MSU Study Shows 12 Percent Growth in Michigan Agri-food Industry

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A new report from Michigan State University found one bright spot in Michigan’s battered economy—the food and agriculture industry.

According to the report from the MSU Product Center for Agriculture and Natural Resources, Michigan’s second-largest industry experienced 12 percent growth in 2007, the year the study was conducted.

“Agriculture is a force for economic stability in Michigan, with yearly economic impact estimated to be $71.3 billion, on the basis of data from 2007,” said MAES scientist Christopher Peterson, who serves as director of the MSU Product Center and is one of the study authors. “This represents a $7.6 billion increase from the $63.7 billion impact projected in an analysis of 2006 data released last year.”

The study, “Second Interim Update on the Economic Impact of Michigan’s Agri-food and Agri-energy System,” considers economic contributions from agriculture, food and related industries, including nursery, turfgrass, ethanol, ornamental plants and food processing.

“Michigan’s agri-food system represents almost 20 percent of the state’s overall economic engine, making it the second-largest industry in Michigan, and it employs a quarter of the state’s work force,” said Don Koivisto, Michigan Department of Agriculture director. “This report further underscores the importance of this growing industry in rebuilding and diversifying Michigan’s economy.”

The study shows the agricultural economy expanding at a rate more than five times the growth rate of the general economy (11.9 percent versus 2 percent) between 2006 and 2007.

“If Michigan’s agri-food sector appeared on the Fortune 500 list, it would rank 55th,” Koivisto said. “To me, that speaks volumes about the vitality of the state’s dynamic food and agriculture business sectors, and the intrinsic role it plays in our state’s economic health.”

Evidence also suggests that employment in the agri-food system has increased since the last economic census data was made available in 2004.

“Our last analysis showed Michigan’s agri-food system accounting for 1.05 million jobs, both directly and indirectly,” said William Knudson, product market economist for the MSU Product Center and the study’s lead author. “We won’t have updated job figures until 2010, but signs point to job growth putting Michigan jobs related to agri-food well over 1 million.”

Knudson cautioned, however, that the agri-food industry may have hit its peak for the next few years.

“Food is a necessity, so the agri-food industry, unlike tourism and manufactured goods, may fare better than other industries in an economic downturn,” Knudson said. “But the system is not immune to the impacts of the global recession.”

The MSU data further support growth trends demonstrated in the recently released U.S. Department of Agriculture 2007 Census of Agriculture, which showed a $2 billion increase in farm gate sales since 2002.

The study is available online.

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