Heartland Poised for Entrepreneurial Growth
BY Peter Hoy
Expanding organic industries and a population shift make the Plains states a "potential hotbed of capitalist creation," according to a new report.
Thanks to a booming organic market and increased communication technology, there is good reason to think the American Heartland will be the next entrepreneurial frontier, according to a new report.
The report by the New America Foundation, Rebuilding America's Productive Economy: A Heartland Development Strategy, found that increasing demand for organic alternative biofuels is creating business opportunities in the Plains states, while technology advancements and lower costs of living are driving a population shift to support these Heartland businesses.
"In contrast to the picture of emptying towns and embattled farmers so often portrayed by the media, we see the Heartland as a potential hotbed of capitalist creation and innovation," wrote co-author Joel Kotkin, who is also an Inc. contributing editor.
Kotkin and co-author Delore Zimmerman point out two booming industries that are especially dependent on the Middle America's ample acreage -- organic agriculture and biofuel.
Consumer interest in organic food is on the rise, according to the report. Between 1992 and 1997, certified organic cropland in the United States doubled to 1.3 million acres. By 2003, 2.3 million acres of cropland and pasture were devoted to organic production.
The states with the most organic cropland include North Dakota, Minnesota, Montana, Wisconsin, Colorado, and Iowa.
The demand for biofuels is also rising. Between 2000 and 2005, worldwide ethanol production jumped 165 percent to 12.2 billion gallons a year, and the production of biodiesel more than tripled to 790 million gallons.
The American Heartland is well-positioned to meet that demand as well. A 2005 report from the Department of Agriculture estimated that the United States has the land to produce 1.3 billion dry tons of biomass -- enough to supply 30 percent of the nation's current demand for transportation fuels.
"A collaborative effort between the region's land grant colleges and industry seeking innovative solutions to the energy crunch could lead to unprecedented economic growth," Kotkin wrote.
Not only do such entrepreneurial opportunities exist, but thanks to telecommunications and lower costs of living, a population shift is taking place that will supply start-ups with a skilled workforce.
Between 2000 and 2005, more than 2.7 million people moved out of the nation's largest cities and more than a third of them moved to what the Office of Budget and Management calls "micropolitan" areas (cities with 10,000 to 50,000 people).
Increasingly, as money is put into high-speed communications and transportation infrastructure, therefore reducing isolation of non-metropolitan areas, the middle of the country has the same access to information as coastal urban hubs.
Furthermore, Kotkin noted, "Housing prices in the Heartland have remained remarkably reasonable." In 2003, before the recent housing boom, roughly 15 percent of metropolitan households spent half their income on housing.
As the U.S. population, which recently passed 300 million, continues to grow, the authors of the report predict that the crowds and costs of living in large coastal cities will drive more people to these smaller inland cities and towns.
With population growth bolstering an educated workforce, the authors foresee a knowledge-based economy that could expand its entrepreneurial landscape to include high-technology services, communications, energy production, manufacturing and warehousing.