The Rural System Initiative
Sustained rural resources; sustained profits
P.O. Box 924
214 West Main Street
Marion, Virginia 24354
Robert H. Giles, Jr., Ph.D.
formerly of the College of Natural Resources
504 Rose Avenue
Blacksburg, Virginia 24060
In Smyth County we have a problem to solve together for now and the future. You know the local conditions very well. The problem has many sides or facets like those of a diamond:
These are all related in Smyth County but not unique throughout the Commonwealth or the nation. Today, together, we have to build tomorrow. It has to be solid, innovative, and well planned for matching our strengths. We, as the people of the county and players in the region, must seize an opportunity while preserving the best of our past for future generations. We must take initiative, take an initiative called Rural System.
Things we know about the county.
The Rural System has been difficult to describe in the past. We must tell much more about what it does that what it is. It is new so there is little with which to compare it. First we'll list what it does, then tell what it is.
People consistently tell us that Rural System is "hard to get your mind around it." You will find it easy as we tell you what it is in a nutshell, then tell a few stories, then tell you how it can be a for-profit solution to the local many-sided problem.
First, in a nutshell -
|The Chamber and its colleagues should start a for-profit corporation called Rural System. It unifies about 70 small rural- and natural-resource-related businesses. It manages land and water, and provides services, products, and other benefits. It offers new employment and a community tax base. It's a system using computers and the Internet in the business end of the work, but with their big payoffs being in planning, decision-making, and in gaining efficiencies from using our computer maps and satellite data. It provides comprehensive services for using and developing land for sustained annual profits for the long run. We're planning it for a worldwide franchise to meet growing environmental and human needs.|
A one page capsule is available.
1The first story started with Bob watching football on the TV. As a professor of wildlife management and ecology he suddenly saw that, by analogy, he had been describing and working with the football all of his life and had not realized he could have been working with the total football enterprise…uniforms, stadium, publications, travel, etc…. the whole system. He had been interested in describing and modeling deer and grouse and raccoon populations but the real system
Together Everyone Achieves More
2The second story is about Bob's work after he got the Powell River project started years ago with funding by Penn Virginia Resources Corporation of Duffield. They wanted to know what to do with their land after the coal was gone. He studied the optimum farm for the strip-mined benches but finally realized conditions were too limiting, the scale was wrong. He studied single enterprises such as raising cattle and found that only very large herds could be profitable. We needed for the newly available and restored lands a "cattle system" not a " few steers" with marketing, fencing, veterinary, pasture analyses, protein buying, and security elements to be profitable…and that system could be very profitable. The need was to shift the scale of recommendation from unprofitable cows to a profitable cattle system.
3The third story is about one part of modern forestry. Well-done forestry can improve the profits on almost any wooded tract in western Virginia by 20%. If the wood comes from a certified-as-sustainable tract, the gain is likely to be an additional 10%. If wooded tracts are entered into the planned Rural System Tracts, then the profits likely from tracts will double. When Bob first described the concept to a logger he said, "Oh all you are doing is providing annual income to the forest land owner." He was right. Instead of planting trees and waiting 60 years for a harvest, Rural System tracts would yield annual income from the collective activities of 70 enterprises on all tracts. If invested, the amount would equal or exceed the worth of the harvested trees…and the forest would be regenerated and moving into the future. In addition, it would be moving faster because the productivity of the sites would be improved by the expertise and investments of The Forest Group, one of the enterprises of Rural System. Increasing or maintaining productivity is a cost of normal business…an alternative way of discussing the new "conservation."
It's a company that doesn't cost the county any more tax funds but contributes to the tax base. It provides employment, assists in stabilizing schools, improves the productivity of the land for the future (using a 150-year planning horizon), makes past investments in research pay off, and uses the National Forests and other public lands (with permission) thus gaining tax-related benefits now few from such lands.
The Initiative is that of creating a diverse corporation with a headquarters in the county. A research foundation will develop later. With the same arguments as for diverse stock portfolios and diverse ecosystems, the enterprise is diverse with about 70 small businesses. There is a central administrative unit called Q Works. It provides common services for all enterprises but especially database, optimization, dynamic planning, education, and computer support functions making it unlike the typical incubator. (This might link efficiently with existing local resources.) About half of the enterprises work on Rural System Tracts, private lands under contract for superior comprehensive total system management … profitability for the long run, based on millions of dollars of research results and site-specific knowledge. We work on 10-yard x 10-yard land squares or cells throughout the county, and then expand throughout the region and elsewhere. The other half of the enterprises works out of offices or homes, most with strong computer activity. The fifth component is the Land Force. This is a major employer that works in the outdoors, manages the land, provides security, and assists in all activities of Rural System. It achieves economies through safety, education, computer planning, GPS use, GIS maps, and rentals and shared use of equipment that is designed and used right for the conditions on the varied tracts. Increasingly absentee owners, trust land owners, and ecotourism interests need the services of the Land Force.
