Production, Processing and Distribution—In States That Suit
Market, transportation and material access help fuel location choices for the businesses that feed us.
As a result of the financial crisis—causing low commodity prices and low credit that limited farmers’ ability to buy seeds and fertilizers—and unfavorable weather conditions in food producing areas, the supply and demand in agricultural markets became unbalanced. And while the United States Department of Agriculture (USDA) has declared many crop producing regions as disaster areas (including counties in Tennessee, New Mexico and Arkansas) based on crop losses; the department also predicts record harvests for 2010. While determining how or if one can coexist with the other is a question that will only be answered as the year unfolds, many regions of the U.S. continue to put their best foot—or land—forward in order to bring in more agribusiness.
Agribusiness includes business entities that most significantly affect how food is grown, processed, and distributed in the United States. As one of the largest segments of Agribusiness, the food processing industry interacts with farmers, livestock growers, distributors and consumers to convert raw ingredients such as fruits, vegetables, grains, meats and dairy products into finished goods.
Agribusiness, consisting of food production, food processing and packaging, and food product distribution, is the number one industry in Genesee County, NY. More than half of its land (314,000 acres) is assessed as agribusiness. Three of the top 10 largest vegetable farms in the U.S. are in Genesee County and it is one of the top 10 counties in New York state for onion, cabbage, sweet corn, milk and wheat production. Perhaps that’s because Genesee County is part of the Great Lakes and Finger Lakes regions, which provide long-term fresh water availability that’s more reliable than anywhere else, making it one of the most logical choices for locating a food processing company. In order to utilize all this capable land, the Genesee County Economic Development Center (GCEDC) developed the Genesee Valley Agri-Business Park, a 200-acre Industrial Park that offers immediate access to state highways, is 30 minutes from two international airports (Rochester and Buffalo), and is within a 10-hour drive of 125 million people.
Because time is of the essence—particularly with delivering food products—Livingston County, NY is a great location for food processing. The richest market in the world is within a radius of 750 miles of New York State; this radius includes half of the total U.S. and Canadian populations and covers the 18 Northeast states and parts of two Canadian provinces. Half of the U.S. personal income, wholesale sales, and about 50 percent of its retail trade are accounted for within this radius. More than 50 percent of the land area in Livingston County is used for agriculture, and the county is within the top five New York counties in grain, beet, bean and dairy production.
Omaha, NE is another great location for agribusiness. Its market access and city incentives are some of the reasons it is home to many expanding food processing companies that make items ranging from meat and flour to frozen dinners and cereal. Omaha’s dynamic workforce and tax programs make it easy to set up and maintain a food production facility.
Sioux City, IA was selected as one of the five leading Food Processing and Agribusiness Growth Sectors in the nation in Business Facilities’ 2009 Metro Rankings. Sioux City is a hub for food processing, food products and agribusiness. The epicenter of the Siouxland Initiative’s highly successful development of a huge food-oriented job-creating engine, food processing is one of Sioux City’s strongest sectors with many long-standing and new businesses that have grown and expanded. The area plans to continue targeting food processing firms to locate and grow in their Industrial Park areas through low operating costs, agricultural resources, and transportation convenience.
Greater Rochester, NY also has the coordinates and resources that attract agribusiness. With more than 100 food and beverage manufacturing companies, it is the largest milk-producing region in New York State and the nation’s second largest wine producer and third largest grape grower. Greater Rochester has almost 5,000 employees in the food manufacturing sector and 1500 in the beverage sector. Area farms produce annual crops of soybeans, corn and a variety of fruits and vegetables while its dairy farms generate over two million pounds of milk each year. The business parks and utilities lure one company after the other creating a neighborhood of food industry giants.
The Greater Rochester Expansion
Two national companies, Kraft and LiDestri Foods, have announced major expansions that will create 100 to 150 jobs in the Greater Rochester, NY Region.
Kraft Foods, the world’s second largest food company with annual revenues of more than $42 billion, has expanded its local production facility in Avon, NY, Livingston County. Kraft’s production capacity is increasing by one-third, adding 50 full-time jobs that bring its Upstate NY workforce to 410 people.
