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Agribusiness and Food Processing Boom Continues 

fall food processing

By Mark Kleszczewski

Opportunities abound for the agribusiness community.

From major acquisitions and consolidation deals being pursued by food and agribusiness giants, to individual farms taking on high-tech tools to boost production and lower costs, it’s been a very busy year so far in the American food industry. Meeting the growing global demand for agricultural products, beverages and even biofuels is spurring domestic and foreign investments in clusters throughout the country. For producers and agribusiness communities, that spells opportunity.

Industry-watcher Packaged Facts predicts food and beverage retail sales to reach $667.5 billion in 2015 — a 4.5 percent increase over $638.8 billion in sales during 2013 — and $796 billion by 2018. One of the fastest-growing areas of activity — the USDA Foreign Agricultural Service (FAS) reports — is in processed and packaged food exports, where producers and sellers are benefiting from rapid growth in global demand.

As a result, exports of high-value food products climbed to more than $45 billion in 2013, up from $29 billion in 2009. Among the biggest categories is dairy foods and beverages, with export value in 2013 alone projected to have topped a record-breaking $6.6 billion, 30 percent higher than in 2012, according to the U.S. Dairy Export Council.

Benefitting from the Boom

A notable complement to the U.S. food export trend is also at work in southern Idaho’s Magic Valley region which contributed well over half of the state’s nearly $8 billion agriculture receipts for 2013.

It’s where a growing presence of foreign companies is part of nearly $800 million in food company investments made since early last year, by industry leaders such as Chobani LLC, Monsanto, Clif Bar Co., Calva/Brewster Partnership and others, says Jan Rogers, executive director, Southern Idaho Economic Development Organization (SIEDO).

“Southern Idaho is blessed with agricultural diversity and natural resources and today has grown to become a major center for food production, processing and science,” Rogers says. “Food companies here can use our extensive infrastructure to process, package and transport a wide variety of agriculture products.”

“Besides value-added food products and R&D, food-based FDI has become a major strategy for us,” she continues. “Foreign food companies like Glanbia Foods, which is based out of Ireland, and McCain Foods from Canada are finding this combination very attractive, so we’re working with initiatives like SelectUSA to target to more international food companies that make sense for our region and our state.”

It’s where a growing presence of foreign companies is part of nearly $800 million in food company investments made since early last year, by industry leaders such as Chobani LLC, Monsanto, Clif Bar Co., Calva/Brewster Partnership and others, says Jan Rogers, executive director, Southern Idaho Economic Development Organization (SIEDO).

Among the latest food manufacturing FDI projects in the region to be successfully secured using this approach comes from Portugal-based fruit processor Frulact Group, which expects its new $30 million plant in the rural community of Rupert to be ready to supply Chobani’s local yogurt plant by April 2015.

Heading east, although more than 90 percent of Iowa’s surface area is geared toward commodity crops such as corn and soybeans, the state features a large and well-organized food processing sector where companies such as West Liberty Foods LLC, General Mills Inc., Quaker Oats Co., H.J. Heinz Co. and Ralston Foods Inc. serve markets in North America and beyond.

“Iowa is known as a breadbasket, but we have some additional industry advantages from a supply chain and logistical standpoint,” says Mark Nolte, president, Iowa City Area Development Group. “We’ve got several trucking companies headquartered here, and an abundance of transportation options that fit perfectly with our food warehousing, distribution, packaging and cold storage capacity — all of which make it efficient to serve both ends of the nation. Plus we offer abundant water, wastewater, and affordable electricity and natural gas.”

The cluster is well-positioned for rail and trucking to all major Midwestern cities, Nolte says, with I-380 running north and south between Cedar Rapids and Iowa City, and I-80 running directly through the Iowa City area. The seven-county region is also one of the leading bio-processing and food ingredient centers in North America, anchored by the likes of Cargill, Genencor International Inc., Penford Products Co., ADM Co. and Diamond V Mills Inc.

Nolte further notes that the area is also home to the National Cooperative Grocers Association, United Natural Foods Inc. and other organic and natural product producers. “The phenomenal growth in the natural, organic and local food sectors is one of the reasons we’re seeing a lot of interest in some of our shovel-ready industrial parks and the food technology incubator we’re working on to grow young companies oriented toward natural foods segment,” he says.

Food processing is also a targeted industry for Joplin, Mo., where plentiful raw materials, food research centers and transportation options make the surrounding region a prime location for food and agribusiness expansion, says Rob O’Brian, president, Joplin (Mo.) Regional Economic Development Alliance. “Manufacturing is very strong here, but our deep experience in food safety and high-tech automation required by modern food production is something that can help food companies grow whether they are producers, packagers or ingredient suppliers.”

Leading food manufacturers in the area, he says, include Frito-Lay Inc., ConAgra Foods Inc., General Mills and Gilster-Mary Lee Corp.; they are joined by specialty producers such as Jasper Products LLC, Cott Beverage Inc., Schreiber Foods Inc., and Annie’s Homegrown Inc., which acquired its first snack manufacturing plant in Joplin earlier this year.

