The Economic Impact of Michigan’s Food and Agriculture System


July 31, 2018 - William Knudson


Major Findings

Michigan’s food and agriculture system remains a major contributor to income and employment in the state’s economy. The agri-food system encompasses everything from inputs such as fertilizers purchased by farmers to the food consumers buy at supermarkets and restaurants as well as the ethanol and fiber produced in the state. The system accounts for an estimated $104.7 billion in direct, indirect and induced economic activity annually. This sector also accounts for approximately 805,000 jobs. These figures are estimates based on the best available sources of information with measurements generally consistent with the calendar years 2014-2016. However, most processing estimates are for 2012. The Census Bureau, which collects this information, generally updates this every five years. Data for 2017 is currently being collected but will not be released until 2020 or 2021.
Some activities such as direct farm sales to consumers are not captured, and given the delay in publishing data, particularly for food processing and wholesaling, the actual figures may be higher especially for the economic impact numbers. The economic impact includes, not only the direct impact of the industries themselves, but the impact on related industries (indirect impacts) and impacts on household spending (induced impacts).

Economic Impact

Exhibit A provides the summary analysis. Michigan’s food and agriculture system which includes agriculture, food processing and manufacturing, leather processing, food wholesaling, retailing and food service, as well the floriculture/ornamentals/turfgrass and ethanol industries, accounts for a total of approximately $104.7 billion in total economic activity – including direct, indirect and induced activity. This is an increase of 14.5 percent from the 2012 study (mostly based on 2010 data) and represents a compound annual growth rate of 2.3 percent. (See Table 12 in the body of the report for 2010-2016 comparisons). During the same time period, inflation increased by a compound annual growth rate of about 1.5 percent based on the GDP deflator.
These figures must be interpreted carefully. The direct impact of the entire system is $62.4 billion; an increase of 19.0 percent or a compound annual growth rate of 2.9 percent from the 2012 study. The direct impact of the agribusiness and farm sector is $8.4 billion or about 13.4 percent of the total. Most of the value-added activity in the sector is related to food processing, wholesaling and retailing (grocery, restaurant and food service). In 2016, the state’s gross product was $487.2 billion; the agri-food system directly accounts for 12.8 percent of this total. When the total economic impact is considered, the agri-food system accounts for 21.5 percent of the state’s gross product.

Impact on Jobs

Michigan’s food and agriculture system is a major source of employment for the state’s workforce. Total employment in this sector – including direct, indirect and induced effects is approximately 805,000 of which more than 549,000 are directly employed within the sector. The level of employment declined between 2010 and 2015 by around 119,000. Most sectors of the agri-food system saw a decline in employment. Increased automation and labor shortages are the likely primary reasons for this decline
The food and agriculture system remains an important source of employment. The total employment impact accounts for approximately 17.2 percent of the total employment in the state. Given these figures, Michigan’s food and agriculture system remains of substantial importance to the state’s economy.
Full-time direct employment in the farm sector including farm labor is estimated to be in excess of 88,000 or approximately 16.1 percent of the total direct employment in the sector. Most sector employment is accounted for in food processing, wholesaling and retailing.


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