EAST LANSING, Mich. — Michigan’s economy is facing many challenges, including recent news about factory closings and layoffs among automotive industries and others. But there is some good news in one key sector, according to an analysis by economists with the Michigan State University Product Center for Agriculture and Natural Resources.

 “The Economic Impact and Potential of Michigan’s Agri-Food System” highlights how the agri-food system has the potential for adding nearly $1 billion to the state’s economy if current investment trends continue over the next three to five years.

The paper, released in January, examines economic contributions from agriculture and related industries, including leather, nursery, turfgrass, ornamental plants and food processing. This total food and fiber system has a $60.1 billion impact each year on the state’s economy.

“This is the first time a study of the economic impact, including investment and future potential of the agri-food system, has been completed,” says Bill Knudson, product marketing economist with the product center. “The idea was to look at areas that show potential for growth and what could exist.”

The paper highlights how the state’s agri-food system also employs nearly one quarter of all employed Michiganians. More than 725,000 of these workers are directly employed in the industry; others are employed indirectly in related sectors, such as transportation. Agri-food is the state’s second largest production sector, behind the automotive industry.

“These findings underscore that Michigan’s dynamic agricultural industry — with its robust capital investment and new technology — is growing and diversifying our state’s economic base,” said Mitch Irwin, director of the Michigan Department of Agriculture, who requested the study. “MSU’s conclusions bode well for Michigan’s future.”

The findings show a strong potential for development of a bioenergy industry. Bioenergy includes production of fuels from natural sources, including corn-based ethanol and soybean-based biodiesel, but it also includes electricity generated from wind energy.

Currently, Michigan’s only ethanol plant produces 45 million gallons of ethanol per year, directly adding $64.5 million to the economy. Plans for four additional plants are under way, along with the possibility of a biodiesel facility.

The paper includes two scenarios for potential expansion across the agri-food system, one based on knowledge of current investments in the system and a second based on a more generic pattern of investment. Both show the potential for considerable economic growth —nearly $1 billion per year over the next three to five years — and increases in jobs of more than 23,000 annually from direct and indirect sources. 

“Certainly all of Michigan’s economy is now facing significant challenges,” says Chris Peterson, director of the product center and the paper’s lead author. “What this paper shows is that as we look for opportunities to expand and grow industries within our state, we need to be mindful of what we have and the potential for further developing our already strong food, fiber and agricultural production.”

“The Economic Impact and Potential of Michigan’s Agri-Food System” is available online at the MSU Product Center for Agriculture and Natural Resources Web site. Visit http://www.aec.msu.edu/product and click the link to the Strategic Marketing Institute.

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The MSU Product Center for Agriculture and Natural Resources is organized to provide coordinated, universitywide assistance for agriculture, food and natural resource entrepreneurs and managers in improving economic opportunities for Michigan. The center’s mission is to envision, explore and empower a profitable future for businesses and industries engaged in Michigan agricultural, food and natural resources systems.