Trends in Michigan Agriculture and Food Processing

Agriculture, prominent in the early settlement of Michigan in the 1800s, was joined by food processing in the 1900s to become a major component of the economy even as the auto industry became predominant. Michigan farmers have adjusted to new opportunities and have taken advantage of the unique aspects of the soils and climate to generate a very diverse system of crops and livestock. The close rural-urban interface is mutually beneficial to the agricultural/food processing complex and the rest of the state. The interdependence of agriculture and food processing suggests that they be considered in combination in evaluating trends and prospects for both. The state being well suited for forage production and with an expanding urban population, dairying became the most important enterprise. New hybrids pushed corn production to far exceed the livestock requirement of the state, stimulating cattle feeding, hog and turkey production. Michigan farmers have competed more effectively in the national scene with crops than with livestock, particularly on soybeans, sugarbeets and ornamentals. Real value added by food processors in the state increased over time with the strongest performance relative to national totals in dairy processing. While some recent trends have been negative, agricultural production and processing remain as a key sector in the economy. Broadly defined, the output of this sector totaled $27 billion annually in the late 1990s if backward linked industries supplying agriculture and food processing are included; $37 billion if wholesaling and retailing are added. Agricultural production and processing employed nearly 100 thousand directly and an additional 100 thousand in backward linked industries; a total of over 500 thousand if direct and indirect effects of wholesaling and retailing are compiled. The expanded 500 thousand jobs represent nearly 13 percent of total employment in the state. Besides its strong presence in the state, the agricultural production and processing sector provides diversification to an economy heavily dependent on durable goods industries, principally motor vehicles and parts. Cycles in agriculture are not highly correlated with the business cycle which swings Michigan's economy more than other states. Efficiencies in agricultural production have resulted in lower real farm prices, contributing to reduced level of inflation in food prices. Also, farmers perform key roles as stewards of the Michigan landscape. A tradition in Michigan agriculture and the food business has been entrepreneurship and innovative leadership which will be essential for the future.