Food and ag leaders remain confident about the future , cautious about investments

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Michigan farmers and food processors remain optimistic about the future of their industry, and they aren't afraid to show it. That's what economists from the Michigan State University Product Center learned when they conducted the second Michigan Agriculture and Food Index.

The index, which was based on a survey conducted in December 2013, gauges the current business climate of the state¹s food and agriculture system. A rating of 100 on the index is considered neutral; ratings above 100 signal increasingly positive confidence, and below 100, increasingly negative confidence.

Respondents gave the overall state of food and agriculture a rating of 146, down only one point from the April 2013 survey. In contrast, they rate Michigan¹s overall economic outlook at a healthy 120, up five points from April.

"This is a good sign," explained Chris Peterson, director of the MSU Product Center and lead investigator on the project. "It tells us that not only are industry leaders extremely bullish on the future of Michigan¹s food and agriculture business, they are gaining confidence in the state¹s ability to handle their growth."

The MSU Product Center conducted the first survey in April 2013 to solicit the opinions of members of a newly convened Food and Ag Leaders Roundtable‹more than 100 movers and shakers representing all facets of Michigan agriculture and food processing, including farmers, ag and food processors, and other industry professionals.

The MAFI scores three aspects of the food and ag system in Michigan. The current sales outlook was stable with a rating of 131 in December, and 133 in April; the job outlook scored 126, slightly down from its 132 score in April. Investment opportunities dropped from 133 in April to 107 in December. The drop in investments seemed troubling to economists until they compared notes with a small group of industry leaders during a Feb. 26 meeting.

"They told us that the December number was justified because it looked at short-term growth opportunities. The industry had a wait-and-see attitude," Peterson said. "They wanted to make sure the good times were going to continue before they invested further. However, they remain optimistic that additional investments will be made over the next three years."

The survey also offered respondents a chance to highlight their concerns. Bill Knudson, an MSU Product Center marketing economist, said immigration reform remains a top concern for food and ag leaders and was especially problematic for respondents in the fruit and vegetable sectors.

"When we asked people what kept them up at night, many answered, Œlabor and government regulations)," he said. "They worry about finding good seasonal and full-time labor, as well as finding ways to encourage young people to enter the food and agriculture system."

The survey will be repeated every six months to track ag leaders' perceptions of the business climate and its positive or negative effects on the food and agriculture system. The next survey will be sent out in April and the results released in July 2014.

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