Presented byDeborah Markley, Center for Rural EntrepreneurshipInes Polonius, alt.Consulting

Building Wealth Using WealthWorks Value Chains 

Deborah Markley• Co-Founder and Managing Director, Center for Rural

Entrepreneurship

Ines Polonius • Executive Director, Alt.Consulting, Inc. • Arkansas Green Energy Network (AGEN)

Introductions

• Learn about the WealthWorks approach to rural development through story and discussion.

• Appreciate the role of value chain intermediaries in the WealthWorks approach.

• Define the fundamental elements of the approach including wealth creation value chains and the use of the wealth matrix as a tool for planning and evaluation.

Objectives of this Presentation

• Wealth, broadly defined, is the foundation for prosperity.

• Poor places and people will stay poor unless they are connected to larger economies.

• Poor rural places have assets which, if properly developed, can contribute to larger regional economies.

Why a Wealth Creation Approachto Livelihood Development?

Why a Wealth Creation Approachto Livelihood Development?

• Those assets can be developed and linked to markets in ways that create multiple forms of wealth.

• Structures exist and can be created that will cause that wealth to stick in rural areas instead of being extracted.

• Wealth that sticks leads to improved livelihoods.

#1 WealthWorks is demand driven.#2 WealthWorks is intentionally inclusive.#3 Wealth is tied to place by WealthWorks value

chains.#4 Measurement is integrated into the entire

process as a tool for planning and adaptive management.

#5 Wealth sticks in rural areas through attention to structures of ownership and control.

#6 The WealthWorks approach is strategically flexible while doing no harm.

Guiding Principles

Principle #1:

WealthWorks is demand driven.

Guiding Principle

AGEN

Regional / Urban Demand:• Purpose: Bring new money into rural

communities, allow wealth creation• Valero needs biofuel to meet blending

requirements per EPA RFS2. Interested in investing in getting value chain to scale.

• FedEx commitment: 50,000 gallons/dayLocal Demand:• Purpose: Price stabilization for

vulnerable budgets• Municipalities and county governments

want stable fuel prices• School system: Burn cleaner fuel in

school busses transporting children

AGEN: Identifying Demand

Principle #2:

WealthWorks is intentionally inclusive.

Guiding Principle

AGEN

• Winter crop for soybean and cotton farmers Focus: Minority and small

farmers• New Entrepreneurial Opportunities

Micro-Bio-Refineries Waste Oil Collection Seed Management Seed Crushing Manufacturing of Refineries

Example: Intentional focus on minority farmers by providing technical assistance, help with planting and harvesting.

AGEN: Creating Wealth Intentionally

Principle #3:

Wealth is tied to place by WealthWorks value chains developed within sectors.

Guiding Principle

• A business model that delivers economic, social, and environmental values in response to market demand.

• Buyers, processors, producers and other transactional partners work together for mutual benefit to create value in response to market demand.

• Includes direct engagement by supporting players who may not be direct transactional partners – educators, researchers, technical assistance providers, financers, policy-makers, etc.

A WealthWorks Value Chain is…

Traditional Supply Chain

Chain starts with producer supply

Measured by net income produced

Everyone is in it for him/herself

Power determines who gets paid how much for their role

Participants try to pass on costs to others within or outside of chain

Tries to influence policy to create advantage and maximize short-term income

WealthWorks Value Chain

Chain starts with consumer demand

Measured by wealth created/retained

Everyone is in it together

Intentionally balances mutual benefit of all in chain

All known costs are considered and addressed

Tries to influence policy to level the playing field and maximize long-term and widely shared wealth

Value Chains vs. Supply Chains

AGEN

AGEN: Deep Collaborations

• Seeking larger systems change

• A move beyond partnerships focused on specific projects

• Deep collaboration built on each member’s self interest

• Self interest creates momentum!

• Example: Initial conversations with individual members identified their self interest. “What is in it for YOU?”

• Collaboration is problem solving together almost on a weekly basis.

Demand for biofuelLocal municipalities, school districts, farmers, truckers

Regional companies - Valero, FedEx

Local and

State Policy

Support

MSCC Mini Refinery Micro Refinery

Spring-board Diesel Mfg Dist

Gir Ener

gy Mfg

Angel Investor

Net workLoan Funds

Waste Vegetable Oil Collection Businesses

Source of WVO: restaurants,

convenience stores, schools,

hospitals,prisons,casinos, etc.

