money talks" but we did not understand. Perhaps it is not too late. The new design is around making honest money ... over the long run, but doing it together, in many different ways, at the right scale.
As an example, we did computer studies and discovered that profit could not be made consistently on small ownerships of marginal lands by raising cattle. We also found that money could be made from a large herd with common marketing, fencing, veterinary, and food supply support. Part of the solution was in how the cows were distributed and the great economies that could be experienced from shared and coordinated work with a few resources.
Our concern then and now is for the people in the region in the near future. We must talk about resources, but our concern is for people closely linked to their landscape. The regional landscape seems to be cumulatively degrading and all that goes with it. Things do not seem to be getting better; they are not even staying the same. We no longer want to talk about that for our pessimism has disappeared in the bright light of the way out, the light produced by the potential for implementing a new paradigm - that of a new, private, sophisticated rural resource enterprise. Heavily involved with natural resources, the emphasis is on the potentials of the total rural system ... as a system.
The state and federal lands of the region are valuable assets. They are under management already but their budgets are unstable, staff demoralized and mobile, and they have to give great attention to their separate policies and interest groups. The private rural lands constitute a sleeping giant of a resource ready for care, restoration, and new developments.
A Working Platform
The private land can be viewed as a working platform, a place where a system works. It can be viewed (one way only) as a factory, a place from which products and services are created and delivered for money. It is a place where ideas, as well as seeds, germinate. The costs must be contained, profits assured by marketing, and the whole managed very well if profits are to be stabilized within reasonable bounds. People have been talking about conservation and improved land management and land ethics for many years. Not much has changed. The desired conditions have not yet been achieved. Eventually we have to come to a precise statement of what we really want, at least a measurable criterion of accountability for this. How will we know we have achieved such desired conditions? The answer on private land must be for most people: when we have sustained reasonable (within bounds) expected profits over at least 150 years.
To do that we have to work from the platform, tend it well, shift with the times and markets, and hold or improve the soil, air, water, and biological base. But we need annual gains from many sources while we wait for the slow growing trees and slowly building soil to reach ages at which we know a profit can be made. We need a new concept of success, an image of the success of the total products and services from the land platform, the success of the total, long-lasting, rural resource system.
A Forestry Example
If we could develop such a paradigm and the enterprise that makes it real, then we could capitalize on massive investments already made in forestry. For example, even though millions have been spent on forestry research, foresters, and forest agencies, less than 20 percent of forest land in Virginia is now harvested under the guidance of a forester. All of the education, taxes, and pious conservation literature are silly in the face of this awareness. We suggest there be no more begging or pleading to "conserve" or whining about a land ethic; no more "grants." We have analyses showing how to double the profits made on most forest lands in the region into the far future if they are operated as a system! ... and still have wilderness, wildlife, and forests producing unbelievable benefits.
Thousand of acres of land being put into Trusts need trespass protection, erosion control, over-all stream-bank, pasture, and forest management to retain their pastoral beauty, their forest structure, their wildlife that has been held dear by current owners. Their values and appreciations of the land must be managed ... or they will be lost ... certainly not the desire of well-intended benefactors.
A Soil Example
Soil is what people build on. It is what grows trees and feeds horses, people, birds, and beautiful things. In the region, landowners are losing about 16 tons of soil per acre per year. That has been going on for years but given little attention. It just has to be stopped! New awareness suggests that phosphorus, a key element in plant growth and human nutrition, is in short, declining supply and limited access. Within that eroding soil is phosphorus, a loss worth today about $32 per acre per year. Given the size of the region, the annual financial loss is staggering. Someone, a business, needs to get this loss under control in a region that is said to be in economic trouble. The key word is control, not just tossing around a "prevent erosion" slogan as in the past. We need to cut our losses and add value to the things produced. Soil-related businesses can do this; we need profit-oriented managerial control.
How the Enterprise Works
The new proposed enterprise is strictly voluntary and people may invest in it. There are 70 groups. A unit of the enterprise "rents" land from willing owners and improves it using peak scientific knowledge. We first concentrate on work with absentee owners and people moving to the cities. They often need help in tending, improving their investment, and caring for their land. The enterprise manages and uses its resources for profit, sharing gains with the landowner, the county, and stockholders and employees. Having old elements of sharecropping and "cooperatives", the enterprise seeks to maximize profits over a dynamic 150-year planning period, one sliding forward each year. Not just involved with direct long-term production of trees from the land, as in the past, the corporation is as broad and diverse as the "football enterprise." Its separate but interdependent groups, all with dedicated employees with personal incentives for seeking to make the greatest possible collective corporate profit, seek to sustain that profit over time. This is not a "cut-out-and-get-out" operation.
