Office of Agriculture Development
Michigan Department of Agriculture Goals

1. Establish and strengthen partnerships to ensure that MDA meets customer needs and addresses emerging issues.
2. Work to ensure a safe food supply.
3. Work with stakeholders to promote environmental stewardship.
4. Support economic fairness in the market place.
5. Support and promote viable agriculture and food industries in Michigan.
6. Meet the needs of its internal customers.
7. Provide timely, accurate, and pertinent information to our internal and external customers.

During 2000, the Michigan Department of Agriculture continued to place a strong emphasis on its four bedrock priorities: food safety, environmental stewardship, consumer protection and development of the agricultural economy.

The Office of Agriculture Development (OAD)

The Office of Agriculture Development (OAD) was created by Director Dan Wyant in April 1997 as part of a process to streamline the Michigan Department of Agriculture (MDA). Strengthening the family farm and enhancing opportunities for the food and agriculture industry, especially in rural Michigan, continues to be the primary mission of OAD in the Michigan Department of Agriculture. The division plays a key role in this effort by assisting in the creation and implementation of unprecedented alliances among private industry, farmers, non-profit groups, government and academia to create new opportunities in the areas of rural development, sustainable agriculture and agricultural economic development.

Office of Agriculture Development Mission Statement

The Office of Agriculture Development serves as a catalyst for improving the economic and environmental sustainability and viability of Michigan's food and agriculture industry by ...

• strengthening and enhancing agriculture support businesses and production agriculture opportunities;
• encouraging the use of alternative technologies/practices and;
• promoting local community-based development.

The Rural Development Council of Michigan (RDCM)

The Rural Development Council of Michigan is located within OAD as part of MDA. In January 1993, Governor John Engler signed a memorandum of understanding with the National Rural Development Partnership to create the Rural Development Council of Michigan (RDCM). RDCM is a public/private partnership charged with developing new, collaborative approaches to enhance the future of rural Michiganians. RDCM, an umbrella organization, continually promotes the membership and active participation of six partner groups: private for-profit and non-profit interests, local, federal and state governments, and Native American tribes. The major emphasis of the Council's work is innovation and collaboration: finding new, non-traditional, non-structural ways to address issues, problems and needs of rural Michigan. The Council identifies barriers to rural development, brings together resources, and coordinates issue resolution.

Sustainable Agriculture

--Michigan Organic Products Act

The Michigan Organic Advisory Committee and OAD staff met monthly to draft legislative language that would implement recommendations contained in their strategic plan, Advancing Organic Agriculture in Michigan. They completed their work in May of 2000, just prior to, Senator Leon Stille introducing Senate Bill 1273, "Michigan Organic Products Act". The bill was acted upon quickly by both the Senate and the House, and on October 19, 2000, Governor John Engler signed into law PA 316 of 2000 creating requirements for organic products. The Act creates a regulatory framework to protect consumers, producers, and handlers of organic products, as well as to protect against false labeling, misleading advertising and fraudulent practices in the marketplace.

The Act creates provisions to:

• Prohibit a person from selling or representing an agri- cultural product as an organic product unless it had been certified.
• Require certification, by a certifying agent, of a producer who sells organic products to the public; a handler; or certain handling operations.
• Exempt, from certification or registration requirements, handling operations that do not process, produce, or relabel organic products under their own name or for private label; and retail food establishments who only receive and/or sell organic products in their final retail form.
• Require a person who wants to be a certifying agent to register with the Michigan Department of Agriculture (MDA), pay an annual registration fee, and meet cer- tain certification requirements.
• Require that handlers who sell or represent agricultural products to be organic, register their products with the MDA and establish a schedule of registration fees based on gross organic sales.
• Require the MDA Director to adopt organic standards that meet or exceed Federal organic standards. In the interim, the standards of the Organic Growers of Michi- gan or the Organic Crop Improvement Association will be used. Final standards will be promulgated by rule.
• Create the Organic Advisory Committee within the MDA to assist in the development of organic standards; review and recommend rules governing organic pro- duction and handling; review organic product and cer- tifying agent registration programs; and recommend actions to promote organic products.
• Create the "Organic Products Fund" and allow money in the Fund to be used to administer and enforce the proposed Act, and to develop and improve organic train- ing and education programs.
• Require the labeling and advertisement of organic prod- ucts to comply with requirements in the bill and interim and final standards.
• Permit the Director to deny, suspend, or revoke a reg- istration for a certifying agent or a handler, and to seize an organic product that does not comply with require- ments in the bill and interim and final standards.
• Permit the Director to issue and enforce a stop sale order to prohibit the sale, processing, or movement of an organic or agricultural product determined to violate the standards.
• Establish misdemeanor and felony penalties for persons who violate the requirements in the bill and interim and final standards, and permit the Director to impose an administrative fine for a violation.

--Michigan Organic Advisory Committee

The Michigan Organic Advisory Committee with lead- ership from OAD staff, provided draft legislative language which will help promote and market Michigan organic products. The language was designed to compliment the Michigan Organic Products Act. It establishes organic foods as a commodity, and creates a mechanism for the Michigan organic industry to self-access themselves. Revenues collected would be used to promote Michigan organic products and/or conduct organic research. This work completes the legislative recommendations contained in the Organic Advisory Committee's strategic plan

--MIFF Marketline

OAD provided staff to the Michigan Integrated Food and Farming Systems (MIFFS), Marketline project. MIFFS is a non-profit organization whose purpose is to promote diverse community efforts to sustain food and agricultural systems that improve economic, ecological and social well being. Its focus is on farming practices, marketing, farmland preservation, education and community organizing. To help create new linkages, MIFFS established "Marketline". This is an USDA-MDA funded direct marketing project. "Marketline's" principal focus has been the development of a website, where small to medium sized buyers and sellers of locally grown farm products and farm-based recreational opportunities can be identified. This Internet directory currently targets both wholesale and retail establishments on and off the farm. It lists products and services by county and provides directions and other contact information to locate local sources or supplies. Staff assisted in preparing materials and website, making presentations, serving as a member of the Advisory Committee, and writing weekly promotion pieces posted to a listserv. Since the website became operational in late October, over 125 Sellers and

50 Buyers have been added. The Marketline website can be viewed at: http://www.miffsmarketline.org

--North Central SARE Council

OAD staff continues to serve as the state agency representative to the North Central Sustainable Agri- culture Research and Education Administrative Coun- cil. For the years 2000 and 2001, she serves as Chair of the Council. The NC-SARE program has awarded more than $10 million worth of competitive grants to farmers and ranchers, researchers, educators, public and private institutions, nonprofit groups, and others exploring sustainable agriculture in 12 states. Illinois, Indiana, Iowa,Kansas, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, South Dakota and Wisconsin are members of the NC-SARE. Its purpose is to foster site-specific, integrated farming systems; satisfy human food and fiber needs; enhance environmental quality, natural resource conservation and the integration of on farm and biological resources; enhance the quality of rural life and support owner-operated farms; protect human health and safety; and promote crop, livestock and enterprise diversity and the well-being of animals.

