The financial squeeze that metropolitan Texans feel as the general economy becomes increasingly uncertain has pinched the state's rural residents for nearly a decade. But Texas state Rep. David Swinford says the legislature has begun to address a problem that affects more than 3 million residents, 15 percent of the state's population.

A bill passed during the last legislative session, he says, created a means for farm groups to create agricultural districts, which would operate similarly to water districts.

“Producers would band together to form a district to build a processing plant, packaging facility or other enterprise,” Swinford says. “The facility, as an ag district, becomes a government entity and is not required to pay property or sales tax.

“That's a huge competitive advantage.”

Swinford, speaking at the recent Texas Commodity Symposium in Amarillo, said the key to revitalizing rural Texas is to add value to agricultural commodities.

“Currently, 90 percent of our agricultural commodities are processed elsewhere,” he said. ‘If we can increase that by just 1 percent, we add $2 million to the state's economy. Farmers are in a box, caught in the middle of a deal. They purchase materials from manufacturers and deliver commodities to corporations who process them and reap the benefits.”

Swinford says the farmer, the man in the middle, takes the risks with little of the return.

“We have to concentrate on value-added for success,” he said. “When the wrapper on a loaf of bread costs more than the wheat in it, we're in trouble.”

He says the state needs a facility to package peanuts.

“And since there is no canning facility in the Lower Rio Grande Valley, growers can't process what they produce. Also, Texas needs an ethanol plant.”

Swinford says income for rural Texans is 70 percent that of urbanites. Job creation is 60 percent of the urban rate. “Rural Texas relies on agricultural, gas and oil,” he said. “Manufacturing is not a factor. We haven't had a manufacturing plant move into rural Texas in 10 years.”

Meanwhile, the number of farms and farmers continues to decline. And 90 percent of farm income now comes from off-farm sources. “The burden for farmers and legislators is to figure out a different way of doing things.”

Swinford says value-added and the opportunity districts offer good first steps. But he is also concerned about the federal farm bill currently in debate. He's particularly fearful of additional conservation measures.

“I'd rather Congress give me a nuclear bomb than offer another Conservation Reserve Program (CRP). The last CRP nearly ruined rural Texas.”

Swinford says opportunity districts benefit producers and the regions in which they form their entities. He says the tax-free status may produce manufacturing facilities from which the county gets little revenue, but the investment and the money that turns over from the plant stimulates the area economy.

Swinford says that although only 15 percent of Texans live in rural areas, those 3.3 million residents represent more population that many states. He's convinced that neither the state nor the federal legislature can afford to ignore the continuing plight of rural America. “We need to influence farm legislation,” he said.

“We have to make a better deal for rural America,” said John Fuston, Texas Farm Services Agency (FSA) director. “It's a valuable resource.”

Fuston said without government funds the past few years, farmers and other rural residents would have been in even more dire straits.

“I'd like to see a situation in which government payments can decline and we can get better markets.”

rsmith@primediabusiness.com