In summary, the solutions are in the parts of Rural System:
|The Chamber's Motive
As seen Clearly from its web site , the Smyth County Virginia Chamber of Commerce has the objective of enhancing the economic base and quality of life of the community. That is consistent with the objectives of Rural System. In addition to achieving diversity of enterprises and members, the Chamber can gain financial support from sponsoring Rural System. A part of the mutually beneficial financial incentives will be in the mutual support of Rural System and the Chamber.
Rural System has designed within it The Base which can be taken over by or included with Chamber functions. Chamber members can help guide and direct System activities to make then compatible with the social and political realities of the county advancing to the future.
Smyth County can become the starting place of ranging. Ranging is a concept that is needed to replace tourism or ecotourism. It's a new form of soundly-based, diverse, regional tourism, ecotourism, and sightseeing, combined with most forms of extensive outdoor recreation (hunting, fishing, archery, boating, hiking, camping, etc.), and outdoor projects, events, memberships, shows, contests, and games. It needs to be strongly affiliated with cultural resources for historical and future reasons but also for the practical reasons of responding to diverse family interests, trip orientations, and even for diversifying stops on single trips.
Tourism, as now promoted, tends to be narrow in scope, seasonal, costly, provides few financial gains for the county, often produces dissatisfactions, produces few desired jobs, and trespassing and disrespectful visitors bother local people. Clearly, tourism produces benefits in some areas, few in others.
Ranging is a complex activity for economic development for the county and its region. It capitalizes on superior land management in and around a county or named region, and shows how a new conservation and education base for a diverse private corporation can improve economic conditions for businesses and citizens. It provides novel dimensions of culture, lifestyle, and quality of life for residents as well as visitors.
The key relationship of ranging to other elements of Rural System is that requires a superior environment. For that environment to exist and be sustained, there must be modern sophisticated management. Rural System can supply such management. Ranging needs an enterprise like Rural System.
(Full scale uses… with permission… of local, state, and federal forests, parks, and recreation lands is intended. Serving them under contract will be sought. The more stable their funding and policies, the greater will be their contributions to the problems of the town and counties of the region.)
The above comments have often produced intense questions before we could finish the description of Rural System. Here are a few and I shall be happy to answer others (Please email questions to firstname.lastname@example.org or RHGiles@RuralSystem.com).
|Special potential recreational dimensions
There are many pathways to the same desirable end point… to the objective… to create a private profitable corporation that provides employment and reduces emigration and creates community stability, well being, and quality of life through gaining improved restoration, select preservation, and management of natural resources of the region…then expands. We hope that people within the communities will work to find a clear, swift, economically viable means to implement Rural System.
Here's one clear path. (We invite your thoughtful suggestions for others or modifications.)
A Rural System Fund, a foundation is created in a local bank(s). This is a non-profit foundation created to create Rural System. A board of directors is formed. Smyth (and perhaps adjacent or nearby counties) guarantees $500,000; the State guarantees $1 million; and the federal government provides $1 million; foundation additions are sought. A key point … after 7 years, most of these funds are repaid by the working conglomerate and then the foundation is disbanded. These are not grant funds, only a special loan pool. Citizens and corporations are invited to participate in tax-deductible ways. The direct financial gains for investors from such investment seem to be 3-4% after 7 years. The rate of return is initially low but the investment expands the great secondary good from the corporate conglomerate. Employment opportunities are estimated to be about 200 people at that time.
Continuing the suggestion, the Rural System Fund offers a line of credit. Staff then uses funds carefully to develop Rural System as fast and efficiently as possible. Acquiring key managers, educating employees, gaining contracts for Rural System Tracts and working with local landowners will take much time. Contacting local businesses to gain their support and participation will be an on-going activity. Some enterprises will "takeoff" immediately. Others such as Q Works may not be functional for a year. Major development is needed for Q Works for it to provide efficiencies among the developing groups.
The economics of each developed group cannot be evaluated well without knowledge of the other groups. Each depends in part on the existence and efficiency of related groups. Rural System is a business ecosystem with designed relations for stability. Each group benefits from the presence of at least one other group. Most of it must start at the same time. An additive strategy will not work. Starting with many low-development-cost enterprises has been suggested. The start of each will largely depend upon employing a team of dynamic managers who will build the system.
