Maryland Agricultural and Resource-Based Industry Development Corporation

1410 Forest Drive, Suite 26, Annapolis, MD 21403www.marbidco.org

Maryland Agricultural & Resource-Based Industry Development Corporation

FY 2011 Annual Report

After completing its fourth full year of operation, MARBIDCO is pleased to report that it has continued to make significantstridesinfulfillingitsmissioninFY2011,despitethechallengesstillpresentedbyaneconomyrecover-ingfromrecession.ThisAnnualReportdocumentsmanyofthesesuccesses,showingMARBIDCO’sgrowthandcapabili-tiesinaddressingthespecializedfinancingandbusinessdevelopmentneedsofMarylandagriculturalandresource-basedindustries. Disappearingruralworkinglandscapes,globalagriculturalmarketcompetition,anagingfarmerpopulation,andalackofaccesstoaffordablecapitalfornewfarmersandruralbusinessinnovationaresomekeychallengesthatMARBIDCOwascreatedtohelptoaddress.Asauniquelycharteredfinancialintermediaryandbusinessdevelopmentagency,MARBIDCObringstogetherresourcesfromthefederal,Stateandlocalgovernments,aswellastheprivatesector,toassistMaryland’sfarming,forestryandseafoodbusinesseswithaneyetowardsthelong-termsustainabilityoftheseruralindustry sectors. ContributinggreatlytoMARBIDCO’seffortsareourStateagencypartners,MDA,DBED,DNR,MEA,RMC,MFCAandUME,aswellasouralliedruralbusinessorganizationsintheprivatesector.TogetherwithourfederalpartnersatUSDAandagrowingnumberofcommercialbanksthathaveparticipatedinMARBIDCObusinessfinanceprojects,wehaveprovidedsignificantresource-leveragingopportunitiesforourcustomers.Addtothisthecontributionsofourhard-workingBoardofDirectorsandFinancingReviewCommittees,andwecouldnotbemorepleasedwiththecollectiveeffortandtheprogresswearecontinuingtomakeinhelpingMaryland’sfood,feedandfiberbusinessessucceed. ThankstothefinancialresourcesprovidedbyGovernorMartinO’MalleyandtheMarylandGeneralAssembly,MARBIDCOwasabletomakemorethan$3.5millionindirectfinancialinvestmentsinanumberruralbusinesseslocatedacrossMarylandcountiesduringFY2011.Thisdoesnotincludeanother$1.7millionprovidedforoysteraquaculture.Thevastmajorityoftheseinvestmentswereprovidedintheformoflow-interestloans,whileadditionalfundswereusedtoprovidepartialmatchinggrantsforvalue-addedprocessing,andcountyagriculturalcost-shareprojects. OneofthebiggestsuccessstoriesofFY2011isMARBIDCO’slaunchoftheMarylandShellfishAquacultureFinancingFund.WorkinginpartnershipwithDNRandUMEandusingacombinationofstate,capitalandfederalfunds,thisprogramhelpswatermenandotherswhowishtotransitionfromwildoysterharvestingtostartorexpandunderwatershellfishfarmingenterprisesusingleasedgrowingareasintheChesapeakeorCoastalBays.With26aquacultureloansapprovedacross10countiesinFY2011,thisprogramisofftoaverysuccessfulstart.NotonlywilltheseprojectshelprevitalizeandpreservethehistoricoysterindustryinMaryland,butasaby-producttheywillalsogreatlycontributetoimprovingthewaterqualityoftheChesapeakeBayanditstributaries. MARBIDCO’smostpopularofferingcontinuestobetheMarylandResource-BasedIndustryFinancingFund(the“MRBIFFProgram”),aprogramwhichmakesavailablelow-costloancapitalworkinginpartnershipwithcommercialbanksandtheFarmCreditSystem.Lastyear,asanoutcomeofthisprogram,weobservedthateverydollarthatMARBIDCOinvestedinaruralbusinessprojectleveragedalmosttwodollarsinadditionalcommerciallenderfinanc-ing.Asaresult,wewereabletoassistseveralyoungandbeginningfarmersinstartingtheirownbusinesses,includingtheestablishmentofthefirstsheepdairyfarminMaryland.MARBIDCOalsohelpedanumberofotheragriculturalenterprisestodiversifyorexpandtheiroperations,aswellasaidedintherevitalizationofalivestockauctionthatwillprovidesignifi-cantregionalbenefitstoproducers. Whilewecontinuedtoexperiencegreatsuccessthisyear,theworkoftheCorporationisstilljustbeginning.MARBIDCOremainsabsolutelycommittedtosupportingthesustainabilityandprofitabilityofMaryland’sagricultural,forestryandseafoodindustries,whileatthesametimehelpingtoensuretheviabilityoftheruralworkinglandscapethatwehavecometosogreatlycherishinthisState.Andweseemoreopportunitiesinthefuturetosimultaneouslyaidbothresource-basedbusinessaswellastheenvironment.Newprogramstohelpcountygovernmentswiththeirfarmlandpreser-vationeffortsandtohelpurbanfarmersgetstartedinbusinessarecurrentlyunderdevelopment. Cleanairandwater,asafeandhealthylocalfoodsupply,thrivingruralcommunities,andscenicpastoralvistasforhumanenjoymentandrenewalarewhatweplantohelpsustainforthebenefitofmanygenerationsofMarylanders.WeinviteyoutolearnmoreaboutourservicesandprogramsandtojoinusonthejourneytowardssustainingavibrantrurallandandwaterheritageinMarylandthatproducesacornucopiaofhighqualityfoodandfiberproductsforallourfellowcitizenstoenjoy.

