The entire food industry is in a period of disruption, caused largely by consumer demand for healthier, more convenient food delivered in ways it hasn’t been in the past.
“The industry is scrambling to keep up with the changes,” says Joe Needham, director of Food and Agribusiness at JobsOhio.
To that end, he says Ohio has created a system that marries local economic development efforts with regional- and state-level programs to support this industry.
“It’s all about helping the state’s food and agribusiness sectors grow,” he says.
Smart Business spoke with Needham about the opportunities Ohio’s food and agribusiness industry offers to businesses big and small.
What does the food and agribusiness industry look like in Ohio?
Ohio has 70,000 defined farms that employ some 78,000 people and generate a gross state product of approximately $3.5 billion.
Though it has a modest commodity processing industry that comprises about 50 plants that make basic food and feed ingredients, its food manufacturing industry is a powerhouse. This sector comprises some 1,100 facilities, employing 69,000 people and generates $12 billion toward the gross state product from the production of finished consumer food products. It is also the industry where much of the opportunity for growth is projected.
Ohio’s food industry accounts for 5 percent of total production in the U.S., and some of the world’s biggest food companies have facilities in the state. Its combination of farm production, commercial processing, and storage and distribution, adds up to a $107 billion annual economic impact in the state, making it among the top industries.
What trends are shaping the industry?
Consumers are demanding functional foods that are high in nutrients. They’re looking at labels and scrutinizing the ingredients.
Consumers also want ready-to-eat foods that are available when and where they want them. That’s impacted packaging and distribution, and is driving the popularity of home delivery services.
Another area of the industry that’s having a significant economic impact is pet food and snacks. That segment is experiencing 4 percent annual growth in grocery stores — twice as much as any other category. And it’s a significant category for feed manufacturers that are in the pet food business.
With all this disruption comes opportunity for startups. Large companies are buying up smaller, trusted brands because consumers are suspicious of the bigger brands. This has led to lots of startups looking to break through and get bought out.
How is Ohio supporting the food and agribusiness industry?
Ohio understands the impact this industry has on its economy and has programs to support companies in this sector. For instance, it has a research and development program to support companies that are building or expanding their R&D, of which a lot is happening in the state. For instance, the Swiss-based Nestlé has 31 global research centers, three of which are in Ohio. Similarly, The Smucker Co. recently purchased Big Heart Pet brands and moved it from San Francisco to Orville, where it built new offices and R&D facilities.
There’s also the use of revitalization to turn properties into useful facilities. There are programs that offer grants to help with building, machinery and equipment purchases; loan programs to jumpstart capital expenses; and job creation tax credits tied to the number of jobs created and payroll generated.
What advantages could businesses in this industry realize by working in Ohio?
Ohio is a powerhouse in food manufacturing, and with good reason. The state has a large population, a large workforce, terrific geographic location for distribution with quality roadways and railways, and barges and other vessels traveling through the Great Lakes. The state is also fortunate to have an abundant energy supply, most of which comes from the oil and gas that can be extracted from its shale formations.
All of the state’s strengths make Ohio an attractive place for companies of all sizes and stages to set up shop.
Insights Economic Development is brought to you by JobsOhio