--MDA Comments on Federal Organic Standards

At the request of MDA Director, OAD drafted comments from the Michigan Department of Agriculture and the Michigan Organic Advisory Committee to the USDA, AMS for 7 CFR Part 205 [Docket Number: TMD-00-2-PR2], National Organic Program; Proposed Rule. Forty- one specific comments were provided to USDA. Alternative language to further clarify issues surrounding labeling, production, allowable materials, accreditation, and state authorities was suggested to close exemptions, exclusions, and authorities contained in the rule.

Rural Development Council of Michigan

--Rural Partnership Conference

The Rural Development Council of Michigan, in partnership with 13 other organizations, sponsored the 2000 Rural Partnership Conference - Michigan's Rural Resources: A Foundation for Successful Community Development. The conference was held on April 12 - 13, 2000, at the Shanty Creek Conference Center in Bellaire, MI.

Several issues facing rural Michigan were highlighted during this two-day conference. Such issues included: preparing rural Michigan for the 21st Century, learning to build a community's capacity, partnering with the timber industry throughout Michigan, capturing a community's economic dollars, adding value to agricultural resources, building a thriving community around a community's natural resources, and capitalizing on the digital revolution.

The 2000 Rural Partnership Conference was co-sponsored by the Rural Development Council of Michigan, Michigan Department of Agriculture, Saginaw-Chippewa Indian Tribe of Michigan, Michigan Association of Regions, Michigan Family Independence Agency, Michigan State University Extension, USDA - Rural Development, USDA - Farm Service Agency, Wade-Trim, Inc., Michigan Farm Bureau, Detroit Edison, Consumers Energy Company, Great Lakes Oil Company, and Michigan Economic Development Corporation.

--Mendon Heritage Schoolhouse Project

The former Mendon High School building, a historical community landmark built in 1905 in St. Joseph County, has been vacant and boarded up for a number of years. Rather than razing the structure, a group of community leaders have been exploring renovation of the building and finding ways to utilize it for various community needs. The community requested assistance from the Rural Development Council of Michigan in facilitating community support for the project and to provide input as to a possible course of action.

The renovation plan was developed by a steering committee comprised of dedicated, actively involved individuals from Mendon and surrounding rural areas. The RDCM was asked to help facilitate a community meeting, attended by over 75 local citizens. RDCM helped groups of attendees identify the building's assets and liabilities, with regard to the project, and developed ideas for a vision for future use of the school. A report was completed by RDCM and submitted to the community, summarizing the results of the meeting as well as recommendations for next steps in developing a business feasibility plan for the project.

As the community and project leaders continue to move forward with this project, RDCM will continue to provide additional assistance in outlining the next course of action and the development of a clear strategy for broadening community support and ownership of the project. Continued assistance is being provided as RDCM assists with completion of a business feasibility plan, and in pursuing a funding strategy in accordance with the business plan.

--Ultimate Land Use Conference

The Rural Development Council of Michigan helped organize The Ultimate Land Use Conference, which was sponsored by twenty-four organizations and held on February 28 & 29, 2000, at the Kellogg Center in East Lansing, MI. More than 500 people attented. Participants included local officials, state legislators, farmers, builders and others concerned about land use issues. Topics included strategies for urban redevelopment, innovative designs for new housing developments, transportation and infrastructure planning, the role of business in community growth and various farmland preservation strategies. The conference served as an educational tool as well as a professional development opportunity for many local leaders.

--SChip Programs

Throughout the year 2000, the Rural Development Council of Michigan continued its work on the State Children's Health Insurance Programs (SCHIP).SCHIP started in 1999, but the Council's efforts have expanded to include several other counties. The Rural Development Council of Michigan held a MI Child meeting in Roscommon County in February 2000. During such meetings, RDCM board members promoted the MI Child and WIC program for children.

The first seminar was held in Clare County and the second was in Roscommon. Forty-five individuals attended these public meetings. Meeting attendees included individuals from churches, public and private schools, the health department, county commission and housing commissions. At least seven other counties have asked for similar seminars, offered with the community-based approach. The Council also submitted a grant, in partnership with the Michigan Center for Rural Health, to the National Center for Rural Health. The grant was accepted, and funding will be available in the next year to broaden the approach to additional communities.

--Ultimate Farmland Preservation Bus Tours

The Rural Development Council of Michigan co-sponsored and helped organize two Ultimate Farmland Preservation Tours during 2000, which included 275 participants. The first tour of the year was held March 30-April 3, 2000 and the second tour was held September 14-18, 2000. The five-day bus tour of seven counties throughout Maryland, New Jersey and Pennsylvania allows participants the opportunity to get a first-hand look at some of the best farmland protection tools and sustainable development strategies in the country. Nearly 650 people have been a participant on the five UFP Tours held to date.

The tour highlights communities that have successfully utilized transfer of development rights, purchase of development rights, agricultural security areas, effective agricultural zoning, urban growth boundaries, smart growth strategies and innovative urban development options to address various land use issues. Sponsors of the highly successful UFP tour have included Michigan Agri-Business Association, Michigan Association of Conservation Districts, Michigan Farm Bureau, Michigan Farmland and Community Alliance, Michigan Integrated Food and Farming Systems, American Farmland Trust - Central Great Lakes Region, and Michigan United Conservation Clubs. The participants, which included urban officials, state legislators, realtors, farmers, county and township officials, were impressed with the impact the programs had made in those counties, and they saw how successful farmland preservation programs can make a significant difference for the economic future of agriculture. The tours have resulted in many participants assuming leading roles in their communities, and many have been elected to local offices.

--Community Visits and Panel Discussions

The RDCM Governing Board visited a number of communities during the course of the year to learn first hand from local leaders about local issues. These on-the- road discussions have allowed the Council to visit with Dow Corning executives, to learn about expanding agricultural development opportunities with companies like Bay View Foods and Monitor Sugar, to see first hand how community leaders can rally together to build an unprecedented camp for handicap children, and to understand challenges facing rural communities as they learn to create affordable long-term care arrangements for the elderly. Other trips have allowed Council members to visit with rural community leaders who have successfully redeveloped a contaminated brownfield site, to learn about issues related to genetic modification and seed production, to more clearly understand the challenges facing the timber industry, and to see how rural communities are finding ways to provide top-notch telecommunication training and facilities for their youth.

Community struggles, problems and successes come alive as Council members engage rural leaders in discussions about their personal and community projects. RDCM Governing Board members return better informed and more knowledgeable about the vital importance of diverse partnerships in solving problems and advancing rural development and rural citizens become more aware of the council.

