Agricultural Manufacturing Location Decisions in Colorado: Implications for Rural Economic Development Polic

Many rural areas face unique challenges that put them at a competitive disadvantage relative to urban areas. State and Federal policies in the U.S. promote opportunities for value-added agriculture (manufacturing) as a means to create and retain wealth in rural places. In order to inform policies that might attract agricultural manufacturing firms to rural locations, this research explores agricultural firm location decisions using a case study of Colorado. First, this research creates a unique dataset of agricultural manufacturing firms in the State of Colorado and uses these data to assess if the traditional factors associated with neoclassical firm location theory (such as wages, tax rates and population) are correlated with agricultural manufacturing firm locations. Second, we conduct in-depth interviews with selected food manufacturing firms located in Colorado's heterogonous Western Slope. Results suggest a behavioral framework (where assets other than profit increase welfare) may better explain how agricultural manufacturing firms choose to locate in rural places. We recommend bottom-up policies that allow communities to promote entrepreneurship and take advantage of location-based comparative advantages as a means to attract agricultural manufacturing firms to rural Colorado.