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The New Entrepreneurial Agriculture

Fresh crop of innovative producers makes money, keeps land in farming

June 4, 2002 | By Patty Cantrell
Great Lakes Bulletin News Service

  The Shetler family’s "From Moo to You" milk is well past the break-even stage and supports multiple family members in its business of delivering all-natural, non-homogenized milk in glass bottles to independent grocery stores in the Kalkaska area.

Guided by the invisible and powerful hand of the free market, a new crop of entrepreneurial farmers in Michigan and other states is tailoring production to meet changing consumer demands. The result not only is more profitable farm families but also safer food and farmland free of pavement and pollution.

Such successes depend on switching from conventional farm and marketing practices and breaking into new consumer markets, say economists. The number of money-making farms also could increase if local and state economic development agencies expanded their work to include farmers, according to The New Entrepreneurial Agriculture, a special report on the promising trend by the Michigan Land Use Institute.

Even though agriculture is the state’s second largest industry, economic development officials do not work, on the whole, with farmers. "Their biggest challenge is convincing others in economic development and government that farming is commerce," says Michigan State University agricultural economist Chris Peterson.

"Agriculture could be a very strong area of growth with more focus on it as a business," says Jonathan Scott, economic development director for Mecosta County, who worked with entrepreneurial farmers in North Dakota before moving to Michigan. "It’s an entirely new perspective versus raising crops. It’s about selling products, labeling, processing, packaging. That’s what economic developers need to work on; they need to facilitate that."

Michigan farm families have plenty of untapped profit opportunity that communities can help them realize with market research and business development assistance, says Mr. Scott and other development specialists. According to the Institute’s special report, farm families in communities as diverse as Kalkaska, St. Johns, suburban Grand Rapids, and Goetzville in the Upper Peninsula are earning more money through direct sales, processing, and value marketing.

George and Sally Shetler’s two oldest sons, for instance, returned from city jobs to help build the family’s "From Moo to You" milk-bottling business in Kalkaska. The dairy now is well past the break-even stage and supports multiple family members in delivering all-natural, non-homogenized milk in glass bottles to independent grocery stores in the area.

Michigan’s Advantage
Michigan has a unique competitive advantage in the new entrepreneurial agriculture. The state is second only to California in its broad range of agricultural products — from pears to perennial plants. The state’s farmers also sit within 500 miles of half of the populations of both Canada and the United States.

Even more overlooked are the ready markets right at home. Michigan consumers spent $25.7 billion on groceries and eating out in 2001. Only about 10 percent of that food comes directly from Michigan farmers, according to industry researchers.

Capturing just a tiny fraction more of Michigan’s total food dollars can amount to a lot of money for independent farmers in Michigan who want to stay on their land.

The new entrepreneurial agriculture does not aim to replace the all-encompassing mass food market of large-scale farms, mega processors, and superstore chains. "We will continue to depend in a major way on global markets," says Michigan State University agricultural economist Jake Ferris.

It does, however, aim to claim its competitive place in food and agriculture markets by serving consumers who value the quality many farmers in their area have to offer. The challenge now before Michigan’s local governments and economic development officials is to recognize they have a new and important role in helping more farmers switch from low-return commodity markets to high-profit consumer markets. At stake is nothing less than the future of Michigan’s rural economies, the fate of its reawakening cities, and the influence of its valuable farmland to protect water and wildlife.

New Economic Agenda
"The national trend is that agriculture is going in two different directions," said Dan Wyant, director of the Michigan Department of Agriculture. One is toward larger operations that mass-produce commodities under contract with larger companies. The other direction is toward niche and specialty food markets; toward farmers adding value to their crops with their own processing ventures; and toward locally grown and locally sold agricultural products.

"Michigan is uniquely situated to take advantage of niche, value-added, and local market opportunities," said Mr. Wyant, whose agency oversees the state’s second-largest industry. "We have a lot of diversity in the things we produce, and we have a lot of agricultural production where we have a lot of people, unlike some big rural states that don’t have a large population base."

Some communities in Michigan recognize the opportunity and put essential business assistance behind their valuable farmers.

In Grand Rapids three years ago, apple grower Sharon Steffens responded to low fruit prices not by throwing up her hands but by reaching out for new ideas. The grassroots Ridge Economic Agricultural Partners group she founded has since developed an agritourism guide for the "ridge," a rich fruit-growing area northwest of Grand Rapids. The group also is researching new markets for higher-value, fresh apples and has put area farmers through a business training course with the Michigan Small Business Development Center at Grand Valley State University.

In Emmet, Charlevoix, and Antrim counties at the tip of Michigan’s mitt, the Northern Lakes Economic Alliance is working to maximize local farmers’ market potential. Alliance Director Tom Johnson says putting agriculture back into economic development is a matter of first realizing the opportunity exists and then making it happen. "When you see consumer demand unfulfilled, you go get it. That’s what business is all about," he says.

Michigan communities can look to southwestern Pennsylvania for proof of the possibilities and payoffs of putting agriculture back into economic development. A nine-county agency called the Southwest Pennsylvania Commission launched a novel effort five years ago to keep area farmers on their land by working with them to generate new sources of farm income. The initiative is going so well that it now figures prominently in the region’s economic future.

Among the new farm-to-market initiatives now changing the face of agriculture in southwest Pennsylvania are: A network of 14 farmers markets and farm stands; a project to supply five area school districts with local beef; plans for a major public market in a nearby urban area; and a farm-to-chef partnership.

"Our first goal was to stop the loss of farms," says Allen Matthews, a farmer and staff member of the Pennsylvania Association for Sustainable Agriculture, which has partnered with the commission. "Now our goal is to increase the number of farms."

Movers and Shakers
Like all small business ventures, agricultural entrepreneurs face a range of management, marketing, and financing challenges. Yet many in Michigan are doing their homework, taking the risk, and reaping the rewards of a new consumer-oriented direction.

Newlyweds Terri and Rick Hawbaker and Dawn and Eric Campbell, for example, are two young dairy families in the St. Johns area that now are investing in farmland because they’ve found a way to make more profit per cow. They’re doing it with a grassland grazing system that dairies in New Zealand started developing in the 1950s and have used to become some of the lowest-cost, highest-profit operations in the world. The all-natural grazing system also has set up the families to earn 50 percent more for their milk as certified organic milk producers.

In the eastern Upper Peninsula, Rus and Amy Goetz have come home from jobs and commuter lives in Omaha, Nebraska, to raise their two young daughters close to their Goetzville roots on the Lake Huron shore. The Goetz’ were able to make a profit in their first year of raising poultry on pasture in movable, outdoor pens for local customers who want chicken free of synthetic hormones.

Like hometown banks or specialty retail stores, farms can succeed despite mega mergers all around them. They, too, can do it by adding value to their products with a friendly face or specialty processing, by finding profitable market niches —anyone for goat’s milk yogurt? — and by finding new ways to consumers, such as selling shares in the next season’s harvest. Rather than take what global markets will pay for raw "commodities" — tankers of milk, bulk grain, or mass-produced meat — they can capitalize on new marketing opportunities and keep their families and land in farming.

Patty Cantrell, an economist and journalist, manages the Michigan Land Use Institute’s farmland conservation program. Reach her at
patty@mlui.org. For more of the Institute’s first-rate reporting and commentary on Smart Growth, see www.mlui.org.

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