--Land Use Leadership Training Program

A 12-month leadership training program was implemented by RDCM, in partnership with the Michigan Farmland and Community Alliance and Michigan Farm Bureau. The program's goal was to increase land use knowledge and understanding and to provide leadership training for those who wish to affect positive change in their communities. The 42 participants ranged in background from farmers, members of the real estate community, and urban leaders to local and county officials. The training program provided in-depth training education on various land use issues as well as leadership development. Sessions focused on formulating messages, partnership building, communicating with the media, communication skills, planning and zoning issues, farmland preservation strategies, agriculture development, urban redevelopment and collaborative efforts between rural and urban initiatives. Participants were also required to complete various community action assignments, tailored to their community, during the year-long program.

--Michigan Community Showcase Tour

The Rural Development Council of Michigan hosted, along with the Michigan Farmland and Community Alliance and Michigan Farm Bureau, the Michigan Community Showcase Land Use Tour, held June 20 & 21, 2000. Eighty participants, representing farmers, community leaders and elected officials, spent two days visiting various Michigan communities and learning about their approaches to urban redevelopment, suburban development designs and farmland preservation.

Tour stops included Lansing, Grand Rapids and Traverse City, with an opportunity to see, first hand, unique development projects and thousands of acres of preserved farmland. Participants learned from General Motors officials about their efforts in redeveloping existing urban sites and some of the redevelopment challenges faced by developers in downtown Grand Rapids. The tour also stopped at Bailey's Grove, an award winning development project, where developer Mick McGraw shared his experience in building a planned community with nearly 1000 diverse housing units. In addition, community leaders shared experiences they had developing local farmland preservation programs, including implementation of Purchase of Developments Rights(PDR) and Transfer of Development Rights(TDR) programs. Tour participants were able to gain important insights into the various steps that are essential in establishing programs in their own communities.

--Successful Legislative Initiatives

At the request of the Michigan Department of Agriculture, RDCM provided assistance in the development of legislative initiatives to strengthen the agricultural industry. These successful initiatives included the capping of property tax assessment increases on farmland, even with the transfer of ownership to other farmland owners, to 5% or the CPI, whichever is less. In addition, the Legislature also passed legislation establishing the State Agricultural Preservation Fund, which will provide state matching funds to local communities that have established local farmland preservation programs.

--RDCM Communications Strategies

The Rural Development Council of Michigan has continued to promote the Council's role in addressing rural issues. Projects for strong communication of the Council's efforts and involvement throughout rural Michigan include: displaying an informational booth at various conferences, publishing "The Road Less Traveled" newsletter and by distributing the RDCM Profile Directory,and providing a listing of the various areas of expertise represented on the Council's Governing Board. Future communication strategies will include a revised and an up-to-date RDCM website that can serve as resource and link for rural communities and leaders.

New Markets

--New Markets

OAD staff helped the Michigan chestnut industry obtain a $40,000 Federal grant to research and implement a grading standard for their industry, as well as determine the grades consumers desire most. The grant was provided through the USDA Federal State Market Improvement Program (FSMIP). FSMIP is a matching fund program, so the Mid West Nut Producers Council will match the Federal monies with in-kind contributions of professional time, and by providing product to conduct the grading and consumer studies.

--Identity Preserved Soybean Japan

Marketing ConferenceOAD staff organized a Marketing Conference where the director of the American Soybean Association's Tokyo office conducted a briefing on the market for identity preserved soybeans in Japan on November 30th. The conference was staged at Michigan State University's Kellogg Center and was the result of OAD staff encouraging the Michigan Soybean Association and Cooperative Elevator, Pigeon, to participate in an Identity Preserved Soybean Conference in Tokyo in June 20 2000. Conference topics will include production and genetic variety information, as well asinformation about how to sell into the Japanese market.

--Farmers Market Cooperative in

Clare County MDA staff worked with Tom Guthrie, Executive Director, Michigan Integrated Food and Farming Systems (MIFFS) to prepare a grant request for the USDA Rural Business Enterprise Grant program. $95,000 is being requested to compliment a $23,175 grant MIFFS was recently awarded by the Nationwide Insurance Enterprise Foundation. Together, these monies will be used to create a Farmers Market Cooperative in Clare County. Both grants were prepared with the assistance of OAD staff.

--Packaging Workshop Held During MSU

Agriculture and Natural Resources Week MDA co-sponsored a packaging workshop with the MSU Packaging Department during ANR week entitled, "Finding and Using Packaging Materials." This program designed for food processors and manufacture, helped them improve their business by satisfying packaging requirements when marketing their products in either domestic or foreign markets. It included both lecture and exhibits to show what is required to optimize packaging and to choose the correct packaging materials, as well as the correct packaging systems for specific marketing applications. Workshop topics included : (1) plastics and glass materials, usage, where and how to obtain the proper package; (2) corrugated fiberboard and paperboard; (3) the importance of attractive and functional packaging to marketing; (4) the importance of packaging for specialty and consumer ready foods; and (5) a manufacture's search for proper packaging and successful accomplishment!

 --Michigan Exports Market Hogs to Canada

For the first time in nearly 70 years, Michigan farmers began exporting market hogs to Canadian processors in early 2000. Due to international trade agreements, Canadian policy changed on October 27,1999. This, coupled with Michigan's 1999 upgraded USDA Stage IV status for pseudorabies eradication, opened the market for hog shipments. Canadian processors indicated that they would like to buy at least 4,000 hogs a week from Michigan. OAD staff facilitated this market opening with industry groups and government agencies.

In December 2000 it was announced that USDA granted Stage V status to Michigan; pseudorabies-free status. With Stage V, marketing restrictions and surveillance activities are reduced. This would assure a long-term market opportunity for exporting hogs to Canada.

Opening the door to Canada and other areas should be a tremendous economic success. It is an accomplishment, occurring ahead of schedule, that was made possible with the strong cooperation of swine producers, veterinational State-Federal-Industry Cooperative Pseudorabies Program was established in 1989 during the time that USDA considered all states to be at Stage I. Michigan's efforts to considered all states to be at Stage I. Michigan's efforts to eradicate the disease escalated in 1994 with the passage of the Pseudorabies and Swine Brucellosis Control and Eradication Act, along with additional funding in 1995. The last known pseudorabies-infected herd was released from quarantine in March of 1999, and no additional cases have appeared since then.

-- National Trichinella Research Project

In 1997, MDA began a relationship with the MSU College of Veterinary Medicine, the National Trichinella Research Project, the National Pork Producers Council, USDA- Agricultural Research Service, Animal and Plant Health Service, on a pilot project to test Michigan swine for serologic evidence of trichonillosis. MDA began testing swine blood collected from its Pseudorabies testing program in 1998. During 1999, MDA (in cooperation with MSU and the MDA Laboratory) tested more than 1,600 samples from wildlife and 23,000 samples from swine for the presence of antibodies to trichinosis. This work was performed in preparation for a national joint initiative from the aforementioned coalition, to provide swine herd certification. Certified herds would be able to deliver pigs to a processor after completing a risk assessment survey. The survey would allow a processor to make a "trichinae safe" statement about the pork product. This will open up new export markets and increase domestic demand. It could serve as a model for other industry-driven programs that integrate HACCP principles into a food system from "Farm to Fork."