In addition to plentiful raw materials and processing facilities, O’Brian emphasizes that the area’s transportation infrastructure is a major draw for shippers with I-49 providing access to the Kansas City metro and the upper Midwest, while I-44 connects to the Midwest and Southwest’s growing population centers.

O’Brian says that although most goods come in and out by truck, greater Joplin also features three Class I rails, two short lines, three commercial airports and proximity to the Tulsa Port of Catoosa in Oklahoma — one of the nation’s farthest inland ice-free ports — making the region a cost-effective option for transporting grains and other bulk products.

Missouri’s location in the middle of the animal health science corridor also goes hand in glove with processing pet food, adds O’Brian. One of the newest local projects in this growing subsector is the construction of the Blue Buffalo-Heartland Pet Foods Manufacturing plant which is slated to produce up to 30 million pounds of pet food a month, beginning in 2015.

Moving over to western New York, integrating technology into food production with the help of collaborations and partnerships is expanding markets for Livingston County, among the top five New York counties in grain, beet, bean and dairy production.

Although it’s already the sole manufacturing location for Kraft Food Inc.’s Cool Whip dessert topping, a major production location of Oscar Mayer Lunchables, and a U.S. manufacturing center for Barilla Group, the world-wide pasta market leader, the county is taking the lead in applying cutting-edge agricultural techniques to diversify farmer’s businesses and provide high-quality dairy products, while reducing operating costs and helping the environment.

Last fall, Empire State Development Corp. (ESD) announced the launch of an innovative dairy processing facility developed by WNY Enterprise LLC, a partnership between Dairy Farmers of America (DFA) and Craigs Station Ventures (CSV), to build a new 14,000-square-foot cold milk separation facility in the town of York. The $12 million project, supported by $150,000 in Excelsior tax credits from ESD, is located at a multi-generational family dairy farm in Livingston County that’s part of CSV, which is owned by eight dairy farms located in Livingston County and nearby Wyoming County.

“Agriculture is the No. 1 industry in Livingston County,” said Julie Marshall, director, Livingston County (N.Y.) Industrial Development Agency, at the time of the announcement. “We are pleased to partner with WNY Enterprise LLC and Craigs Station Ventures on this innovative agribusiness project.”

Back in the Midwest, tapping into technical prowess is a major benefit of being in the “Quad Cities” area that straddles Iowa and Illinois — home to Deere & Co. — where a blend of heritage, innovation and logistics create an environment in which food and packaging companies thrive.

“This innovative facility will help local dairy farmers meet growing milk demands while creating new jobs,” said Kenneth Adams, president, CEO and commissioner, Empire State Development. “Agribusiness is an important sector of the upstate New York economy and with WNY Enterprise LLC’s dairy processing facility, we’ll be well positioned to access new markets.”

“Consumers want to know who produces their food, but they also want us to demonstrate that their food is produced in a way that minimizes impact on the environment,” said Christopher Noble, a dairy farmer with CSV. “We developed this project with those thoughts in mind.” The facility — powered with renewable energy from an anaerobic digester — will receive approximately 1 million pounds per day of fresh milk and separate it into roughly 990,000 pounds per day of standardized milk and cream.

Back in the Midwest, tapping into technical prowess is a major benefit of being in the “Quad Cities” area that straddles Iowa and Illinois — home to Deere & Co. — where a blend of heritage, innovation and logistics create an environment in which food and packaging companies thrive.

“Having raw corn, soybeans, wheat, meat and an abundant water supply available is definitely a key advantage, but having the technical know-how to transform them into valuable food products is something we do really well,” says Paul Rumler, executive vice president and chief economic development officer, Quad Cities First.

“We have a lot of food and ag-based companies investing in technology advancements for their products lines and facilities,” he says. “We’ve been innovating as long as we’ve been alive in agriculture, so us having a workforce that can keep up with those trends is an important asset to those companies.”

Convenient shipping to customers is another critical component of the region’s agribusiness cluster, Rumler says. “Whether it’s large equipment, commodities or packaged goods, OEMs and suppliers today want to be able to deliver their products within a day’s drive. Our region is served by a 250-acre master logistics center that integrates four major freight railroads, four Interstates and over a dozen state and federal highways, putting us within a five-hour truck drive of Milwaukee, St. Louis, Kansas City, Des Moines, Indianapolis and Omaha,” he says.

For complete details on the organizations featured in this article, visit:

Iowa City Area Development Group

Joplin (Mo.) Regional Economic Development Alliance

Livingston County (N.Y.)

Quad Cities First

Southern Idaho Economic Development Organization

Illustration by Stuart Miles at Free Digital Photos.net

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About the author: Mark Kleszczewski

Mark Kleszczewski is president and CEO of GoBusiness Group LLC and a freelance writer on critical business topics. He can be reached at mark@gobusinessgroup.net.

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