A frequently asked question is, "How much does it cost?" The best answer is "nothing," because it will be profitable and pay off in profits and benefits.
That answer is usually not satisfying.
1One answer is that for the unemployed it costs nothing but time and reinvesting personally in becoming a superior creative team player and employee. It may mean taking classes, emailing, using distance learning. It may mean allowing their land to become demonstration Rural System Tracts, placing their nearby lands under contract for the modern sophisticated natural resource management offered. Depending on land characteristics and past use, it may mean making profits soon.
2Another answer is that is costs Smyth and willing adjacent county participants a total of $500 thousand in a bank account for a special kind of loan, a line of credit, to the forming Rural System. It really costs nothing but the foregone interest because the funds will be used as quickly as possible to get started and then paid back by the conglomerate.
3One answer is that it costs the state and nation about $2 million dollars. These are from a tax pool, but they are not citizen costs of improving their rural environment on which we all depend. They are not risky grants, merely a short-term loan, a special type of bond for creating a smoothly functioning system to help maintain the essential food, water, and amenities of the rural environment that is so rapidly being left by people for city life.
4Work will staunch the flow of environmental development funds out of the state where overhead is high and gains inconspicuous. Creative uses of private donations will be offered. New local libraries, corporate grounds development, and urban areas will bloom. Smyth County may become a notable international rural environmental system capital, gaining special identity.
The bottom line … money talks. Improved natural resource management we now believe can be seen to be likely only within managed, private, socially-responsible capitalism. Rural System provides many benefits to citizens, most well beyond those of now-declining agencies. After 7 years of development, it will achieve advancing, improving rural conditions…for at least the 150-year planning horizon, all at a modest or better bounded-profits for members, investors, and citizens of the region.
When a person buys an item for one dollar and sells it for 20 dollars, do the cost or the gains become more important? The magnitude of the difference in gaining Rural System exceeds this ratio. No longer only extractive or exploitative, Rural System seeks to gain modern sophisticated rural resource enhancement and management for the people of the region for the long run, then to expand that knowledge and influence worldwide. No longer a joke: "We ain't farmin' half as good as we know how." Rural System changes that.
The following is offered as a potential or assumed budget, based on a gradual start within 2 years, early development of Q Works and a dynamic planning system, continued development, and profit-driven incentives for both staff as well as affiliating enterprises within Marion, Saltville, Chilhowie and the rest of Smyth County.
The Sectors of Rural System1. Q Works (also called System Central in the web site)
2. Forestry Topics
3. Wildlife / Nature
4. Agricultural Topics
5. Sports and Recreation
6. Products and Services
The Land Force (leadership, staff, and equipment)
The Rural System Tracts
The Rural System Studies and Education Foundation
|Raccoon Branch – The Raccoon Branch Area is located in Smyth County in the Mount Rogers National Recreation Area. The property contains 4,223 acres of extremely rugged country characterized by high ridges and low streams. Eight major trails provide excellent access for hunters, fishermen, hikers and horseback riders and two nearby campgrounds serve as convenient trailheads. In addition, 4.5 miles of the Appalachian Trail also traverses the Area.
The Lewis Fork area (748 acres) in Smyth and Grayson are of special interest.
With an average annual startup cost of $70,000 each, the total is $2, 310,000. Addition costs are for equipping and staffing The Land Force involved in many of the above Groups. Investors will be invited. Estimated profits are 3% by year 7. Employment is expected to be about 300 after year 7. Over 200,000 acres are expected to be planned and under intensive watershed management by year 7.The total list of Groups proposed to be within Rural System follows.
You may link to the total list of proposed Groups.
The Land Force
The Rural System Studies and Education Foundation (To be developed later after 7 years development for research education, and health system relations)
On the following pages we provide a brief sketch of the financial potentials provided owners of farms (based on nearby Blacksburg assumptions). The emphasis within Rural System is first on absentee land owner units, Trust lands, and large tracts. Initially, tracts must be greater than 50 acres but that limit will change rapidly.
What May Rural System Offer the Small Farm Owner?
Systems work starts with objectives and for years we have studied those goals and objectives of people in rural areas. Even summarizing them results in a long list. We can discuss them later for on-site detailed analyses.
In Rural System we concentrate on financial stability, believing that if bounded sustained profits are achieved for many years, most of the other important not-easily quantified objectives can be achieved. Adequate income, one objective, may be a condition for being satisfied by the others. (We do know of special needs and can create custom systems.)
