Feature: MSU Agri-Food Product Center Spurs Economic Development
The state agri-food sector—a fifth of the Michigan economy—is booming thanks in part to MSU’s Product Center for Agriculture and Natural Resources and a vast complex of university resources.
Agricultural and natural resource businesses have always been a significant part of Michigan’s economy. As a land-grant institution, MSU was founded to help develop the state’s critical land-based resources. The MSU Product Center for Agriculture and Natural Resources is a prime example of how MSU fosters economic development in the state.
Some might be surprised to know that agriculture is Michigan’s second-largest industry, after automobile manufacturing. With an estimated yearly economic impact of $71.3 billion in 2007, agriculture is clearly a force for economic stability. Our new economic impact study shows that agriculture in Michigan grew 12 percent between 2006 and 2007—five times the growth rate of the general economy. Overall Michigan’s agri-food system represents almost 20 percent of the state’s overall economic activity and employs close to a quarter of the state’s work force. This includes related industries such as nursery, turfgrass, ethanol, ornamental plants, food processing and food retailing.
An economic sector of this scope doesn’t happen by chance. The agri-food system has reaped the benefits of research and extension efforts supplied by MSU. The complex of university resources dedicated to the system includes the College of Agriculture and Natural Resources (CANR), the Michigan Agricultural Experiment Station (MAES), and MSU Extension (MSUE). Hundreds of faculty and specialists over multiple years have created and then applied advances in seeds, farming procedures, handling and storage methods, food processing and packaging, and so on.
State-level initiatives like Project GREEEN (Generating Research and Extension to meet Economic and Environmental Needs) and the Animal Industry Initiative have buttressed the system. Both initiatives have put faculty and specialists in place to carry out research and extension efforts that directly contribute to the growth of the state’s agri-food economy.
Amid this vast array of resources, the MSU Product Center provides coordinated, university-wide assistance to help Michigan entrepreneurs develop and commercialize high-value, consumer-responsive products and businesses in the agriculture, food, natural resources and bioeconomy sectors. It’s a single gateway for Michigan entrepreneurs to access MSU expertise.
The Product Center was created in 2003 by CANR, MSUE, and MAES. It is a unit of the Dept. of Agricultural, Food, and Resource Economics. On the food and agriculture side, primary funding comes from Project GREEEN. Additional funding for a new program supporting bioeconomy ventures comes from the MSU Office of Biobased Technologies.
Product Center clients receive all types of support services for developing their ventures. The most basic service assists a new entrepreneur or an existing business to develop a business or product concept that focuses on the innovative idea being introduced, the real market potential for the idea, and an assessment of the entrepreneur’s drive to take the idea to market. More advanced services help the entrepreneur or business with developing a business plan and arranging for specialized services to test the product and its marketability. Research analysts are also available to prepare specialized product and industry studies for clients as well as commodity groups, industry associations, and other public and private organizations. Clients have access to the expertise of MSU faculty and staff, including a network of about 30 Innovation Counselors and Educators, primarily MSUE county and regional educators.
The Product Center partners with local and state agencies, not-for-profits, community and industry leaders, private companies and individual consultants. The Michigan Partnership for Product Agriculture (MPPA), a consortium of the state’s general agriculture, agri-business, government, commodity, research and educational organizations, has been a key partner and sponsor. The Michigan Dept. of Agriculture (MDA), Michigan Farm Bureau (MFB), and Michigan Food and Farming Systems (MIFFS) are lead partners within MPPA. Other examples of longterm partners include the Michigan Small Business Technology and Development Centers (SBTDC), and MSUE’s Economic Development Area of Expertise Team.
The Product Center has helped numerous Michigan-based businesses. For example, the Product Center helped four fishing companies form a cooperative—a move that assisted the state’s whitefish industry in getting its product into Michigan retail stores.
The Product Center and the Michigan Sea Grant program created a strategic plan for the four fishing companies to form the Legends of the Lakes Cooperative. The venture established high standards for harvesting and processing whitefish, while combining marketing efforts under one label, Legends of the Lake.
Using funds from its USDA Cooperative Development Program grant, the Product Center helped create the cooperative, then found and developed new markets using a distinctive label and package as a method of promotion for their unique whitefish fillets. The Legends of the Lakes cooperative has nearly doubled profits from wholesale pricing and has stocked local retailers’ shelves with their product.
Another example involves the 16-member Michigan Turkey Producers Cooperative, some of whom’s businesses date back to the early 1900’s. In the late 1990’s, their meat processor decided to exit Michigan, leaving them without a market. In 19 months, the producers raised $16 million, borrowed a like amount, and, in 1999, completed the construction of a raw meat processing facility, and started business. In January 2006, the cooperative completed a $21 million expansion to produce cooked meat products. The Product Center provided guidance during the transition from raw meat to cooked processing and served on a steering committee to investigate possible new turkey products for the foodservice market. During the course of this study, the Product Center recognized that the Cooperative would need a cook plant to be competitive in this market. The Product Center provided funds through its Agriculture Innovation Center for development of the plant’s food safety plan and final testing to assure the sanitation of the plant prior to start-up. In July 2006, the Product Center completed an analysis of the Cooperative’s capital plan to help set the stage for expansion of the production of turkeys to supply both the raw and cooked meat processing facilities. By June 2006, MTPC sold 2.3 million pounds of cooked products and successfully brought all co-packed products back in house by the following April. The goal for the year ended June 2007 was to hit or exceed the 7 million pound mark.
