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MSU: Michigan ag & food up $20 billion in two years
Michigan Correspondent

LANSING, Mich. — A Michigan State University Product Center report, released last week, highlights the growing importance of the food and agriculture sector in Michigan. The Economic Impact of Michigan’s Food and Agriculture System showed an increase in value of the state’s food and agriculture sector to $91.4 billion, up from $71.3 billion in 2009.

The announcement was made at the April 11 meeting of the Michigan Department of Agriculture and Rural Development (MDARD) Commission.

“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,” said Chris Peterson, Product Center director. “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 attributed the jump in value to the worldwide increased demand for food. “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, (that has) pushed the food price higher,” he said.

The report is part of a series the Product Center has been conducting for more than 10 years. The first such study was in 2000. The study was redone in 2006, that time using 2004 data; that one showed the food and agriculture sector to be worth $60.1 billion.

An interim report was issued in 2009. It showed an increase in value, also to $71.3 billion. This latest study, which uses data from 2010, shows another big increase. In percentage terms, it’s a 51.9 percent jump from the 2006 study and represents a compound annual growth rate of 7.22 percent.

Some of the findings surprised Bill Knudson, a product marketing economist at the Product Center and lead author on the study. “I was more surprised by the amount of the increase at the farm level,” he said. “It showed that they were able to pass on the increased commodity prices.”

The report revealed there was a $7.2 billion farm direct impact. As jobs go, the food and agriculture sector employs 923,000 people, the report revealed; that includes direct, indirect and induced jobs.
Knudson said indirect jobs are those created within the sector that are “backward-linked industries.” These could be more jobs at a milk processing plant created because of an increase in dairy farming, as one example.

Induced jobs are those created throughout the economy. This could mean, for example, farmers who have more money because their farm businesses are prospering purchase more haircuts, which leads to that business owner having to hire an additional barber.
Overall employment in the food and agriculture sector declined by just under 112,000. It’s thought the loss of jobs overall is attributable to the foodservice sector, especially the restaurant industry which has been hit by the bad economy. The report also revealed ethanol sales in Michigan were approximately $560 million. The total economic impact of ethanol production, including corn and related indirect and induced effects, was $640 million.
Knudson said there was a lot of business at the commission meeting, so there wasn’t a lot of “hoopla,” but “people are impressed with the size of the agri-food sector.”