Imagine 100 landowners in Virginia renting their land to the proposed corporation. The tracts become somewhat like well-known public forests. There are, after 5 years, over 400,000 acres (large and small) under intensive management. Within them are pastures and ponds and streams. All are managed, trees are thinned, walnuts are collected and processed, hunts are managed, trails are built, fires suppressed, and the areas are used year-around by family, customers and tourists. On schedule, trees are harvested gently. Areas are replanted in superior tree species. Wood is made valuable by preliminary processing. Ponds are managed, fishing tournaments are held, and streams are improved along with their water table. Flooding peaks are reduced. Pastures are restored to rich conditions with secondary benefits to deer and other wildlife but also reducing stream sediments and feeding cattle, goats, rabbits, and geese that are bred for the climatic and topographic conditions at each site. Beautiful gardens beside houses are notable on drives throughout the region. A few "Avi" signs appear, indicating areas for the new sport of birdwatching, similar to golf. Annual fairs and conferences are continually being announced for the many nature, wildlife, and garden organizations that have been formed. Small businesses produce specialty items. Residents work in all of these activities. Clusters of new residents are evident. They will have moved in for the rich environmental surroundings and diverse recreational opportunities as they develop and export software and engage in the educational, publications, website, and high-tech aspects of Rural System. Unusual, meaningful, at-home and regional activity opportunities and new computer-aided schools become available to youth and to "old-timers", many who are new residents.
The proposed enterprise has half of its groups that are office oriented. The other half works with trees, pastures, ponds and streams, but it is for the people of the region, clearly not just for logging trees that have grown large enough to cut for a little income (and no profit). It adds value to harvested wood. It deals with the total rural environment and communities using the best of computer-aided land management, integrating that with ideas and diverse interests of the people in the region. It is sensitive to energy budgeting. It allows existing businesses to affiliate if they wish to. It educates people for profitable roles within the organization and the region. It becomes seen as the jobs-place for the Internet-connected, home-employed people of the region's future.
and the E-Community's
Toward the Bottomline
| Citizen-owned Your money, your enterprise Working for you now for tomorrow |
In the conglomerate, there is no requirement (except policy) as to where the profits will be made. The funds are pooled from all enterprises within it. We live in a trading society. Goods produced in one place are rarely consumed in the same place. Production of units is to be where that is most efficient, not where the raw materials are produced or the demand is met. The very concept of sustainable forestry, for example the Smartwood certification of land, opens doors for wood sales internationally, generally enhancing the worth of exported wood by 5-9% ... because of very different demands and different willingness-to-pay for such certified wood products throughout the world.
Some of the small, proposed groups might be very financially successful. Others may have strong linkage roles or provide security. Working together, they profit. Only as a little ecosystem do they survive together and profit. The bottom line is that launching a new, private, modern, sophisticated natural resource enterprise can solve the major problems of Virginia and surroundings. We do not see another solution after spending 30 years looking for one.
The Financial Strategy - An Incentive-Driven System
There are 20 groups that can be profitable together and can be considered only peripherally involved with crop, livestock, water, or forest prodcution. Floats is an example. These can exist if there are no Tracts.
System Central is a key group because it reduces duplication of equipment and services and centralizes expertise. Not an "incubator," this is a common core function of each group. It works with a field team that serves most of the production groups as well as many of those seen as more membership- and office-oriented.
We'll favor cooperative work with existing enterprises.
| - 50 % |
| - 10 % |
For the first 5 years, 10% of net gains will go to an enterprise building fund.
| - 40 % as follows:
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Cost Management
The advantages of the unusual organization also create problems. All groups have a common accounting service within System Central. There are real dangers characteristic of the "Tragedy of the Commons." Each group is independently managed and very distinctive. General leadership is offered; there is group process, but each manager is autonomous. Rather than building an enterprise, as in many other businesses, each manager is building profits since these bring group and personal rewards. The costs of System Central (for the entire enterprise including repayments) are large. After a few years, all groups within the enterprise share these proportionally (above a fixed amount). An additional 20% of that amount is charged as cost and is spent on approved costs of group enhancement and growth for each. Salaries and benefits are high and represent the major costs within each group. Merit raises are one of the expected cost increases. (Additional salary incentives are from the funds outlined above.) Each group pays direct costs for its supplies, raw materials, and special services. The gross income minus these costs is the fund distributed by System Central
We shall be pleased to discuss the Bottom line and related options.
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September 21, 2004