-- Regional Hog Strategies

The Office of Agriculture Development has worked with the Michigan Pork Producers Association and Michigan State University Extension to explore the strategic potential of value added activities that might include a regionally based hog packing/processing facility. Pork producers in the states of Michigan, Indiana and Ohio have met to discuss possible strategies for realignment of a swine industry that is rapidly undergoing vertical coordination and integration, leaving farmers with fewer and fewer marketing options.

Farmer-owned, value added processing cooperatives will be explored as a new market outlet along with other options:

China PNTR Will Directly and Indirectly Benefit Michigan Agriculture Michigan Department of Agriculture Director Wyant applauded the congressional approval of Permanent Normal Trade Relations (PNTR) with China in October 2000. OAD performed an analysis along with USDA on the action with China belonging to World Trade Organization (WTO).

One of the keys to sustaining the economic viability of Michigan's food and agriculture producers lies halfway around the world, in China. PNTR with China will benefit Michigan agriculture by providing a long-term growth market and set of fair trading practices that all countries must follow.

Director Dan Wyant said that China will become part of the World Trade Organization WTO and subject to the WTO trading rules that member countries have been required to follow for years. PNTR will level the playing field and open the Chinese market for Michigan and U.S. agricultural products by reducing tariffs, establishing tariff rate quotas and loosening Chinese import regulations. It will also implement many safeguards such as creating anti-dumping provisions and lowering Chinese export subsidies.

The state's fruit and vegetable crops, soybeans, nursery products and poultry products are among Michigan's commodities likely to see some benefits based on OAD and USDA studies.

half of that growth expected from China. In fact, one in four consumers in the world live in China, and economic growth has fueled the shift of China's limited farmable land from agriculture to industrial production.

Legislation

--Governor Signs Farmland Preservation Bills and Agricultural Preservation Renaissance Zone Bill.

In June 2000 Governor John Engler signed a bill package that will help preserve Michigan farmland and expand value-added agricultural processing. Staff from the Office of Agriculture Development and the Rural Development Council of Michigan assisted in drafting and researching these bills.

"The bills I am signing today will help preserve precious Michigan farmland by helping to keep farms in the hands of farmers," said Governor Engler. "They eliminate the "pop up" on agricultural property sales; make property that is taken out of agricultural use subject to a 'recapture tax'; and create the Agricultural Preservation Fund, which will fund the purchase of development rights of prime and unique Michigan farmland."

The Governor also signed a bill allowing up to 10 additional tax-free Renaissance Zones for agricultural processing facilities in Michigan.

"Creating Agricultural Renaissance Zones will keep Michigan's raw commodities in the state and will attract new agricultural processors to Michigan, creating many new jobs," Engler noted. At a bill signing ceremony at a farm in Perry, Michighan Governor Engler signed the following bills:

SB 709, sponsored by State Senator Mike Goshka (R-Brant), amends the General Property Tax Act by eliminating the "pop up" on agricultural property sales. Under Proposal A, all property taxes are capped at 5 percent or the rate of inflation, whichever is lower. However, this cap is removed when property exchanges hands, and the taxable value of the property "pops up" to the market rate. For agricultural sales, this pop-up could be the difference between keeping the land in agricultural use or development taking over the property. SB 709 allows agricultural properties to stay under Proposal A cap, if the property remains in qualified agricultural use after the sale. If the property is taken out of agricultural use, then the property is subject to a "recapture tax," outlined in SB 1240. The revenue generated from the recapture tax will be deposited into the Agricultural Preservation Fund, created by HB 5780.

SB 1240, sponsored by State Senator George McManus (R-Traverse City), creates a new act entitled the Agricultural Property Recapture Act. The recapture tax is equal to the benefit derived from the property, the difference between the capped and uncapped agricultural values. The recapture tax is a seven-year look back.

HB 5780, sponsored by State Representative Jim Howell (R- St. Charles), establishes the Agricultural Preservation Fund, funded by revenues generated by the recapture tax. This fund is created within the Department of Treasury, but is managed by the Michigan Department of Agriculture. The MDA will establish a grant program to which local governments may apply for the purchase of agricultural easements. This bill also creates the Agricultural Preservation Board, the members of which are appointed by the governor.

SB 1251, sponsored by State Senator Bill Schuette (R-Midland), amends the Michigan Renaissance Zones for agricultural processing facilities.

--Governor Signs Julian-Stille Value Added Act

Governor John Engler signed Senate Bill 1340 in October 2000, cited as the "Julian-Stille Value-Added Act, Public Act 322 of 2000. It creates an Agricultural Development Fund to assist in the expansion of value-added agriculture processing ventures in Michigan. The Office of Agriculture Development, will administer the Act.

"With Michigan's agricultural diversity we are in a great position to add value for farm-grown products by processing them here and thereby adding income, jobs and investments to Michigan's agricultural economy," said Director Dan Wyant. "With more than 60% of our commodities currently being shipped out of state and processed elsewhere, there's a need for expanding food and agricultural processing in Michigan."

The new law details how an MDA advisory committee needs to be formed to devise selection criteria and a scoring system for grants that will be reviewed and awarded from the fund The selection criteria and the scoring, or point, system shall be reviewed and approved by the Commission of Agriculture. In addition, rules and regulations need to be promulgated, and other procedures must be in place before grants can be awarded from the Agriculture Development Fund. The Director would have final approval of grants under the law, and could impose fiduciary obligations upon grant recipients, as well as conditions upon the receipt and expenditure of the grant money. Before a grant could be awarded, applicants would be required to have a cash match of at least ten percent of the grant or there would have to be some other repayment guarantee with a dedicated funding source.

--Governor Signs Bill On Comprehensive Requirements For Organic Products

Governor John Engler signed legislation (PA 316 of 2000) creating requirements for organic products. The new law is the end product of a 1999 goal the Governor gave the Michigan Department of Agriculture (MDA) and was accomplished by the Organic Advisory Committe and OAD staff.

" I appreciate the leadership and quality work of MDA's Organic Advisory Committee in developing this proposal, and the prompt action the Legislature took in passing this bill," Governor Engler said. "Michigan now can assure consumers here and around the world that all organic products produced or sold in Michigan can meet a verifiable standard."

Senate Bill 1273, sponsored by State Senator Leon Stille (R-Spring Lake), establishes certification requirements and a registration program for organic products and a licensing program for third party certification.

MDA, along with the Michigan Organic Advisory Committee, will develop and implement final organic production and handling standards. The Department will also be responsible for enforcement through investigation and sampling programs.

