Posted July 25, 2014

CoBank announced that it has joined with the U.S. Department of Agriculture (USDA) to create a new public-private partnership focused on infrastructure investment in rural America, according to a press release. The New York Times also publishes an article available here, Agri-Pulse here, and Farm Futures here.

The new “U.S. Rural Infrastructure Opportunity Fund” will serve as a private-sector capital source to partner with USDA on various infrastructure projects in rural communities. CoBank will serve as anchor investor and has committed $10 billion of balance sheet capacity to co-lend with the fund.

“We’re the eHarmony.com of infrastructure and business investment,” the agriculture secretary, Tom Vilsack, said, referencing the online dating service. “We’re going to be a connector,” he added. “This is a new role for the [USDA],” according to The New York Times.

The funds will distribute loans to improve infrastructure in rural communities such as wastewater treatment, roads and bridges, rural broadband and conservation projects. Capitol Peak Asset Management Company is also managing the fund, and loans will be distributed and repaid with the intent of creating an ongoing fund for rural infrastructure improvements, according to Agri-Pulse.

The loans will be offered with market conditions and will be implemented in the similar ways that USDA and CoBank already independently operate, but Vilsack and CoBank CEO Robert Engel both said the partnership will allow the companies to “break down the silos” that previously stood in the way of collaboration.

The goal is “building a network that reaches and expands our reach and resources more effectively,” said Engel. The need and profit opportunity are out there, but investors have to be aware of it, he added, according to Farm Futures.

“The continued success of the U.S. rural economy and the improvement of rural communities depend on the strength of our infrastructure,” Engel said. “To remain competitive, we must develop innovative financing strategies that will ensure infrastructure investment keeps pace with the needs of agriculture and other key rural industries. We strongly believe this public-private partnership will facilitate the flow of capital to deserving projects and promote the health of rural America,” according to
The New York Times.

For more information on agricultural finance and credit, please visit the National Agricultural Law Center here.