PhyllisE.Kilby StephenR.McHenry Chairwoman ExecutiveDirector

A Message from the Chair and Executive Director

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MARBIDCOwasestablishedtoenhancethesustainabilityandprofitabilityofMaryland’sagricultural andresource-basedindustriesinordertohelpbolsterruraleconomies,providelocally-producedfoodandfiberproducts,andpreserveworkingfarmandforestland.Duringitsfirstfouryearsofoperation,MARBIDCOhasinvestedmorethan$11millionin136farmandruralbusinessprojectslocatedin21Marylandcounties,andintheprocesshashelpedcreateorretainanestimated782full-andpart-timejobs.Todatetheorganizationhasfunded42value-addedfoodorfiberprocessingenterprisesandhelped43youngorbeginningfarmersbuytheirfirstfarmsorexpandtheirbusinessoperations.ThankstothestrongsupportofMaryland’sGovernorandGeneralAssembly,MARBIDCOhasbeenfullyoperationalsince2007andemploysasmallteamofexperiencedruraleconomicdevelopment,creditunderwriting,andloanservicingpersonnel.

Our VisionMARBIDCOexpectstoplayavitalroleinhelpingMaryland’sfoodandfiberpro-ducersandprocessors,andotherresource-basedbusinessestoinnovateandthrive,bothnowandwellintothefuture.Byworkingcollaborativelywithitspublicandprivatesectorpartners,MARBIDCOwillbethe“goto”placeinMarylandtoobtainruralbusinessdevelopmentassistance,includinghelpwithaccessingcapi-talandcredit,businessplanninginformationandreferral,andruralworkinglandspreservation.

Our MissionTohelpMaryland’sfarm,forestry,seafoodandrelatedruralbusinessesachieveprofitabilitythroughtheprovisionoftargetedservicesandaspecializedinfrastructurethathelpsretainexistingresource-basedindustry production and commerce, promotes rural entrepreneurship, and nurtures emerging industries.

MARBIDCO: Growing Rural Ventures

MARBIDCO Offers:• Assistanceinsecuringcapitalandcredit,especiallyforinnovativeorvalue-addedactivities;• Ruralbusinessplanninginformationandtechnicalassistancereferral;• Rurallandacquisitionassistance(particularlyhelpforyoung/beginningfarmers);and• Ruralworkinglandpreservationfacilitation.

MARBIDCO’sprogrammingfallintothreebroadcategories:1. CoreRuralBusinessDevelopment. Severalloanandgrantfinancingprogramsmeetkeyagricul-

tural,forestry,orseafoodbusinessinvestmentneeds.Loanscanbeusedforlandpurchases,facilitiesconstructionorrenovation,equipmentacquisitionorworkingcapital.Loansrangefrom$10,000to$400,000andmustbefullycollateralized.Grantprogramshelpproducerswithpartialmatchingfundsforenergyefficiencyandvalue-addedprojects,andprovidelocalgovernmentswithmatchingeconomicdevelopmentcostsharefunds.

2. RuralLandPreservationFacilitation.ThesefinancingopportunitiesareofferedinconjunctionwithotherStateandlocalagencies,withMARBIDCOservingasaconduitfinancingagent.Thisincludesan“installmentpurchaseagreements”programwiththeMarylandAgriculturalLandPreservationFoundationtoassistwithpurchasingagriculturallandconservationeasements.

3. HigherRiskorMicro-CreditLending.Theseloanprogramsarefundedbypartneringorganizationsfortargetedpurposes,suchastheMarylandShellfishAquacultureFinancingFundProgram,andtheRuralBusinessEnergyEfficiencyLoanProgram,whichisofferedwiththesupportofthevariousfederal,State,andphilanthropicfunds.

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The MARBIDCO Fiscal Year 2011 Annual Report

MARBIDCOisaneconomicdevelopmentagencywithauniquemission:providemuch-neededspecializedfinancingandbusinessdevelopmentassistancetosupportthecontinuedviabilityofMaryland’sagriculturalandruralindustries,andintheprocesshelppreservemorethan3millionacresofopenspaceandinsureasafeandplentifulsupplyoflocallygrownfoodandfiber.Ourclientsareruralbusinessen-trepreneurs,food/fiberproducersandharvesters,andfarmandforestlandowners.Weworkcloselywithcommerciallenders,cooperativeextensionagents,localeconomicdevelopmentofficers,Stateagencymarketingandlandpreservationstaff,andotherruralbusinessserviceproviderstomakeourfinancialandbusinessplanningservicesavailabletothosethatneedthem.MARBIDCO’sBoardofDirectorsconsistsof17individualsrepresentinggovernmentagencies,foodandfiberproducersandprocessors,commerciallenders,andpublicfinanceandeconomicdevelopmentprofessionals.TheGovernor,withtheadviceandconsentoftheMarylandStateSenate,appoints11privatesectormemberswhilesixareappointedbystateagencies.