"Organic agriculture represents a promising market for Michigan's agriculture industry, as the overall U.S. organic food market is expected to more than triple in value over the next few years," Wyant said. "This new law creates a level playing field, with identifiable requirements that protect both consumers and Michigan growers."

Agricultural Alliances

- Ethanol 85% Fueling Stations

In the fiscal year, the state realized a 200% increase in the number of E-85 (85% ethanol and 15% gasoline mixture) commercial fueling stations. With an increase from two to six E-85 stations located in some of the metropolitan areas of the state, a positive impact on ethanol consumption has occurred. On an annualized basis, both E-10 ( 10% ethanol and 90% gasoline mixture) and E-85 ethanol consumption have more than doubled over 1999 in Michigan. The OAD staff, in cooperation with the Biomass Energy Program in the Department of Consumer & Industry Services and the Michigan Corn Marketing Committee, have provided resources to assist E-85 stations opening in Lansing (Don's Windmill Truck Stop), two stations in Battle Creek (Crystal Flash) and in a station in St. Johns (Crystal Flash).

Consumer messages have been directed to motorists that drive a flexible fueled vehicle (FFV) in order to educate them about the availability and compatibility of E-85 fuel. In the meantime, ethanol consumption in Michigan during 2000 has reached the 7.5 million gallons per month plateau. In comparison to last year, monthly figures were 3 to 3.5 million gallons per month. A vast majority of the ethanol consumption is due to the popular use of E-10 fuel blends at hundreds of stations across Michigan.

- Ethanol Workshop - August, 2000

The Office of Agriculture Development, in cooperation with the Biomass Energy Office in the Department of Consumer & Industry Services, held the second annual ethanol workshop in August. Approximately 80 people attended the timely conference to learn of the state and national ethanol industry. Highlights of the day-long event centered on: 1) the need to increase public awareness of the use of ethanol in 10% blend and 85% blend with gasoline; 2) the development of a corn - to- ethanol plant in Michigan; and 3) the desire to build a coalition of organizations and individuals interested in expanding ethanol use in Michigan.

- Ethanol Working Group

As a result of the 2000 ethanol workshop in Michigan, the Office of Agriculture Development has called together a group of interested parties to address various issues concerning the development of a statewide ethanol industry. Production, marketing, motorist acceptability, increased flexible fuel vehicle use and a host of other issues have been raised by the group. Approximately fifteen different organizations have met and three subcommittees have been formed to address specific issues.

- Michigan Cattle Producers, Consumers, to Benefit From a $2.5 Million Federal Beef Grant

Michigan Department of Agriculture (MDA) Director Dan Wyant announced that Michigan's cattle industry, and ultimately Michigan consumers, will benefit from a $2.5 million federal research grant to develop a regional beef production system model for livestock producers in the Eastern Corn Belt.

OAD has been a leader in developing improvements for our beef industry through the Five-State Beef Initiative and the Michigan Beef Alliance. This new partnership with Eastern Corn Belt states will help improve profitability for our beef producers, create a consistent supply of beef for packers and retailers, and provide consumers with high-quality beef products.

Michigan is one of five states included in the grant, which will create the Rural American Beef Center at Purdue University in Lafayette, Indiana. Other state partners include, Ohio, Indiana, Kentucky, and Illinois. The grant money will be dispersed over a three year period.

The goals of the new center include:

• Developing a regional beef production system model that will improve the competitiveness and profitability of all segments of the industry while simultaneously enhancing rural communities and protecting the environment.
• Providing a safe, wholesome, high quality beef supply that will consistently meet consumer needs.
• Developing a new market coordination and informa- tion sharing system that improves the traditional grading and pricing discovery system.

- Michigan Pork Alliance

OAD staff continued to work with Michigan pork producers to organize a regional pork cooperative with the goal of adding value to pork and pork products. In conjunction with these activities OAD staff traveled to Des Moines, Iowa with Michigan Pork Producers Association representative, Sam Hines, to discuss the potential partnering with Pork America, a new cooperative soliciting membership in 25 states. Pork America has received a $500,000 USDA grant for development of a marketing initiative to add value to pork.

- State, Federal Agriculture Departments Sign Rural Development Partnership Agreement

Michigan Department of Agriculture Director Dan Wyant in April 2000, signed a partnership agreement with the US Department of Agriculture's (USDA) Rural Development Office in Michigan. The agreement formalizes the current arrangement, whereby OAD and USDA work cooperatively to assist Michigan farmers, agricultural businesses and rural communities.

Key components of the agreement include holding periodic meetings to identify significant opportunities for the two government agencies to partner; supporting the formation of farmer-owned, value-added processing cooperatives and agricultural businesses; promoting business and economic development programs; supporting the Rural Development Council of Michigan, and supporting Michigan's Rural Enterprise Communities and Michigan's new Agricultural Processing Facility Renaissance Zones.

"Agriculture is an industry poised on the greatest evolution in its history. Producers must look with greater creativity for new markets and new ways to sell their products in the highly competitive global marketplace," said Donald L. Hare, State Director for USDA Rural Development in Michigan. "By sharing resources and ideas, the Michigan and US Departments of Agriculture can better serve Michigan producers during this time of great change."

International Marketing Program

--Export Sales

Six months after exhibiting in the Michigan pavilion at the 2000 US Food Export Showcase, six firms reported domestic and exports sales of apples, dry beans, honey, dried fruit, condiments and candy valued at $632,000.

OAD staff recruited a Michigan organic family farm operation, with processing and shipping capabilities, to participate on the MIATCO Organic Sales Mission to Japan. The farm was convinced to attend the sales mission after OAD staff assisted in securing Branded Market Acess Program (MAP) reimbursements for 44% of their travel expenses. As a result of attending the sales mission, an additional $220,000 order of organic beans was received.

OAD staff recruited a Michigan snack food producer to submit product literature for a MIATCO sponsored USA food promotion with Sam's Club stores in Mexico. As a result of submitting their literature and prices, the firm received an $83,000 order from Sam's Club of Mexico.

--Export Market Development Activities

Fourteen Michigan companies exhibited in the Michigan pavilion at the US Food Export Showcase, which is part of the Food Marketing Institute (FMI) show in Chicago. The FMI show is the largest grocery industry trade exhibition in the world. The show annually draws 15,000 domestic and 5,000 international grocery industry executives.

The Michigan Soybean Association (MSA) participated for the first time in an annual edible soybean conference and trade show in Japan. OAD staff helped MSA identify a qualified Michigan shipper of identity preserved soybeans to represent the state soybean industry and worked with the shipper so they would receive reimbursement of some of their international promotion expenses through the Branded MAP program.

Five Michigan processors of organic food products participated in a Michigan booth on the MIATCO Organic Sales Mission to Japan. Two of the Michigan processors traveled to Japan to participate in the activity. The Michigan Economic Development Corporation's (MEDC) representative in Japan assisted the Michigan firms at the booth and collected trade leads for the other firms that only displayed product.