In Table 1 we list the gross likely profit from local land use in the classes of average ownership. We show an example for an hypothetical 65-acre diverse farm area with land, house, and buildings valued at $3000 per acre, thus total value of $195,000. The gross 30-year mortgage at 6% is $33,951 per year.
Rural System, within 5 years as a diverse conglomerate can offer conservatively to owners with their land under contract as a Rural System Tract (with examples)
The total estimated annual financial addition for an hypothetical average 65-acre Rural System tract is $6470. Grossly Rural System brings the annual income to
Given estimated productivity of $25,440, the total is $31,910 and this compares with the estimated mortgage ($195,000; 30 years; 6%) of $33,951. All of the production estimates are "average"; all of the gain estimates are conservative. Rural System approximately brings a slightly sub-marginal farm and house into a profitable state. The Rural System affiliation brings additional landowner income as a member of a diverse, growing conglomerate with profits expanding with additional enterprises, incentives, franchises, e-commerce, and enhanced land productivity grounded in computer data with maps and models.
Assumptions needed are many and difficulties with them seem to compound. Costs are not included in the annual averages, but are assumed to be at least the same as priced yields for a break-even operation. In this example we have a marginal operation … and evidence abounds that farmers are leaving farms at unbelievable rates, and urban expansion in number of people and use of rural land for residential/commercial areas is great.
Profit from owning land increases with inflation, diverse structural development, and speculation, rarely with crop, forest, and livestock production. Producing food and fiber remains important; fossil energy available is a new uncertainty; high land value for rural housing requires good water and natural scenery; extending urban services to dispersed rural residences and corporate offices is costly; rural employment and village stability is essential by many criteria.
Rural System - Capsule
Rural System is a proposed corporation, a conglomerate of about 70 small natural resource related enterprises. Some of the enterprises, subsystems, are new and some are very old. It is a system doing modern, sophisticated, computer-aided management of the lands and waters of an eastern US region in order to sustain long-term profits and quality of life for citizens. It responds to rapidly changing regional and national demographics. The nation's population is only 17% rural. Only 6.5% of those people are engaged in farming. People move to the urban core for work and many advantages but then many Americans prefer to live in smaller places that are near urban area, not in them. When no metropolitan center is nearby, counties and smaller cities are better able to retain population and attract new residents compared with more rural counties. People of rural counties and their small towns suffer from loss of employment and tax base, demands for new services, conflicts with residential land uses, and escalating land prices all making conventional farming untenable. Settlers as well as residents find their scenic quality and rural amenities declining. Rural System responds to many of these difficulties.
Concentrating on its objectives of gaining superior resource management, it includes outdoor recreation, specialized tourism and rural development, forest and wildlife management, and it works on restoring and enhancing production from the rural land resource.
The umbrella entity is a philanthropic for-profit corporation with not-for-profit foundation spending a proportion of its gains on improving regional resources. It may use national and state lands and waters but, most importantly, it provides opportunities for the owners of private lands and waters (often for absentee owners and those within forestry cooperatives) to experience profits related to superior rural land management. While managing the assets of such lands, Rural System provides related services and products from the unified business units. Half of these units work from the private managed lands that are under contract. A central unit provides incubator-like services and allows the corporation to harvest public research investments, to achieve economies of scale and division of labor, to gain synergism, and to stabilize employment.
The enterprise leads the region in computer-aided, year-around, and private land management. It shares projects and funds with citizens and investors. It links citizens as well as visitors to the land and its long-term potentials for profits. It provides an alternative town and regional identity, one of a place for modern regional rural resource development and management. It links buyers and users with producers of certified forest products and wildland resource opportunities from well-managed rural land and water resources. Successes are achieved via diligent work with personal incentives, diverse enterprises and products, and computer optimization of a total system. It overcomes the old failures of natural resource management, i.e., diseconomies of small-scale operations, mixed objectives, lack of diversity, seasonal work, lack of annual income, and failure to add value to products and efforts. It capitalizes on innovative uses of past research, results optimization, the Internet, global positioning satellites, and computer mapping throughout the region.
The system is described at www.RuralSystem.com.
The vision for the enterprise is that its success in helping improve the social, economic, and environmental well being of the region can allow the enterprise to become effective and expand. Thus, similar influences can be transferred, years later, throughout southern and western Virginia and eventually internationally. The work will be recognized as the product of a special paradigm in rural resource and wildland management. As such, Rural System will become a profitable conglomerate operating well past this century, given its 150-year planning horizon sliding forward annually.
Here are some things we know about the county
Perhaps you will share ideas with me about some of the topic(s) above .
Robert H. Giles, Jr.
April 10, 2006