AppointedbytheGovernorPhyllis Kilby (Chair)OwnerandOperator,KilbyCreamandDairyFarm.RepresentingAgri-culturalProducers

Peter AlexanderMillSupervisor(Retired),GlatfelterPulpWoodCompany.RepresentingTimber&ForestProductsIndustries

Joseph ChisholmRetiredBankVicePresident.Repre-sentingCommercialLendingInsti-tutions

Faith Elliott-RossingDirectorofEconomicDevelopment&Tourism.RepresentingRuralEco-nomicDevelopment

J. Robert FrazeePresident/CEO,MidAtlanticFarmCredit. Representing Commercial LendingInstitutions

William GerweckGeneralManager(Retired),WinbakFarms.RepresentingAgriculturalInterests

Dr. Howard LeathersAssociateProfessor,Dept.ofAg-ricultural&ResourceEconomics(UMD).RepresentingPublicFi-nance

Karen OertelCo-owner,HarrisCrabHouse,Inc.andW.H.HarrisSeafood,Inc.RepresentingAquacultureProducers

A. Orrell Saulsbury, IIIFormerOwner,SaulsburyBrothersCompany. Representing Commer-cialFood&FiberProcessing

StateAgencyRepresentativesGregory ColeDirector of Rural Region FinancingProgramsMD Department of Business andEconomicDevelopment

Donald DarnallExecutiveDirectorMarylandFoodCenterAuthority

Vanessa OrlandoExecutiveDirectorRural Maryland Council

S. Patrick McMillanAssistantSecretaryMD Department of Agriculture

Dr. Nick PlaceAssociateDean/DirectorUniversityofMarylandExtension

Emily WilsonDeputyDirector,LandAcquisition&PlanningUnitMDDepartmentofNaturalRe-sources

StaffStephen McHenryExecutiveDirector

Kristen RobinsonFinancialProgramsOfficer

Christina WilkinsBookkeeper/LoanProcessingAssistant

Board of Directors

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Rural Business Development Programs

MARBIDCOLoanPrograms

MarylandResource-BasedIndustryFinancingFund(MRBIFF)offerslow-interest(3%APRini-tially)loanstoAg/RBI-industryfirmsforthepurchaseoflandandcapitalequipmentforproductionandprocessingactivities.Themaximumloanamountis$200,000foracquisitionofequipmentandfixedas-sets,and$250,000forrealestatepurchases,food/meatprocessingandbioenergyprojects.MARBIDCOprovidesupto50%offinancingneededforaproject,andacommerciallenderand/orapublicinstru-mentalitymustalsohaveanequalfinancialcommitmentinanytransaction.MRBIFFisMARBIDCO’smost popular lending program.

RuralBusinessEquipmentandWorkingCapitalLoanFundofferslow-interest(5%APR)loanstoAg/RBI-industryfirmsandproducersforworkingcapitalandequipmentpurchases.Themaximumloanamountis$75,000.Aborrowerequitycontributionandletterofreferralfromacommerciallenderisrequired.

MarylandVineyardPlantingLoanFund offerslow-interest(3-5%APR)loanstohelpmeettheuniquefinancingneedsofMaryland’srurallandownerswantingtoplantgrapesanddevelopwineries.Themaximumloanamountis$100,000andaninterestonlyoptionisavailable.Aletterofreferralfromacommerciallenderisrequiredaswellasasiteevaluationapprovalletterfromthewine/grapeindus-try’sviticulturecommittee.TherequestedfinancialassistancefromMARBIDCOmustrelatetotheinstallationofnewvineyards,including,butnotlimitedto,thepreppingoflandforvineyardinstallation,purchaseofvines,vineyardequipmentandsupplies.

ForestryEquipmentandWorkingCapitalLoanFundofferslow-interest(5-10%APR,dependingonthelevelofcreditandcollateralrisk)loanstoMaryland’sforestproductsbusinesseswithrespecttoworkingcapitalandequipmentpurchases.Themaximumloanamountis$150,000.Aletterofreferralfromacommerciallenderisrequired.InaspecialefforttobetterservetheforestproductsindustryinMaryland,MARBIDCOwillutilizeslightlymoreliberalunderwritingguidelinesthannormalformak-ing loans under this program.

AgriculturalCooperativesEquityInvestmentFundprovidesaportionofthepatientcapitalinvest-mentneededbycooperativesthatdonothavethenecessaryequityavailabletoobtainthecommercialfinancingthattypicallyisrequiredduringtheperiodthatbusinessoperationsarebeginningorsignifi-cantlyexpanding.ThemaximumamountofequityfundingthatMARBIDCOcanprovidetoanindivid-ualcooperativeis$100,000inanysingleyear.EquitycontributionsmadetocoopsbyMARBIDCOwillbeofferedintheformofpreferredstock,withadividendpaidannuallybeginninginthethirdyearofbusinessoperation.Afterabouttheseventhyearofacooperative’soperation,theequityinvestmentwillbecallable,atwhichtimealumpsumprincipalrepaymentwillbedue,oralternatively,aloannoteagreementmustbeenteredintowithMARBIDCOwithanearmarket-rateinterestcharge.Thefinancialparticipationofaunitoffederal,stateorlocalgovernmentisalsousuallyrequiredforanycoop-erativethatreceivesanequityinvestmentfromMARBIDCO.

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Specialty Loan Programs

*New In FY 2011* Maryland Shellfish (Oyster) Aquaculture Financing Fund (workingincollabo-rationwithDNRandUMEandusingacombinationofspecial,capitalandfederalfunds),helpswatermen(andothers)whowishtotransitionfromwildoysterharvestingtostartorexpandunderwatershellfishfarmingenter-prisesusingleasedgrowingareasintheChesapeakeorCoastalBays(whichasaby-productwouldalsogreatlycontributetoestuarinewaterqualityenhancement).ThisnewprogramhadasuccessfullaunchinFY2011,with26aquacultureloansapprovedacross10counties.Eligibleprojectsincludecommercialaquacultureenterpriseswithfeasibleoysterorshellfishproductionandbusinessplans.Theloanproceedscanbeusedtopurchaseshell,seed,spatorequipment(dependingonthesourceoffunds).Theborrowermakesinterest-onlypaymentsforthefirstthreeyearswhiletheoystersaregrowingtomarketsize.Afterthat,ifborrowershavebeenconsistentinmakingtheirquarterlypayments,someoftheprincipalbalancewillbeforgivenandborrowerswillfullyrepaytheremainingamountoftheloanovertwoyears.Theseloansareunsecuredandonlythepersonalguaranteesoftheborrowersand/orbusinessesarerequired(althoughthelossofaDNRshellfishaquacultureleaseisalsoatriskintheeventofaloandefault).

