November 12, 2003
US' Minnesota's Animal Agriculture Industry In Crisis
The United States' Minnesota animal agriculture industry is in a crisis and the business climate must change to foster expansion and halt exodus, Gov. Tim Pawlenty said Monday.
"We're at a competitive crossroads in Minnesota with respect to animal agriculture, and we're in danger of losing even more of this value-added sector that we should be growing and encouraging in the state," the governor said.
The stakes are high, he said. The livestock industry represents more than $5.2 billion in economic activity for Minnesota and directly or indirectly creates for more than 90,000 people employment opportunities.
While Minnesota's pork and poultry industries are growing fast and beef is holding steady, the dairy industry is losing ground fast, Pawlenty said, citing a study commissioned by the Minnesota Agri-Growth Council.
He spoke to about 350 people at the annual meeting for the council, which unites farmers, businesses, researchers and others who promote the state's agriculture and food-production industry.
While western and southeastern states are gaining ground in the dairy sector, Minnesota has lost 166,000 dairy cows in the past decade, as well as the processing businesses that go with them.
According to Professor Brian Buhr of the University of Minnesota's Applied Economics Department, each dairy cow represents $5,000 in economic activity. He produced the report for the council, which will use it as an annual benchmark.
In the past two years alone, Minnesota has lost $235 million worth of economic activity by losing 47,000 dairy cows, as Buhr said. It's also losing about $33 million a year in beef-processing opportunities, which have gone out of state.
Pawlenty said that to counter the exodus he is forming a task force to review regulations in Minnesota that are restricting investments. The experts will be given specific charges and be asked to develop recommendations for the Legislature on a relatively short timetable, he said.
"The first [charge] will be to develop a new permitting model for livestock production and processing that supports the retention and expansion of livestock operations in Minnesota, while meeting environmental standards and protecting the environment," he said.
Minnesota competes in a global economy, one in which other states and countries see opportunities to capitalize and grow the livestock sector at Minnesota's expense, according to the new report.
The most successful are the pork and poultry sectors that have successfully linked farmers to processors through vertical integration, Buhr said. But Minnesota has been slow to adopt to this economic model, with dairy lagging behind and faring the worst, he said.
Pawlenty said the new task force would gauge "the competitive index" for animal agriculture in Minnesota. "You line up all those things that go into the economic and decision making matrix of the sector, and then you compare Minnesota with the other states and see which ones we're out of line with," Pawlenty said.
"If we're going to be serious about competing with these other states, we need to try to bring Minnesota in alignment . . . We've gone too far toward just conceding big sectors of animal agriculture without much attention or fight."
University of Minnesota President Robert Bruininks said the state's agriculture-related strengths include cutting-edge facilities on the St. Paul campus, such as the Cargill Building for Microbial Research and Plant Genomics, the first of its kind at a U.S. public research university; and the new Insect Quarantine Facility with the Minnesota Department of Agriculture, which researches plant pests.
Bruininks pointed to examples of the university's "leveraging effects" in the agriculture sector. A few years ago, for example, the university developed a new wheat variety that helped reduce wheat scab. That $800,000 investment provided Minnesota farmers with a 15-fold return on that investment each year, through a yield advantage of $12 million annually, he said.
