A few years ago, the Michigan Milk Producers Association added equipment at one of its manufacturing plants, enabling it to dry milk in response to rising export demand for whole-milk powder.
Now the Novi-based cooperative wants to identify other growth areas for the state’s dairy industry, ranked eighth in the nation for milk production. And it’s hoping that a food and agriculture industry initiative moving through the Michigan Legislature will help.
“We see continued growth in the Michigan dairy industry,” said Ken Nobis, president of the approximately 2,000-member association. “It’s the old standbys like butter; the new kid on the block, whole-milk powder. But we’re looking for the next product, too.
“If we get the strategic growth initiative in place, it can help speed that process for our producers here in Michigan.”
Proposed in Gov. Rick Snyder’s budget for the upcoming fiscal year is a $3 million effort to target barriers to business development and growth in food processing, agribusiness and agricultural production. The state would award competitive grants to fund research, education and technical assistance.
The aim is to increase profits, help business expand and boost the $91.4 billion economic impact of the Michigan food and agriculture industry.
“The idea behind this is … how do we find global solutions to help multiple parties in the industry?” said Jamie Clover Adams, director of the Michigan Department of Agriculture and Rural Development.
For example, potential issues could include logistics, the availability of workers trained in food safety and sanitation, and technology needs such as advances in equipment or packaging.
One key focus is examining how Michigan can process more of its own agricultural products within its borders. As of 2012, the state had 1,841 licensed food processors with a total economic impact of nearly $25 billion, ranking it 19th in the nation by the latter measure. But for a variety of reasons, a large amount of crops and livestock are shipped out of state for processing.
Hogs raised in Michigan, for example, are shipped for slaughter to other Midwestern states that have processing plants near central transportation corridors.
“Our geographic location is a little problematic because we do sit out here on a peninsula,” said Dave Armstrong, president and CEO of East Lansing-based GreenStone Farm Credit Services, one of the country’s largest rural lenders and a supporter of the initiative. Armstrong said he sees opportunity to research “additional opportunities that we haven’t fully explored in terms of further processing of our animal products and our fruits and vegetables.”
Clover Adams said an example of how the initiative could help would be to fund a feasibility study assessing animal locations and the best place to build a processing plant, supply chain, product competitiveness, market and distribution issues, and available financing.
The initiative also could be an opportunity for the state to develop relationships with out-of-state processors and learn their perceptions of Michigan and barriers to investment, Armstrong said.
What ultimately could put Michigan in a different light, he said, is emphasizing the state’s strengths — such as corporate tax climate, balanced budget, economic development investment, educational institutions, a strong manufacturing history and workforce, as well as the advantages of the proposed New International Trade Crossing between Detroit and Windsor.
The initiative, which arose from the industry, continues a Snyder emphasis on agriculture and agribusiness.
Could it translate into brick-and-mortar expansions?
“I think that would be our hope,” said Armstrong, who is also a member of the executive committee of the Michigan Economic Development Corp. “That would probably have the biggest impact on diversified job creation, which we desperately need in Michigan.”
MEDC President and CEO Michael Finney said his organization will work with the agriculture department and ultimately bring the MEDC’s pool of incentive dollars to assist with expansions or site locations.
“It’ll be a partnership all the way to closing projects in the state,” Finney said.
The MEDC’s export team also may have a role in the initiative, and its staff could help an advisory board review proposals for grant funding.
The proposal calls for $1 million in general fund money through the agriculture department and $2 million from the Michigan Strategic Fund. The advisory board of food and agriculture industry representatives would identify industry barriers and opportunities for growth, after which a request for proposals would be issued.
“We don’t want to just fund research for research’s sake but what product are we going to get at the end of this,” said Clover Adams of Agriculture and Rural Development. The size of available grants has not been determined.
The initiative is part of the department’s fiscal 2014 budget, which is moving through House and Senate committees and is slated to come up Thursday in the Senate Appropriations Committee’s agriculture and rural development subcommittee.
Amy Lane, Crain’s Detroit Business.