Rural Business Energy Efficiency Improvement Loan Fund (workingincollaborationwithMEA)offerslow-interest(4%)“micro”loansforenergyefficiencyprojectsundertakenbyfoodandfiberproducersand processors implementing the recommendations of a third-party energy auditor. The minimum loan amount is$2,500andthemaximumloanamountis$30,000.Loanadvancesmaynotexceedthecostofactuallymak-ingtheimprovementsminusanygrantincentivefundingreceivedforaproject.Acreditscoreofatleast650isrequiredwithnobankruptciesfiledwithinthelastsevenyears.Loansmadeunderthisprogramareunsecuredandonlythepersonalguaranteesoftheborrowersand/orbusinessesarerequired.Loanswillbefullyamor-tizedwithtermsnotexceedingtheanticipatedsavingspaybackperiodwithatleast1.0-1.0ratioontheannualenergysavingspayback.Aletterofreferralfromacommerciallenderisrequired.

Rural Business Development Programs (Continued)

MARBIDCO Spotlight: Helping Local Products Reach Consumers

ShoreGourmet,operatingundertheauspicesoftheMid-ShoreRegionalCouncil(MSRC),servesasanonprofitentitydedicatedtopromotingandsustainingthefoodandagriculturalvalue-addedbusiness-eslocatedonMaryland’sEasternShore.CollaboratingwiththeEasternShoreEntrepreneurshipCenter,ShoreGourmetoffersdistributionandconsultingservicestothelocalagriculturalcommunitytohelpmarkettheirvalue-addedandgourmetfoodproducts. In2010,MSRCneededtoimmediatelyraisea45%matchforaUSDA-RuralDevelopmentgrantof$22,000fortheequipmentneededtodistributefoodthroughShoreGourmet.Withonly$4,800leftstandingbetweenthemandthegrantmoney,MSRCturnedtoMARBIDCOforhelpinmatchingthefinal$2,400thattheycouldcontribute.ThroughaLocalGovernmentAg/RBIProjectCostShareGrant,MARBIDCOsuppliedMSRCwiththe$2,400matchitneeded,andasaresultShoreGourmetwasabletopurchasearefrigerationtruckcosting$40,366.ThistruckisbeingusedtobothacquireanddistributeEast-ernShoreproductsbothtoandfromtheShoreGourmetwarehouseinEastontovendoranddistributionoutletslocatedacrosstheEasternShoreandintheAnnapolisarea.Theproductsincludecheeses,yogurt,meatrubs,sauces,pastries,biscuits,honey,flavorednuts,bisonmeatproducts,beef,andporkproducts. ThankstoShoreGourmet,MarylandersaregettingtoexperienceEasternShoreproductstheymightnothaveotherwisehadaccessto,andagriculturalandregionalfoodbusinessesareincreasingtheirsalesandexpandingthemarketfortheirspecialtyproducts.

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MARBIDCO Grant Programs Maryland Value-Added Producer Grant (MVAPG) encouragesparticipationintheUSDA’sannualandhighlycompetitiveValue-AddedProducerGrantProgram(VAPG).TobeeligibleforfundingundertheMARBIDCOprogram,theapplicantmustalsobeeligibleundertheUSDAprogramandfundswillbeawardedupto20%ofthematchingrequirementtothosewhoactuallyreceivetheUSDAaward.TheUSDAprogramrequiresafinancialmatchingcommitmentandeachapplicationfortheUSDAVAPGprogrammustincludea“verificationofmatchingfunds”.TheUSDAVAPGProgramoffersamaximumawardof$100,000foraplanninggrantand$300,000foraworkingcapitalgrant.MARBIDCO’sgrantscanbeap-pliedforupto$20,000and$40,000respectively.

Local Government Ag/RBI Project Cost Share Program is designed to lend support to local and regionalruralbusinessdevelopmenteffortsthatsubstantiallysupportMaryland’sfarming,forestry,orsea-foodindustries.MARBIDCO’sparticipationcannotexceedthatofaunitoflocalgovernmentorregionaldevelopmentcouncil.(Theonlyexceptiontothisfundinglimitationisina“OneMaryland”designatedjurisdiction,whichmayqualifyforupto200%ofacounty’scontribution.Themaximumis$10,000.)

*New In FY 2011* Maryland Value Added Producer Grant – Capital Assets Option (MVAPG – CAO) isdesignedtoencouragefarmsandotherbusinesseswantingtoexpandordiversifytheiroperationstopurchasenewequipmentorconstructfacilitiessothattheycanincreasesalesandjobopportunitiesforruralandurban-edgeresidentsinMaryland.Eligibleapplicantsmustbeacroporlivestockproducerorprocessor,agriculturalcooperative,seafoodprocessor,orprimaryorsecondarytimberproductsprocessor,andhavebeeninbusinessforaminimumoftwoyears.Inaddition,applicantsmustbemakingaproductthatis“value-added.”MVAPGfundsandmatchingfundsmustbeusedforprojectsthataredefinedascapitalassetsbyMARBIDCOandthathaveausefullifeofsevenyearsormore.ThematchrequiredfromtheruralbusinessmustbeatleastequaltheamountrequestedfromMARBIDCO.LaunchingtheprograminFY2011,MARBIDCOoffered13grantsofbetween$2,500and$20,000across10Marylandcounties,foratotalof$198,599.