Thirteen Michigan food processors participated in a Michigan Food Processors Association (MFPA) booth at the Grocery Innovations Canada Show. All firms that participated in the activity received in-store market research on competitive Canadian products, a market briefing and one-on-one meetings with pre-qualified Canadian brokers and distributors. IMP staff also assisted qualified food processors so they would obtain reimbursements for their international promotion expenses through the Branded MAP program.

--International Buying Teams

A team of four S.E. Asian buyers met with OAD staff and interested Michigan food processors in March. One-on-one meetings were scheduled in Livonia and Grand Rapids. The buyers supply high end imported gourmet retail outlets in Indonesia, Thailand and Malaysia. The buyer's travel to Michigan was paid by MIATCO with Generic MAP funds.

Three importers of cheese products from South America met with three Michigan cheese processors and toured two other Michigan cheese plants. The buyers' travel to Michigan was funded by the US Dairy Export Council.

Nine representatives of seven Japanese restaurant chains met with Michigan cheese processors and toured one Michigan plant. The restaurant representatives were both menu planners and product purchasers and represented more than 1,900 eating establishments in Japan. The buyers' travel in Michigan was funded by the US Dairy Export Council.

The president of the Costa Rican dry bean importers association, who is also managing director of a bean processing firm in that country, traveled to Michigan to meet with OAD staff and prospective suppliers of black beans. While in Michigan the buyer met with several suppliers and toured their processing plants. The buyer's travel in Michigan was paid through a USDA Cochrane Fellowship grant.

--Leveraging Non-State Resources

In its first year, the MDA International Market Development Grant Program awarded eleven Michigan food and agricultural organizations a total of $100,000. The grants were provided to assist those organizations as they diversify and internationalize their markets. Grant recipients were required to leverage the state funds with either federal or private resources. At the end of the program's first year, Michigan food and agricultural organizations leveraged federal and private resources on a 2.68/1 basis. Federal resources leveraged totaled $204,000. MDA International Market Development Grants enabled Michigan food and agricultural organizations to implement the following programs:

• Dried blueberry promotion in Japan;
• Dry beans in Costa Rica;
• In-store consumer promotion of tart cherries in Germany
• Trade servicing and promotions of apples in Israel
• Processed apple products to Caribbean and Central American importers;
• Introducing Michigan food processors to Canadian importers and distributors;
• Introducing Michigan cheese processors to prospec- tive importers in Mexico, South America   and Japan
• Cranberries in Japan; and
• Research and identify Costa Rican importers of chipping potatoes.

International Market Development Grant projects that were approved in 2000 but will not be implemented until 2001 include promotion of the following items:

• Dried fruit products to the Taiwan baking industry;
• Michigan wines and fruit brandies in Germany;
• Pickles in Korea.

The number of Michigan food processors enrolled and approved to be reimbursed 44% of their international marketing expenses under the Branded Market Access Program (MAP) increased from five in 1999 to seventeen in 2000. The amount of monies these seventeen firms are eligible to be reimbursed increased from $184,500 in 1999 to over $360,000 in 2000. Branded MAP is an USDA program and made available to Michigan firms by MDA's membership in MIATCO. MIATCO annual dues are $12,000. MIATCO membership enabled IMP staff to make $360,000 in reimbursements available to Michigan food processors which is a 30/1 leverage of Federal resources.

In an effort to expand their product line and begin export sales in Canada and Mexico, IMP staff helped a small Michigan cheese processor access the USDA Ag Links Program. Through the Ag Links program, the Michigan cheese processor hoped to identify Baltic style cheeses that they can produce and thereby add to its line of products. These new lines will then be introduced into Mexico and Canada. It is estimated that the cheese processor has up to $12,000 in Federal resources available to them.

--Outreach & Education

The Michigan Agricultural Export Advisory (MAXA) Council held its first meeting in March, 2000. The MAXA Council consists of twelve representatives of Michigan's food and agriculture industry who are engaged in export marketing. The council meets on a quarterly basis giving insight and direction to the IMP staff about program development, assuring the activities serve the best interests of Michigan agricultural exporters.

The USDA Foreign Agricultural Service (FAS) maintains Agricultural Trade Offices (ATO) in seventy eight countries throughout the world. FAS ATO's main mission is to expand the market share of US agricultural products throughout the world. In 2000, MDA hosted ATO officers from the Philippines and the United Arab Emirates. During their visit, MDA took the opportunity to educate these ATO officers about Michigan's agricultural products, in addition, food processors were able to get direct feed back regarding the potential for export sales into those countries. As a result of these meetings, the Michigan dry bean industry will be participating in an activity in Dubai to promote sales in not only the United Arab Emirates, but also Iran.

Over the course of 2000, several Michigan food and agricultural firms have utilized the services of the Michigan Economic Development Corporation's Japan office. The director in MEDC's office, Mr. Takashi Hayakawa, had been to Michigan twice, but had never been exposed to Michigan's agricultural industry. In July, 2000 OAD staff spent two days with Mr. Hayakawa, taking him to meet all of the food processors that had utilized his services so that he could follow through with those companies and better understand Michigan's agricultural economy.

To highlight International Trade Week in May, 2000, IMP staff distributed 150 baskets of Michigan food exports to the Governor's office and the Legislature. The purpose of this activity is to raise awareness of the importance of exports to Michigan's economy.

OAD produced a quarterly newsletter "Select Michigan Global." The newsletter is circulated to over 800 food and agricultural firms, commodity association executives and decision makers. The newsletter provides reports on IMP activities, Federal and state resources available for export market development, and articles on trends that could impact Michigan agricultural exports.

OAD maintains a web site, http://www.mdainternational.com, that provides the following information:

• Directory of Michigan food and agricultural suppliers;
• Recent export trade leads; and
• Current editions of the "Select Michigan Global" news letter.

Environmental Assistance & Waste Reduction

--Food Processing Facility Issues

OAD has worked extensively with MDEQ staff and Mason County Fruit Processing Cooperative in Hart, Michigan, to resolve permit violations through a consent agreement. An agreement was reached that avoided major penalties and involved contribution to a local area supplemental environmental program and a minor fine. Instead of significant penalties, the MDEQ agreed to a plan that involved feasible company expenditures for improvements in wastewater lagoon management activities.

OAD also assisted Honee Bear Canning Company, Lawton, Michigan, with a groundwater discharge permit application now submitted to MDEQ Waste Management Division staff. A June, 2000, meeting between company officials and MDEQ/WMD staff resulted in deferral of an agency consent order and established a time table for further acquisition of data and review of new monitoring requirements.