Community Mktg

Strategy Ed/promo materials

Community Recycling Programs

Progressive Community Leadership

Trans-porta-

tion

Camelina Seed Processing Company

Growers of Camelina: Minority, Non-

Minority Farmers

Camelina research

ASU, PCCUA

Camelina Agronomic

Service Business

USDA Support

Programs: NAP, Cover Crops, Crop Insurance

ADTEC RET

Train ing

Fuel Blend

er Distri butor

Animal FeedComposting

Cosmetic mfg

By Prod uct

Meal

By Product Gly ce rol

Principle #4:

Measurement is integrated into the entire process as a tool for planning and adaptive management.

Guiding Principle

Seven Forms of Capital

Individualcapital

Socialcapital

Financialcapital

Naturalcapital

Builtcapital

Intellectualcapital

Creating wealth that sticks is rarely an intentional goal, even when we define wealth broadly.

Politicalcapital

What do we mean by “Wealth?”

Type of Wealth Interventions in Value Chains

Individual How will your intervention impact the stock of skills and physical and mental healthiness of people in a region?

Social How will your intervention impact the stock of trust, relationships, and networks that support civil society?

Intellectual How will your intervention impact the stock of knowledge, innovation and creativity?

Natural How will your intervention impact the stock of unimpaired environmental assets in a region

Built How will your intervention impact the stock of fully functioning constructed infrastructure?

Political How will your intervention impact the stock of power and goodwill held by individuals, groups, and/or organizations?

Financial How will your intervention impact the stock of unencumbered monetary assets at the individual and community level?

A wealth matrix for planning and evaluation

AGEN

Type of Wealth Interventions in Value Chains

Individual# of farmers growing Camelina Baseline: 0; 3 in Spring 2013# of entrepreneurs who have started micro-refineriesBaseline: 0; Today: 1 entrepreneur preparing to produce by Oct 2013

Social # Number of groups engaged in renewable energy policy work and the strength of their relationships Baseline:1; Today: 5

Intellectual # of requests for renewable energy installations from municipalities, residents, and business. Baseline: 0; Today: 3

Natural # of gallons replaced by biodiesel produced in the Delta Baseline: 0; Today: 1360 gallons

Built# of micro refineries functioning within the value chainBaseline: 0; Today: 1 micro-refinery on campus of MidSouth CC fully operational

Political # co-sponsors on renewable and energy efficiency bill and how far the bill advances in the political process. Baseline: 0; Today: 10 legislators; 4 bills approved by committees

Financial Value of external investment in value chain. Baseline =0. Today 5 local investors committed to invest $1.2 million.

AGEN: Examples of Measures

Guiding Principle

Principle #5:

Wealth sticks in rural areas through attention to structures of ownership and control.

AGEN

Value chain meeting in January 2012

focused on ownership structures.

AGEN: Ownership Models

1. Entrepreneurial Model: Individual / Local investors purchase refinery to serve local and regional markets

2. Farm Coop Model: Coop owns refinery and converts farmers’ crop into fuel for on-farm use on a contract basis.

3. Municipality owns refinery and leases it to entrepreneur with right to purchase % of output

Intentionality: Focus on micro-refinery that costs $250,000 enabling investors to be local and wealth to stay in local communities

Principle #6:

The WealthWorks approach is strategically flexible while doing no harm.

Guiding Principle:

AGEN

AGEN: Strategic Flexibility

1. Members introduce new opportunities Solar Bioenergy

2. Problem solving together Financing barrier led to 3 potential models

3. Connectedness Community leaders Market players Political influence

Transformational Benefits of a Value Chain

Intermediary’s role: Maintain values, do no harm

Central Appalachia

Energy efficient housing, energy efficiency, food, forestry

Alabama Black Belt and Mid-South

Renewable energy, investment, forestry, food, community-based tourism

Lower Rio Grande Valley region in Texas

Green housing/neighborhoods, literacy

Where are we working on the ground?

Please visit:www.creatingruralwealth.org andwww.yellowwood.org/wealthcreation.aspxwww.altconsulting.org

Or join the Community of Practice at www.ruralwealth.org

Or contact:Ines Polonius Deborah Markleyalt.Consulting, Inc. Center for Rural 870-535-0011 Entrepreneurshipines@altconsulting.org 919-932-7762

deb@e2mail.org

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