Rural Land Preservation Facilitation Programs

The Installment Purchase Agreements Programs(s),workinginconjunctionwithStateandlocalfarmlandpreservationagencies,enablesthepurchasingofeasementsonagriculturalpropertiesusingtax-ad-vantagedfinancialarrangementsstructuredtobenefitbothlandownersandtheparticipatingunitsofgovern-ment.TherearetwotypesofIPAs–“self-funded”(whicharecurrentlybeingofferedbyMARBIDCOonbehalfoftheMarylandAgriculturalLandPreservationFoundation),and“leveraged”(whichMARBIDCOisdevelopinginpartnershipwithindividualcountygovernments).

The Next Generation Aggie Bonds/Option IPAs Program is offered in partnership with partici-patingcountygovernmentsinMaryland.MARBIDCOisworkingwithcountygovernmentstoutilizeNextGeneration“AggieBonds”(taxableortaxexemptprivateactivitybondsthathelpfirst-timefarmerspurchasefarmland)toassistthesecountieswiththeircriticalfarmsandrurallandpreservationprograms.UsingAggieBondsorOptionIPAs,MARBIDCOfacilitatesalinkwiththecountygovernment,commerciallenderorbond-buyertogetherwiththefarmsellerandfarmbuyertoenableafarmpropertytransfertotakeplacewhilepreservingthelandfromfuturedevelopment.

Rural Business Development Programs (Continued)

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MARBIDCO Spotlight

Innovative Watermen Lead the Way in Oyster Industry Revitalization

JohnnyShockleyandRickyFitzhughstartedHooper’sIslandOysterAquaculture,Inc.,in2011toproduceandmarkethighqualityhalf-shelloystersandprovideotherswiththeequipmentneededtosup-porttheemergingshellfishaquacultureindustryinMaryland.Shockley,athird-generationwaterman,states,“Aquacultureisawaytocontinueourheritage;it’sthefirststepaswemoveforwardintothenextageofthewaterman.” ShockleyandFitzhughobtainedaMarylandShellfishAquacultureFinancingFundLoanfromMARBIDCOtopurchasetheshellfishlarvae,cages,andequipmentneededtogrowfarm-raisedoysters.ShockleyandFitzhugharesettingoysterlarvaeinthewatercolumnofafive-acreareainDorchesterCountythattheyhaveleasedfromtheState,whichhasincreaseditsaquacultureleasingopportunitiesthroughGovernorMartinO’Malley’soysterrestorationplan.ThroughextensiveresearchtheybuiltequipmentanddesignedasystemthatwilltransitionthetraditionalharvestingmethodsofMarylandwatermenintoacut-ting-edgeseafoodproductionindustry,helpingtorevitalizetheoysterindustryandretainjobsinruralcom-munities located around the Chesapeake Bay. ThefirstcagesofoysterswereplacedinTarBaywatersinJune2011,afterayearofpreparation.Theoysters,whichcangrowtomaturityinseveralmonths,arebeingmarketedunderthebrandnameChesapeakeGoldOysters.Thebusinessisprovidingwholesaleandretailcustomerswithhighquality,sustainableMary-landoystersharvestedfromclean,approvedwaters,whilealsohelpingotherwatermenprogressincreatingtheirownshellfishaquaculturebusinesses.ThecompanyisthefirstintheStateofMarylandtoproducecom-mercialcageequipmentforaquacultureaswellasbeingamongthefirstprivatecommercialoysterhatcheriesto operate in Maryland.

Pictured Above: The ribbon cutting ceremony for the Hoopers Island Oyster Aquaculture Company. Owners Johnny Shockley and Ricky Fitzhugh are pictured with representatives from the Maryland General Assembly and other local dignitaries.

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TheProjectFinancingReviewCommitteesplayoneofthemostimportantrolesatMARBIDCO.Thesecommitteeshavethedemandingtaskofreviewingandapprovingapplicationsforfinancialassistance(includinggrantsaswellasloans).AlthoughtheBoardofDirectorsoftenhasthefinalsayinhowandwhenMARBIDCOfundsgetdistributedtoqualifiedapplicants,theBoardreliesheavilyupontherecom-mendationsofthesepanelsofexperts.TheMARBIDCOLoanReviewCommittee,theMVAPG-CAOGrantReviewCommittee,andtheMDShellfishAquacultureFinancingFundReviewCommitteearecomprisedofindividualsfromMDA,UME,DBED,DNR,localgovernment,andtheprivatesector.MARBIDCOwouldliketorecognizethefollowingindividualsfortheirexemplaryserviceandgenerouscommitmentoftimeandtalentononeormoreofourProjectFinancingReviewCommittees:

Mr. Pete Alexander Retired District Manager, GlatfelterPulpWoodCompany

Mr. Kenny BoundsVicePresidentofBusinessDevelopment,MidAtlanticFarmCredit

Mr. Joseph ChisholmPoultryFarmer&VicePresident(retired),MercantilePeninsulaBank

Mr. Gregory ColeDirectorofRuralFinancingPrograms,MDDepartmentofBusiness&EconomicDevelopment

