Food processing poised for growth, CAEDC says

With all the fervor of the Pennsylvania Farm Show this month, it seems odd to say that public support of agribusiness in Cumberland County is a case of rooting for the underdog.

But in an area where farming and food processing is dwarfed — at least in terms of jobs and net income — by a number of other industries, the county’s economic authority sees an opportunity to expand.

“We went after agribusiness, which is more than just the farming aspect of it. It includes a lot more of the production and manufacturing component,” said Mary Kuna, Business Attraction Manager for the Cumberland Area Economic Development Corporation.

The county’s strategic economic plan, developed by CAEDC, identifies agribusiness as its focus area for new enterprises. The emphasis isn’t on farming per se, but rather in attracting processing and manufacturing as a way to expand the farm economy beyond raw goods.

“What makes us great for distribution and warehousing should also make us great for food manufacturing,” Kuna said. “So we decided that would be a target area, going after combining our farms that we currently have, and have been put into farmland preservation [with manufacturing]. The best balance would be businesses that can piggyback off that preservation, but also benefit from our transportation infrastructure.”

“You’re seeing a younger generation of farmers who are willing to consider a different kind of farming,” added Shireen Farr, CAEDC’s Chief Operating Officer. “Not just farming to raise tomatoes — which is only the first step in getting them on the shelf or in a restaurant — but also being concerned with where the tomatoes go and how they’re sold and marketed.”

Statistically, farm employment makes up only 1 percent of Cumberland County’s workforce, with 1,756 jobs out of 158,965 as of 2012, according to the U.S. Bureau of Economic Analysis. But that count, however modest, grew from 1,432 in 2003, a 23 percent rise in nine years.

More important, according to CAEDC, are calculations from the Penn State Extension indicating that farm performance in Cumberland County is fairly well insulated from farm performance nationwide, giving the county a competitive advantage.

While job growth prior to the recession was explosive in many sectors, post-2007 calculations have been less stellar. According to Penn State, farm employment gained only 46 jobs in Cumberland from 2007 to 2012 — but if it followed national trends, it should’ve lost roughly 30.

Few other industries in the region can say the same. From 2007 to 2012, Cumberland County lost 442 jobs — trending down 0.28 percent, whereas the national trend, adjusted for the county’s mix of industries and their respective performance, should’ve put it up 0.63 percent.

Further, agribusiness has a relatively low location quotient, a statistic that indicates how saturated an area is with a particular industry, based on that area’s population and wealth compared to national averages.

Quotients under one indicate a lack; over one indicates a surplus and likely an export economy. Farming itself rings in very low at 0.19, according to Penn State data. The ancillary industries that CAEDC wants to attract, such as manufacturing and food service, come in at 0.69 and 0.82, respectively.

“If it’s close to one, but not quite there, it means there’s an opportunity to have some impact and change something,” Kuna said. “We have farms, which have a fairly low location quotient, and then we have these other aspects that aren’t quite there, but where we have an opportunity to really do something.”

Some industries’ quotients are predictably high, with warehousing at 2.94. While the industry will likely continue to grow, the saturation means that the marginal impact an agency like CAEDC can offer is lower than for less concentrated sectors.

“When you look at something so high, like warehousing, it’s more retention for them to stay here and continue to employ more people,” Kuna said. “Because that location quotient is so high, we’re not going to invest as many resources in attraction because we’re already dealing with a high market.”

With agribusiness, the marginal impact of a few new opportunities may even be higher given than the data indicates, given that employment figures from the BEA exclude proprietors – i.e., those who make their money from ownership. For many small farms, however, owners are typically also an employee, often the only one.

Farm proprietors’ income, per Penn State data, grew 25 percent from 2007 to 2012, almost twice the net of the rest of Pennsylvania.

“That income is hard to track if you’re a small farmer and it’s just you and your kids working,” said CAEDC Chief Executive Officer Jonathan Bowser. “We’ve also started to realize some of the farmers working at distribution centers at night…once they’re done farming, they’ll take night shift at a warehouse to supplement their income.”

45 percent of Cumberland’s farms see less than $10,000 in annual sales, according to Penn State – roughly the same proportion are under 50 acres.

“It’s a national trend that there aren’t that many mid-size farms,” Kuna said. “It’s either big agriculture, or the small guys. Cumberland in particular has a lot of farms, but we are also a niche market with a lot of small, specialized farms.”

“We’re looking to give farmers a value-added opportunity where they can also go into the processing side. You have a farm that produces milk, maybe they can start marketing their own cheese as well.”

Although many would associate food processing in Cumberland Valley with Land O’ Lakes, the Minnesota-based company is not a local original. Kessler Foods, however, was founded in the area in 1928 and maintains a plant in Lemoyne where the company produces sausages and other meat products under contract for a number of different brand names.

Read the entire article on Cumberlink.com.