--Great Lakes Fisheries Trust Fund (GLFT) Muskegon River Watershed Assessment

As a part of the GLFT contract activities with Kieser and Associates, OAD was involved with the assessment of the social structure of the Muskegon River Watershed communities (used in its broadest terms). OAD explored the extent to which agricultural non-point source watershed improvements could leverage other funds to improve watershed fisheries. These activities tie in nicely with the Michigan Lakes and Streams Association. The final report from Kieser and Associates has been submitted to the Great lakes Fisheries Trust ( which is solely responsible for distribution of the information contained in the assessment).

--Water Quality Trading Project Committees

Draft State Rules and Kalamazoo Project

OAD staff served on the Kalamazoo Water Quality Trading Project Steering and Technical Committees. The project ended with three active trading agricultural participants and several industrial nonpoint source partners that implement stream bank improvements. A final report was issued by the Kalamazoo Forum, as required by the grants. Major accomplishments include the development of the Great Lakes Trading Network (now a national network), nonpoint source improvements on the Kalamazoo River, and breakthroughs in trading barriers. The experience served Michigan well in development of draft State Water Quality Trading Rules. The concept of voluntary efforts to improve water quality in impaired stream segments places Michigan at the cutting edge of leveraging funds from multiple sources to protect and improve water resources. Application of trading will have major bearing on Michigan's response to the federal Clean Water Act's TMDL activities and to the Michigan Agriculture Environmental Assurance Program.

--Innovative Wastewater Treatment Demonstration

A demonstration project involving DynamOX, Inc. and Honee Bear Canning Company, in Lawton, Michigan, started July 10, 2000. DynamOX will provide, at no cost to the company, a demonstration of oxygen super saturation effluent to the Honee Bear Canning Company lagoon system. The process was a spin-off from a technology that was developed at Wayne State university Medical School to increase blood oxygen levels during cardiac surgery. Environmental applications for waste management streams is obvious.

--Composting

OAD, along with Van Buren County Extension, MSU, MDA, MDEQ and industry representatives, helped initiate Michigan "invessel" composting technology and was instrumental in fostering research to broaden its use to include livestock and poultry mortality as well as farm animal manure.

Economic Development

--Site Selection Magazine Ranks Michigan 5th in Nation in Food Processing Expansions

The November 2000 issue of Site Selection magazine contained an article which has Michigan ranked 5th in the nation on new and expanded food processing plants. Despite some notable plant closures the last few years, fifteen new investments are also happening in Michigan. State government agencies(including OAD) have provided some assistance (in kind or financial) for Thumb Oilseed Producers Cooperative, Michigan Turkey Producers Cooperative, Minnell Milling Company, Packerland Packing, Inc., Boar's Head Provisions Company and Minute Maid Company. Yet there are many others that quietly invest in Michigan and public agencies aren't aware of their expansions until Site Selection counts them. The time period for the magazine was from August 1999 through August 2000. Site Selection periodically ranks the top 15 states in the nation in food processing expansions; this was the first time Michigan was placed on the top list during the past decade.

--Paw Paw Beats Texas for Minute Maid Fruit Juice Plant Expansion

OAD cooperated with Michigan Economic Development Corporation staff in successful negotiations to persuade the Minute Maid Company to expand in Michigan. Minute Maid Company, a division of the Coca-Cola Company, expanded its Paw Paw, Michigan plant rather than close down and move to Waco, Texas. Stiff competition resulted between the two states due to the $54 million investment and 150 new direct jobs at the Paw Paw plant. The Michigan Economic Growth Authority (MEGA) approved an estimated $5 million tax credit over 17 years to consummate the decision. While Minute Maid procures most of its juice from Florida and California, Michigan apples should be a juice source for some of the new product lines. It's expected that the new "pouch" juice packages will be produced at the plant as well as an expansion of existing items.

--Michigan Resource Directory

On the MDA website, OAD launched the first comprehensive Resource Guide and Directory for parties interested in starting or expanding a food or agriculture business in Michigan. The directory's purpose is to provide ideas and assistance that will help individuals and communities as they pursue their economic development vision. Contents of the directory include information from federal, state, local and private for profit and non-profit organizations. Since April 2000 when the directory was launched, dozens of inquiries have been received concerning various aspects of economic development. OAD staff have been able to provide effective assistance to Michigan clients looking to grow their business operations as well those firms outside of the state being attracted to our state's market. This can be accessed at: www.mda.state.mi.us

--Proposed Ethanol Plant Development

During this year, a major ethanol production facility project was initiated by Michigan corn growers. The project was incorporated under the name, Michigan Corn Processors, LLC. In order to prove the viability of the project, approximately 380 farm families invested an initial $500, raising $190,000 to finance the details of the plant, feasibility studies, and business plan development. The proposed plant production will be 40 million gallons per year, utilizing approximately 14.5 million bushels of Michigan corn. Total project costs range between $50 and 54 million dollars.

To date, the twelve member board of Michigan Corn Processors has chosen some possible plant sites and is working to complete its business plan for submission to interested parties in federal, state and local governments as well as the banking community. Anticipated ground breaking date will be in late summer, 2001, preceded by an equity stock drive in winter, 2001.

--Agriculture Processing Renaissance Zone

Agriculture Processing Renaissance Zones were recently added by statute to encourage economic development specifically for the agriculture processing industry. Qualified zones will be exempt from all state and local taxes for up to 15 years. A maximum of 10 zones specifically for agricultural processing, facilities may be designated anywhere in Michigan. OAD is responsible for promoting and reviewing the zones; MEDC does overall administration of the act. All zones must be designated by December 31, 2002.

MDA and MEDC's staff conducted several informational meetings, media interviews and other promotional activities on the new Agriculture Processing Renaissance Zones programs. These occurred during the fall as part of a Communications and Outreach Strategy developed by both OAD and Marketing and Communications Division. Interest remains quite high for this new program and the first three applications were submitted to MEDC and MDA at the end of September.

--State Selects First Two Agricultural Processing

Renaissance Zones

Governor John Engler, along with Michigan Department of Agriculture (MDA) Director Dan Wyant and Michigan Economic Development Corporation (MEDC) President and CEO Doug Rothwell, announced on December 19, 2000 that the state has selected its first two Agricultural Processing Renaissance Zones. The zones are both located in economically-distressed Oceana County, which has a higher unemployment rate than most parts of Michigan.

The two designated Oceana County zones are:

Peterson Farms, Inc. is a family-owned fruit and veg- etable processing company, located near Shelby. In return for zone status, Peterson Farms will create approximately 225 jobs and $15 million in private invest ment over the next 15 years.

Gray & Company is a sweet cherry processing facility located in the city of Hart. In return for zone status, the company will create approximately 150 jobs and $22.6 million in private investment over the next 15 years.

These zones are key to keeping farmers farming and helping the state attract and retain agricultural processors. Peterson Farms, Inc. and Gray & Company will add value to the commodities Michigan farmers grow or produce, and generate net economic development for the state's agricultural economy in the future.