Ms. Shannon DillTalbotCountyExtensionDirectorUniversityofMarylandExtension

Ms. Faith Elliott-Rossing Director, Queen Anne’s County EconomicDevelopment&Tourism

Ms. Phyllis Kilby Owner&Operator,KilbyCream&DairyFarm

Mr. S. Patrick McMillanAssistantSecretary,MarketingandConsumerServices,MD Department of Agriculture

Ms. Ginger MyersRegionalMarketingSpecialist,UniversityofMarylandExtension

Mr. Mike Naylor Assistant Director, ShellfishProgram,MDDepartmentofNaturalResources

Mr. Matt ParkerAquacultureBusinessSpecial-ist,UniversityofMaryland,SeaGrantExtension

Mr. Mark PowellChiefofMarketingServices,MDDepartment of Agriculture

Mr. Dan RiderProgramDirector,MarylandForestService,MDDepartmentofNaturalResources

Mr. Karl RoscherAquaculture Coordinator,MD Department of Agriculture

MARBIDCO Project Financing Review Committees

Pictured Left: Kevin Deighan, Shore Gourmet General Manager, and Stephen McHenry, MARBIDCO Executive Director, stand by the refrigeration truck purchased with assistance from a Local Govern-ment Ag/RBI Project Cost Share Grant. The MARBIDCO grant served as a partial match to MAERDAF and USDA-Rural Development grants.

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June 30, 2011 and 2010Assets 2011 2010Current Assets:Cashandcashequivalents $1,958,453 $1,527,636AccountsReceivable $285,000 $5,494Loansreceivable-current $180,814 $135,437Accruedinterestreceivable $43,501 $53,616NoncurrentAssets:Restrictedinvestment(IPAs) $762,377 $762,377Loansreceivable-non-current(net of current portion & $7,046,729 $4,452,379allowance of $249,328 and $115,380 for 2011 and 2010, respectively) Real estate owned $50,000 Capital assets, net $20,554 $27,660Total Assets $10,347,428 $6,964,599

LiabilitiesCurrentLiabilities:AccountsPayable $9,182 Accruedexpenses $31,021 $24,361NoncurrentLiabilities:Long-termdebt(IPAs) $762,377 $762,377Otherliabililties $7,060 $7,860Total Liabilities $809,640 $794,598

Net AssetsInvestedincapitalassets $20,554 $27,660Unrestricted $9,517,234 $6,142,341Total Net Assets $9,537,788 $6,170,001

Total Liabilities and Net Assets $10,347,428 $6,964,599

MARBIDCO FY 2011 Statement of Net Assets*

*From Audited Financial Statements

New Programs on the Horizon

The Sustainable Forestry Emergency Loan Fund,createdbasedontherecom-mendationofaDNRadvisorycommis-siontotheGovernor’sBayCabinet,willaddress a serious challenge facing some family forestland owners in the Chesa-peake Bay watershed relating to land parcel fragmentation and unplanned or premature timberharvests.Toaddressthisdilemma,arevolvingloanfund-typeopportunityisbeingdevelopedbyMARBIDCOtopro-videlow-interestloanstoqualifiedforestlandowners to assist with short-term family financialneeds.Theloanswillbesecuredbytheprivateforestlanditself,operat-ingunderanapprovedsustainableforestmanagementplan,therebyprotectingair/waterqualityandprovidingothertimberresourcebenefits.Inaddition,atemporarylandpreservationeasementwouldbeputinto effect during the term that the loan is outstanding.ApplicantswillberequiredtoenterintoaForestConservationManage-mentAgreementwiththeMarylandForestService.MARBIDCOandtheMarylandForestServicehopetorolloutthisprogramoncefundingisavailable.

The Next Generation Farmland Acquisition Program willenableMARBIDCO, working directly with commerciallenders(aswellasMALPF,RuralLegacyandcountyagriculturallandconservationprograms),toassistyoungandbeginningfarmerswiththepurchaseoffarmland,whileatthesametimeex-tinguishingthedevelopmentrightsonthelandbeingpurchased.Legislationenactedduringthe2008SessionoftheMarylandGeneralAssemblyallocatescertainfundscollected each year to this program from theState’sshareoftheAgriculturalLandTransferTax.FundsforthisprogramarenotexpectedtobeavailableuntilFY2014.

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June 30, 2011 and 2010

IncomeYear Ended

June 30, 2011Year Ended

June 30, 2010Stateappropriation $2,500,000 $850,000 Interest income $134,217 $156,562Programrevenue $20,517 $13,979Federal/Stategrants $1,539,163 $100,000ExpensesGrants $(125,418) $(31,293)Administrative $(167,623) $(133,179)Salaries&benefits $(272,464) $(292,466)Depreciationexpense $(9,106) $(8,772)ProvisionforLoanLosses $(251,498) $(115,380)Net Income $3,367,788 $539,451

Net Assets, Beginning of Year $6,170,001 $5,630,550Net Assets, End of Year $9,537,788 $6,170,001

Statement of Revenue and Expenses*

*From Audited Financial Statements

FY 2011 MARBIDCO Expenditures, by CategoryRuralBusinessLoanProceeds $4,842,266RuralBusinessGrants $221,856ProgrammaticSupport $269,822GeneralAdministrative $101,148Communications and Outreach $46,074RuralEconomic&ProgramDevelopment $41,673

87%

4% 5%2% 1% 1%

Rural Business Loan Proceeds

Rural Business Grants

Programmatic Support

General Administrative

Communications and Outreach

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July 1, 2010 to June 30, 2011Business or Farm Description County Loan Amount

