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MSU study: food and agriculture contributions to Michigan economy top $90 billion

posted on April 11, 2012 10:44am

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Contact:
Beth Stuever
, Michigan State University, (269) 274-1399
Greta McKinney, MSU Product Center, (517) 353-7185
Jennifer Holton
, Michigan Department of Agriculture and Rural Development, (517) 241-2485

EAST LANSING, Mich. – Michigan’s food and agriculture business sector has emerged from the recession with flying colors. An updated Michigan State University (MSU) study on the impact of the food and agriculture supply chain shows the industry contributes an estimated $91.4 billion to Michigan’s economy. That’s an increase of nearly 50 percent between 2004 and 2010.

Chris Peterson, director of the MSU Product Center, announced the findings from “The Economic Impact of Michigan’s Food and Agriculture System” during a Michigan Agriculture and Rural Development Commission meeting April 11 in Lansing. The study is based predominately on 2010 data—the latest available.

Though the largest dollar growth came from the wholesale and retail distribution portion of the supply chain, the largest percentage of growth came from farming. The farming line encompasses food, energy and horticultural crops, as well as animal production and turf production.

“The impact of Michigan’s farms and the commodities they produce is 12 percent of the overall total, and their economic contribution has nearly doubled from less than $7 billion to more than $13 billion,” Peterson said. “You’d be hard-pressed to find another business sector that has pulled through the recession with those kinds of numbers in just six years.”

Peterson attributes the growth to a substantial increase in the value of food and agricultural products throughout the world.

“The global population increase and the dramatic expansion of the middle class worldwide mean that more people are consuming more food and, at the same time, pushes the food price higher,” he explained.

Keith Creagh, director, Michigan Department of Agriculture and Rural Development (MDARD) says Michigan’s food and agriculture industry remains core to the state’s economic recovery and reinvention.

“As a $91.4 billion industry, it would rank 47th if it were on the list of Fortune 500 companies. Thanks to Michigan’s crop diversity—coupled with our fresh water access and business innovation—this study further highlights that food and agriculture will be centric to Michigan’s economic reinvention and lay the foundation for regional economies,” Creagh said. “From having an educated talent bank to cultivating a fair regulatory platform, Michigan has worked hard to create an environment where businesses have an opportunity to grow.”

According to the report, Michigan has more than 73,000 full-time farmers and farm workers. That’s 12 percent of 618,000 direct jobs in Michigan’s food and agriculture business sector. Food and agriculture account for 22 percent of all jobs in Michigan when direct, indirect and induced jobs are considered.

The total jobs line showed a downturn overall from 2004 to 2010 with most job losses coming from food wholesale and retail. Jobs in food processing and agricultural production rose more than 6 percent in the same time period.

“It’s not surprising that there were job losses in the service sector,” Peterson said. “Fewer people are eating out, which leads to fewer waitstaff, cooks, restaurant hosts, etc. However, we’re seeing the numbers of new jobs created in food processing plants and on farm continue to increase.”

The study was first conducted in 2006 using 2004 data. Then, the food and agriculture sector was determined to be valued at $60.1 billion. An interim study in 2009 showed an increase in value to $71.3 billion. The newest study shows that the food and agriculture system is on a consistent growth trend.

That’s a surprise to Bill Knudson, product marketing economist with the MSU Product Center and the study’s lead technician.

“Unlike manufactured goods and tourism, food is a necessity, so we knew this sector had the potential to fare better than other industries in an economic downturn,” he said. “But even we were surprised to see the size of the increase despite the global recession.”

The full report and an executive summary are available at www.productcenter.msu.edu.

The MSU Product Center provides coordinated, universitywide assistance to help Michigan entrepreneurs develop and commercialize high-value, consumer–responsive products and businesses in the agriculture, food, natural resources and bioeconomy sectors. For more information, visit www.productcenter.msu.edu or call 517-432-8750.