Agribusiness: growing even while weathering natural disaster

August 20, 2012
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Agribusiness generally doesn’t get much respect among economists looking for economic growth areas except as it pertains to commodities prices, but Grand Rapids Business Journal reporting this week shows plenty of growth among West Michigan food industry suppliers and manufacturers.

The impact of that fact is a marvel, given the unseasonably warm March weather that fostered early budding, only to be followed by the cruelty of April’s killing frosts. It is a business with unparalleled risk, and instant, unforeseen supply price hikes.

The star of agribusiness reporting this week is Michigan Turkey Producers, which is in the process of a $10 million expansion of its Wyoming and city of Grand Rapids plants, adding another 35 jobs to its payroll. While the manufacturer of turkey products is suffering as yet untold supply price hikes as the result of the drought impact on corn and feed products, it also has a successful sales record. It is the world-wide exclusive manufacturer of turkey products to Costco for its Kirkland brand and also sells to locally owned Gordon Food Service.

Old Orchard Brands in Sparta is the second largest frozen and fourth largest bottled juice company in the United States. The family-owned business packs 100 different juices. It, too, is able to move through the unprecedented frost destruction of Michigan fruit products while maintaining its sales ability.

The Right Place Inc. is one economic development group to have long tracked agribusiness in the region, and often refers to the “triangle” represented (largely) by Kellogg in Battle Creek, north to Nestlé’s Gerber products in Fremont and firmly anchored by a wide array of agribusiness firms in Grand Rapids.

The Right Place notes in recent reports the agribusiness sector produces one-third of Michigan’s total agricultural sales, contributing $1.5 billion to the regional economy. (Michigan’s agricultural diversity is second only to California within the United States.) The Right Place estimates this sector is the source of more than 26,000 jobs, making “West Michigan’s agricultural and food-processing clusters among the top 25 percent among U.S. peers.”

Yet, the industry, which as a whole is tight-lipped and plays things close to the vest — likely due to competitive reasons — gets about as much respect as Rodney Dangerfield.

When manufacturers go under, when the bulk of the tool and die industry disappears or when auto suppliers take lengthy production breaks, the gnashing of teeth is heard throughout the state. When the agriculture industry suffers its worst weather-related setbacks in decades — what Old Orchard’s Mark Saur calls “cataclysmic weather events” — politicians squabble over whether farmers deserve low interest loans.

One would think a business sector that contributes $1.5 billion annually to the regional economy could garner a little more respect.

As a fundamental sector of the regional economy, these local business owners have much to contribute to the discussion of business survival tactics.

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