ShellfishAquaculture-3loans(1 young farmer) Anne Arundel $71,000

ShellfishAquaculture-1loan(young farmer) Baltimore $100,000

ShellfishAquaculture-3loans(1 young farmer) Calvert $175,000

Dairy&Creamery-1loan(young farmer) Caroline $20,000

Grain-3loans (3 young farmers) Caroline $628,104

Greenhouse/Nursery-1loan(young farmer) Caroline $275,000

Livestock-1loan(young farmers) Carroll $250,000

SheepDairy&Creamery-1loan Carroll $200,000

Fruit&Vegetable-1loan Dorchester $132,500

Grain-2loans(1 young farmer) Dorchester $465,000

ShellfishAquaculture-5loans(2 young farmers) Dorchester $300,288

ShellfishAquaculture-1loan(young farmer) Kent $99,999

ShellfishAquaculture-1loan(young farmer) Somerset $66,375

Vegetable-1loan St.Mary’s $187,500

Vineyard-1loan (young farmer) St.Mary’s $100,000

ShellfishAquaculture-6loans(2 young farmers) St.Mary’s $389,000

Grain&Poultry-1loan (young farmer) Talbot $375,000

ShellfishAquaculture-2loans(1 young farmer) Talbot $154,500

Grain&Dairy-1loan(young farmer) Washington $360,000

Greenhouse/Nursery-1loan(young farmer) Wicomico $110,000

Poultry-1loan(young farmers) Wicomico $200,000

ShellfishAquaculture-1loan(young farmer) Wicomico $100,000

ShellfishAquaculture-2loans(2 young farmers) Worcester $83,000

Total Amount of Loans: $4,842,266

MARBIDCO Loan Making Activity in FY 2011

July 1, 2010 to June 30, 2011

Maryland Value-Added Producer Grant -Capital Assets Option Program

Business or Farm Type Assisted CountyGrant

AmountVineyard&Winery Calvert $9,144SheepDairy&Creamery Carroll $20,000Vineyard&Winery(young farmer) Cecil $13,450Vineyard&Winery(young farmer) Frederick $20,000ChristmasTreeFarm Frederick $2,500Forestry(young farmer) Garrett $20,000Beef/Hay/Agritourism Harford $20,000Dairy Harford $20,000Vineyard&Winery Harford $15,000AgriculturalEducation&SpecialtyCrops PrinceGeorge’s $3,998ForestProducts Queen Anne’s $17,000Dairy&Creamery Washington $20,000Vineyard&Winery Worcester $8,364

Total Maryland Value- Added Producer Grant - CAO Program Awarded: $189,456

Local Government Agricultural/RBI Cost Share Program

Rural Industry/Sector Assisted Partnering CountiesGrant

AmountMultipleValue-AddedAgProductDistribution Caroline,Dorchester,Talbot $2,400Vineyard&Winery PrinceGeorge’s $5,000

Total Local Government Agricultural/RBI Cost Share Grants Awarded: $7,400

Special One-Time Grant

Rural Industry/Sector Assisted Partnering EntitiesGrant

AmountMaryland-focusedAgriculturalVideoProduction MDA,MAFC,BaltimoreCo. $25,000Total Special One-Time Grants Awarded: $25,000

Total Amount of Grants Awarded: $221,856

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MARBIDCO Grant Making Activity in FY 2011

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FY 2011 Loan Programs Applicants Loan Amount Status

MDResource-BasedIndustryFinancingFundLoan 12 $2,798,104 FundedMDResource-BasedIndustryFinancingFundLoan 2 $385,000 ApprovedMDResource-BasedIndustryFinancingFundLoan 1 $340,000 WithdrawnMDResource-BasedIndustryFinancingFundLoan 3 $557,000 DeniedRuralBusinessWorkingCapitalLoanFund 1 $20,000 ApprovedMarylandVineyardPlantingLoanFund 1 $100,000 FundedMarylandVineyardPlantingLoanFund 1 $11,000 WithdrawnMDShellfishAquacultureFinancingFundLoan 24 $1,539,162 ApprovedMDShellfishAquacultureFinancingFundLoan 7 $600,000 Denied

TotalLoanApplicationsFundedorApproved 40 $4,842,266TotalLoanApplicationsWithdrawn 2 $351,000TotalLoanApplicationsDenied 10 $1,157,000TotalAllLoanApplications 52 $6,350,266PercentofLoanApplicationsFundedorApproved 77%

FY 2011 Rural Business Grants Applicants Grant Amount Status

MarylandValue-AddedProducerGrant-CapitalAssetOption 7 $113,814 FundedMarylandValue-AddedProducerGrant-CapitalAssetOption 6 $75,642 ApprovedMarylandValue-AddedProducerGrant-CapitalAssetOption 9 $169,048 DeniedSpecialOne-TimeGrant 1 $25,000 ApprovedLocalGovernmentAg/RBICostShareProgram 2 $7,400 Funded

Total Applications Funded or Approved 16 $221,856

By the Numbers: MARBIDCO Rural Business Investments

Pictured Left: The sheep dairy barn at Shepherds Manor Creamery, featured on page 16.

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InFY2011,MARBIDCOlentmorethan$3millionto14Maryland Resource-Based Industry Financing Fund (MRBIFF)borrowers.ThisenabledMARBIDCOtoleveragemorethan$4millionincommercialoreconomicdevelopmentlenderfunds,resultinginafavorable1.5-1leverageratio.

