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Michigan agri business is booming
Michigan has taken it on the chin in the manufacturing sector, but it’s a different story down on the farm.
“Aside from a couple (sectors) — dairy being most notable and fruit production being another challenged area — everybody else is basically doing extraordinarily well,” said Jim Byrum, president of the Michigan Agri-Business Association.
“The irony is, Michigan’s probably ahead of the curve on some of the trends” in U.S agriculture, said Byrum, referring to positive trends in business.
Byrum, who will be speaking at the Association for Corporate Growth in Grand Rapids Nov. 17, heads an organization of about 500 businesses involved with fertilizer, pesticide, seed, feed and grain, retail, wholesale and manufacturers, and also renewable fuels, “as well as some very large farmers, and some food processors, as well.”
Agri-business in Michigan is a $70 billion-plus industry, employing about one million people when all food processing businesses are added to the count, according to Byrum.
To illustrate the growth of agriculture in Michigan in the last few decades, he notes that in 1970, Michigan farms produced about 172 million bushels of corn, soybeans and wheat.
“This year, in 2010, we’ll produce over 500 million,” he said. “There’s a real message there.”
With corn now commanding a high price of roughly $5 per bushel and some Michigan farmers enjoying a bumper crop of up to 220 bushels per acre this year, “the gross is astounding and the net is almost a wonder in itself,” he said, adding that the same is true for soybeans and wheat.
The pork industry was in recession a year ago, due largely to consumer fears related to swine flu, but now pork “has come roaring back,” said Byrum, with bacon commanding record retail prices.
“Outside of dairy and fruit producers, farmer balance sheets probably have never looked better,” said Byrum.
Fruit growers’ woes were the result of a frost in the late spring that reduced the crop, while U.S. dairy industry prices have been low for years now.
The increasing standard of living in Asian countries, notably China and India, has those populations demanding more protein as opposed to starch, according to Byrum, so much of the world’s corn production is going into feed for pork and poultry.
“Five years ago, China was a huge exporter” of corn, he said. “Now they are an importer,” trying to feed hogs and poultry.
Byrum said Michigan doesn’t actually export as much corn, wheat and soybeans as the farm states on the major rivers in the central U.S., where bulk river shipping is possible directly to the Gulf of Mexico and from there to foreign markets. He indicated that Great Lakes access to the Atlantic isn’t as efficient as the river routes.
But Michigan grains do leave the state: “We backfill feed markets all the way to California and to the Carolinas,” he said.
Michigan does, however, export “tremendous amounts” of dry beans, plus edible soybeans, fruit and even some turkey meat, which is also a commodity.
Last week, Byrum was in Mexico City to meet with representatives of the black bean buyers there.
“We export a couple million hundred-weights of black beans to Mexico,” he said. Black bean production in Michigan was practically unheard of before the mid-1980s, he said, but pea beans have long been a major crop in the Thumb area in Michigan. Burnham & Morrill of Portland, Maine, which produces the famous B&M Brick Oven brand of baked beans, has used Michigan beans for generations.
The residential and commercial construction industry in Michigan continues to languish, a reflection of the recession and job losses since 2000. However, one sector in the construction industry here can’t keep up with demand: companies that produce grain storage facilities. Byrum said he believes Michigan will “produce, potentially, a lot more grain next year,” and “we’ll need places to put it.”
Over the last 10 years or so, he said, Michigan farmers often have been forced to store some of their corn crop outside in huge temporary piles. “I have one member who has 3.5 million bushels of corn stored outside in piles, even as we speak,” said Byrum in late October.
“If more grain is produced, it will take more (infrastructure) capacity to handle it and store it,” he said, noting that he did a survey recently that showed that “millions more bushels of storage capacity was built this year and they’re going to have to do it again next year.”
Another type of agri-business infrastructure construction that may increase is food processing plants.
“We are going to see more food processing in Michigan. We have to,” he said, because Americans have heard too often about food improperly processed in other countries. “People want to see it processed here. We have the demand,” he said, mentioning the local food movement that is growing around the U.S.
Members of the Michigan Agri-Business Association “spent a half-billion dollars on infrastructure” in 2010, he said.
Michigan also may be facing an opportunity to produce crops that have mainly been grown in the southwestern U.S., where water for irrigation is becoming harder to get.
“If we can grow it (in Michigan), people will prefer that it be processed here,” he said. “We’ve got to exploit that opportunity.”
Another trend in U.S. agriculture that is very evident in Michigan is a continuing increase in the number of very large farms. The percentage of farm land in Michigan that is controlled by “very large farmers is increasing,” said Byrum, while the number of farms in the middle-range — 300 to 2,000 acres — “are decreasing as the large get larger.”
However, there is also an increase in the number of very small farms of just a few acres, he said.
The roots of the Michigan Agri-Business Association go back to 1903, with the founding of its forerunner, the Michigan Grain Dealers Association. Over the years, the association’s name has changed, reflecting the merger of other associations, including the Michigan Agrichemical and Fertilizer Association in 1990. The primary interests of the association is to further the development and prosperity of businesses involved in or with agriculture.
The Association for Corporate Growth event Nov. 17 will take place at Kent Country Club, 1600 College Ave. NE. The program runs 7:30-9 a.m. The cost is $20 for members and $40 for nonmembers. Advance reservations are required by Nov. 15 by calling (616) 732-7149.