Entrepreneur Paul Siers turned to the Product Center for help with his “Autumnberry” fruit products, a newcomer to the fruit product retail line. He started work with the Product Center through his Innovation Counselor, Isabella County Extension Director Paul Gross. This help included everything from harvesting techniques to new products. Using funds available through the Product Center from a USDA Agriculture Innovation Center grant, Siers developed concepts for several new products. The product development work was coordinated at the Product Center. Siers says, “I now have a number of new products that have been analyzed for their nutritional value and tested through the Michigan State University Department of Food Science and Human Nutrition Sensory Laboratory. This gives me a number of opportunities for the future growth of my business.”
Barbara Jenness of Dancing Goat Creamery, the first farmstead Grade A goat cheese producer in Michigan, is yet another example of a Michigan company helped by the Product Center. Jenness received assistance from the Product Center in the development of her business plan, the planning and licensing of her production facility, marketing assistance, package design (through a School of Packaging capstone course—see sidebar), and customer contacts. She currently has a small herd of 15 goats on 2 acres of property that she milks herself twice a day and produces approximately 60 lbs. of chevre cheese per week. Most of this is sold to local Grand Rapids upscale restaurants. She is so successful that she is struggling to keep up with the demand for her product. She also makes and sells soaps made from goat’s milk and herbs she grows in her own garden. The soaps are sold in various stores and shops in the Grand Rapids area. Barbara’s fresh chevre cheese won second place in the farmstead goat cheese category at the 2008 American Cheese Society Conference.
The Product Center is ever vigilant to findnew ways to serve the economic development needs of Michigan. For example, we added two new programs in 2008. The first of these is Michigan MarketMaker (www.mimarketmaker.msu.edu). MarketMaker is an interactive website designed to connect food producers, processors, distributors, buyers, retailers and consumers. The on-line demographic and business information is provided on maps so that market concentrations can be visually located. The site allows both buyers and sellers of food products to find each other. We are in the process of registering producers who have consumer-direct products.
The second of our new programs serves the bioeconomy—the complex of industries and firms emerging to replace petroleum-based commercial and industries products with biomass inputs. The Product Center has already assisted a number of bioeconomy firms (e.g., ethanol and biodiesel). The future however will demand that we develop more tailored services for these firms competing in dramatically different markets than our traditional food, agriculture and natural resource clients. As a result, the Product Center is launching a new program specifically designed to service bioeconomy ventures in bioenergy, biomaterials, biochemicals, and biopharmaceuticals. The Product Center will build on its successful model of forming new partnerships with internal and external experts to deliver a similar array of services to new bioeconomy clients.
? Chris Peterson is the Homer Nowlin Chair of Consumer-Responsive Agriculture and professor of Agricultural, Food and Resource Economics at MSU. He is director of the MSU Product Center for Agriculture and Natural Resources. He serves on the advisory board of the Michigan Small Business and Technology Development Centers.
ECONOMIC IMPACT OF THE PRODUCT CENTER
Since 2004, the Product Center has provided educational programs to some 3,000 participants, more than 11,500 one-on-one counseling sessions, and helped more than 2,200 clients with business development, venture planning, or specialized services such as product testing, marketing analysis and feasibility studies. The Product Center activities have led to127 known new businesses and business expansions.
Economic impacts from these new businesses and expansions are estimated as follows:
? Increased annual sales: $193.6 million (cumulative first year sales only)
? Value of increased investment: $201.3 million
? Jobs created: 606
? Jobs retained: 348
MSU CAPSTONE COURSES AND ECONOMIC DEVELOPMENT
A capstone course gives students an opportunity to apply what they have learned in the classroom to solve a real-life, industry problem.
Dianne Novak, specialized services consultant for the MSU Product Center, matches customers with capstone courses. “We try to provide solutions to a wide range of issues needed to ensure product success in the marketplace,” says Novak. “Specific capstone class projects range from assisting with strategic market analysis to product packaging solutions to marketing image.”
So how does it work? Meet Linda Hundt, owner of Sweetie-licious Pie Pantry in DeWitt. “I served all my pies fresh from the oven in my pantry, but when I wanted to expand into internet sales, I had to learn how to preserve my pies to keep them fresh through the shipping process so my customers, no matter where they are, can experience the nostalgia of delicious home-made pies,” she explains.
Enter Capstone. After a semester’s work, students determined that her best option was to freeze the pies before shipping. The students actually shipped frozen pies through commercial carriers to test the effectiveness of various container options. Linda now has a container that will meet her needs, while the students have the practical experience of having solved a business problem—a nice resume builder.
You can learn more about Hundt’s bakery at www.sweetie-licious.com. --Tom Kalchik, associate director of the MSU Product Center.