2011 Commercial LenderLeverage mounts

Borrower Loan TypeMARBIDCO

Loan Amount

Commercial Lender Loan

Amount

Private Lender

AmountGrainFarm MRBIFF $125,000 $125,000 SheepDairy&Creamery MRBIFF $200,000 $250,000 GrainFarm(youngfarmer) MRBIFF $200,000 $475,000 GrainFarm(youngfarmer) MRBIFF $200,000 $300,000 GrainFarm(youngandbeginningfarmer) MRBIFF $360,000 $360,000 Livestock(youngandbeginningfarmer) MRBIFF $235,000 $440,000 $100,000GrainFarm(youngfarmer) MRBIFF $375,000 $375,000 GrainFarm(youngfarmer) MRBIFF $228,104 $256,105PoultryFarm(youngandbeginningfarmer) MRBIFF $200,000 $517,000VegetableFarm MRBIFF $187,500 $187,500Fruit&VegetableFarm MRBIFF $132,500 $132,500Greenhouse(youngandbeginningfarmer) MRBIFF $110,000 $120,000Greenhouse(youngandbeginningfarmer) MRBIFF $275,000 $545,000 $25,000GrainFarm(youngfarmer) MRBIFF $340,000 $340,000

TOTALS: $3,168,104 $4,423,105 $125,000

MARBIDCO 2011 Commercial Lender Leverage Amounts

Pictured Right: Young oysters being grown at Hoopers Island Oyster Aquaculture Company.

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Helping Beginning Farmers Bring New Products to Maryland

ColleenandMichaelHistonarenotyourtypicalfarmfamily.BothgrewupinthesuburbsofSilverSpring,Maryland,andeachhavecareersoutsideofagriculture.WhentheymovedtoMountAirytoraiseafamily,theirchildrenbecameinvolvedintheCarrollCounty4-Hprogram,raisingmarketlambs,breedingsheep,marketsteers,andmarketpigs.Aftertheirchildrenweregrown,theHistonsfoundtheymissedthepeopleandtheatmosphere,sotheybeganresearchtodevelopasustainableagriculturalbusinessoftheirown.Aftertravelingtoseveralsheepdairyfarmsacrossthecountry,theydecidedtoraisedairysheepandestablishShepherdsManorCreamery,LLC—thefirstsheep’sdairyinMarylandandthefirsttoproducerawmilkfarmsteadcheese.Asheep’sdairyfillsauniquenicheinMarylanddairyproducts,astheUnitedStatescurrentlyimports99%ofthesheepcheeseconsumedinthecountry.Atthe present time the world’s commercial dairy sheep industry is concentrated in Europe,withonlyapproximately100U.S.dairysheepfarmsthatarelocatedmostlyinNewEngland,theUpperMidwest,NewYork,andCalifornia. TheHistonssecuredmortgageloansfromMARBIDCOandMidAtlanticFarmCredittopurchaseasuitableCarrollCountyfarminNewWindsoronwhichtoreside,housetheirnewlypurchasedlambs,andconstructtheirsheepdairyfacility.AnotherMidAtlanticFarmCreditloanwasobtainedfortheconstructionofthedairybuilding,andMARBIDCOassistedtheHistonswithsecuringadditionalprojectfundingthroughtheawardofa2010MarylandValue-AddedProducerGrant(CapitalAssetsOption).This$20,000matchinggranthelpedthempurchasethepasteurizertomakecheese.Thedairybuilding,whichhasamilkingparlor,cheeseroom,bulkmilktankroom,andanagingroom,wascompletedforuseinMay2011,andmilkingandtheproductionofartisansheepcheesehas begun.TheHistonsalsoanticipateproducingyogurtinthefutureastheirbusinessgrows.

2011 MARBIDCO Spotlights

Rescuing an Historic Facility to Preserve a Regional Asset

TheWestminsterLivestockAuction,whichopenedinthe1930s,isaplaceinCarrollCountywherefarmerscanbringtheiragriculturalproducts—fromlivestocktoproduceandhay—toselltobuyersfromotherlocalfarmsortowholesalerepresentatives.EarlandVictoriaGoukeroriginallyvolunteeredattheauctionasaway to spend more time with their friends, and Victoria also worked there in her youth. It seemed natural then, whentheownerstartedtalkingaboutclosingtheauction,thattheGoukersdecidedtobuyittokeepthehis-toric facility running. TheGoukers,whoalsooperateafarm,workedwiththeCarrollCountyDepartmentofEconomicDevelopmenttoobtainloansfromMARBIDCOandNewWindsorStateBanktopurchasetheauction.TheGoukersexplainthatwithoutthisopportunityforjointfinancing,thedealwouldhaveprobablyfallenthrough.AccordingtoGabeZepp,agriculturedevelopmentspecialistinthecountydepartmentofeconomicdevelop-ment,thiswouldhavemeantatremendouslossnotonlyforCarrollCountyandCentralMaryland,butalsofortheEasternShoreandSouthernMaryland,sincetheWestminsterLivestockAuctionisonlyoneoffourauc-tionsoperatingwithintheStateofMaryland. TheGoukerstookoverthebusinessinApril2011andareworkingtoexpandthroughthedevelopmentof specialized markets, such as an equine auction and special feeder calf auctions. They are also hoping to at-tractmorenon-agriculturalfamiliestotheauction,sincetheycancometobuymanyofthesamegoodsfoundatfarmer’smarkets.AccordingtoVictoria,manyofthesellersattheauctionarehobbyfarmerswhodon’tproduceenoughtohavearegularstandatafarmersmarketbutstillwanttoselltheirproductstothepublic.Theauctionhelpsthesefarmersfindbuyerswhilegivingcustomersanothervenueforbuyinglocalproduce.