--State Agriculture Director Announces New Value- Added Agricultural Venture in Michigan's Up per Peninsula

Begining in July 2000, Ontonagon's White Pine Mine is utilized as an underground agricultural growth chamber that will produce biopharmaceutical plants and seeds for widespread medicinal uses. The new medicines will fight cancer and other chronic diseases.

The underground growth chamber will be operated by SubTerra, LLC, a company contracted by Health Canada, Canada's national health department, to "scale up" production of transgenic seeds containing cancer-fighting biopharmaceuticals. SubTerra's facility meets and exceeds federal regulatory agency requirements on these types of seeds and plants and includes air and water control filters. The closed system has been approved by both the U. S. Department of Agriculture and Health Canada.

This is a tremendous development opportunity for the agricultural and pharmaceutical industries of Michigan and Canada. Through the establishment of this type of activity at the White Pine Mine, Sub Terra will not only be able to improve our understanding of cancer and other chronic illnesses, but also develop a unique closed system plant growth facility that protects the environment.

It was indicated that if SubTerra proposes to do the next step of grinding or processing the seeds into the production and packaging of medicines , it would qualify for Michigan's new Agricultural Processing Facility Renaissance Zone Law. With SubTerra's value-added agricultural processing facility the Upper Peninsula would reap economic development benefits with new jobs and investment. If the company is designated as a Agricultural Processing Facility Renaissance Zone, it would pay no state and local taxes for up to 15 years.

--Economic Study Predicts Future of Michigan's Food and Agricultural Industry.

The Michigan Economic Development Corporation and Michigan Department of Agriculture, in January 2000 released a study that predicted a mixed future for food processing and agriculture in Michigan. Conducted by Sparks Companies, a leading food agricultural consulting firm, the "Trends in Michigan Agriculture" study pointed to powerful global and national trends currently influencing agricultural production in the US and Michigan. While these trends will likely limit Michigan's ability to influence economic change in commodity agriculture, the study also outlined sectors with strong future growth potential and recommended that the state pursue and expand agribusiness where niche markets exist.

"These global trends may be difficult to reverse," said Doug Rothwell, President and CEO of the Michigan Economic Development Corporation. "However, recognizing these trends is half the battle. Michigan's strong economy makes it easier for our state to act."

Perhaps the brightest sector in Michigan agriculture is greenhouse and nursery products. Nursery and landscape products have been the state's fastest-growing agricultural sector over the past three decades, according to the report. Michigan's climate and geography make it likely that this sector will continue its strong, positive growth.

In addition, some of Michigan's fruit and vegetable crops should also experience positive growth over the next five years. However, the state's traditional reliance on canning and processing fruits and vegetables will require significant changes if the industry is going to continue to grow. Changing consumer tastes and demands for fresh produce may keep that industry stagnant, whereas the outlook for the cattle and hog sectors in Michigan is moderately positive, according to the report.

"Michigan agriculture is in a crisis. Enacting the recommendations of this study will help save farmers and farmland. Providing tax relief, expanding agriculture processing and enhancing the agriculture biotechnology industry will help Michigan farmers and secure a future for Michigan farm products," said Senator George McManus. "Many of the recommendations complement what the Senate Task Force on Agricultural Preservation offered after its eight public hearings last year."

In order to best utilize the Sparks study results, recommendations were combined with other studies (see chart on page 9) to help the Michigan Department of Agriculture (MDA) and the Michigan Economic Development Corporation (MEDC) effectively report on Michigan's food and agricultural industry.

Results of the 1998 Michigan Food Processors Survey provided necessary background information for three comprehensive studies that occurred during 1999-2000: 1) the MSU Food Processing Industry Rentention and Expanson program conducted personal interviews with companies in four segments of the food industry: meats, grains & beans, fruits & vegetables and dairy; 2) the Trends in Michigan Agriculture study performed by Sparks Company for MEDC, examined the trends of the food industry nationally and globally and compared them to the trends in Michigan; and 3) the Michigan Senate Agricuture Preservation Task Force report. Each of the efforts was geared to respond to the declining profitability of production agriculture and agribusiness in Michigan.

Problem Diagnosis

Loss of major food processors (meat, frozen potatoes, cereal, etc.) in Michigan

Mature, commodity-oriented, price-driven clusters of agri-food industries with low profitability

Loss of Michigan's market share in national sectors, e.g., field crops, fruits, vegetables, livestock and dairy. Where national growth suggests opportunities in broad markets and niches, reinvestment in market position is critically needed.

Shortages of quantity and quality of labor, both skilled and unskilled.

Agri-food sectors need assistance in effectively positioning themselves to address heightened food safety, environmental expectations and regulations.

Adoption of GMO (genetically modified organisms) is a strong threat and opportunity.

High labor costs and production costs are problems to the state's food processors.

Michigan taxes are a major concern to farmers and processors.

Consolidation in the food and agriculture industry indicates fewer but larger farms, agri-business firms and processors.

Preferred Future

Michigan provides a revitalized agri-food sector characterized by market oriented, customer-driven industrial clusters focused on domestic and international growth opportunities.

Promotion of profitable, value-added enterprises with corresponding high-value human and technological assets, including product R&D capabilities, value-added processing (proprietary, corporate, and cooperative), e-commerce participation, technologically sophisticated operations, and more highly skilled workers (line, professional, and managerial).

Michigan's agri-food system attracts capital, labor, management, and customers through leading edge products and technologies.

Strategies and Recommendations

Strengthen the marketing, promotion and management of Michigan agri-food sectors.

• Establish an account executive liaison between MEDC/MDA.
• Strengthen MDA/MEDC agricultural development program where trends are favorable and/or niche markets exist.
• Establish a strategic center enhancing the partnership between MSU and MDA.
• Attracting agriculture biotechnology to Michigan.
• Update state law for farmer value-added processing cooperatives.

Support reinvestment in Michigan's agri-food system.

• Contribute educational and technical assistance to spur innovation.
• Seek tax incentives to update plant and equipment.
• Promotion of agri-food processing renaissance zones.
• Continue efforts to integrate Michigan's transportation system.
• Solicit tax reduction on ag land through use-value property tax assessments
• Identify opportunities to obtain capital to replace aging facilities and infrastructure.

Create the capacity for Michigan to lead in the areas of food safety and environmental stewardship.

• Simplify red tape and eliminate conflicting regulations through a modern, uniform food code.
• Improve waste stream management.
• Assist small/medium firms in best MIOSHA, TQM and HACCP practices.
• Define and enforce organic food standards.

Improve federal agency response to agri-food businesses' needs.

• Allow business loan guarantees for processing facilities that support rural agri-food operation & farms.
• Eliminate duplication of regulatory requirements.

Improve human resource availability.

• Improve agriculture labor situation (training, housing, guest status, providing English as second language classes).
• Increase student job placement and internships.
• Enhance skill development programs.