Kraft produces the Cool Whip and Lunchables lunch combination lines at its Avon, NY plant. The company chose to expand its operation there because of the available plant capacity as well as the high productivity consistently achieved by the local team. Two $125,000 grants, one each from Empire State Development and the Division of Housing and Community Renewal, were given to Kraft through the New York State Community Development Block Grant program, which provides the support and tools companies need to succeed. The funding will be used to develop Kraft’s new Lunchables line.
“As one of the largest companies in the world, Kraft Foods’ decision to expand their commitment to New York demonstrates what we already know; that our state has a wealth of resources, including a talented and highly-educated workforce that is ready to work,” Gov. David Paterson noted when the project was announced.
Empire State Development President Dennis M. Mullen said, “Governor Paterson has made bringing jobs to New York his first priority. We welcome Kraft’s decision to bring new and exciting opportunities to Upstate New York, and are thrilled that such a prominent manufacturer has committed to expanding operations right here in the Finger Lakes Region.”
LiDestri Foods, a premier manufacturer of sauces, dips, salsas and spirits including Classico pasta sauce, Newman’s Own Sauce and Salsa, Francesco Rinaldi Pasta Sauce and Frito-Lay’s Tostitos line, has announced the purchase of a 652,000 square foot building at Eastman Business Park in Rochester. The move, projected to bring 60 to 100 jobs to the Greater Rochester, NY Region, paves the way for the company to expand production of its 500 different products, which feed more than six million people per day.
“We decided against another possible location in the Southeast because we can reach 75 million people within a day’s drive of Rochester,” said John LiDestri, President of LiDestri Foods. “The proximity to major markets without major market costs is a big advantage, but our biggest advantage is the phenomenal talent and work ethic of the Rochester Region’s workforce.”
Home to about 30 companies, Eastman Business Park has extensive on-site infrastructure which includes a full suite of utilities, railroad access, an abundance of affordable fresh water, a waste water treatment facility, security personnel and a fire department. LiDestri plans to set up an innovation center at the Park—developing spirits and new lines of food that could ultimately turn into more business opportunities.
“Kraft and LiDestri are premier players in the food and beverage industry,” said Greater Rochester Enterprise President Mark Peterson. “We are pleased with their decision to expand here. They will continue to benefit from the wealth of resources the Rochester Region has to offer; our talented workforce, world-class facilities, and 7 percent of the world’s fresh water supply, which provides companies with an abundance of affordable fresh water.”
There are more than 100 food and beverage companies located in the Greater Rochester, NY Region, including the largest wine company in the world, Constellation Brands, and Wegmans Food Markets, consistently recognized by Fortune magazine as one of the best companies to work for in the United States.
The Lure of Greater Omaha
The Greater Omaha Economic Development Partnership continues to successfully target the agribusiness industry. The Omaha region offers a favorable business environment for agribusiness. First, Greater Omaha has an educated, flexible workforce with 33.2 percent of adults holding a bachelor’s degree or higher. Second, Omaha is located at the crossroads of Interstate 80 and Interstate 29. Third, industrial utility rates remain well below national averages, with local industrial electricity rates at 30 percent to 40 percent below national rates. Fourth, institutes of higher education continue to provide quality programs that benefit the agribusiness industry. For example, the University of Nebraska’s Food Processing Center offers both technical and business development services to meet the needs of the food industry.
Key to the Partnership’s efforts to grow agribusiness in the Omaha area is the Nebraska Advantage Program. The Nebraska Advantage program can substantially reduce, and in certain cases eliminate, a company’s income, sales, payroll withholding and certain classes of personal property taxes for up to 15 years. The program is designed to reward companies via a performance-based system both short and long term. The program provides tax credits and sales tax refunds based on a flexible, six-tier investment and job creation schedule. In addition, the program provides tax credits to reduce or eliminate payroll withholding, sales, property and income tax liabilities. Food processing equipment receives exemption from personal property tax, with a $10 million investment and the hiring of 100 full-time employees. Finally, companies have five to seven years to attain required job- and investment-creation levels and can utilize credits against the various tax liabilities for up to 15 years.
The favorable business environment and the Nebraska Advantage program enhance the Greater Omaha Economic Partnership seamless regional approach to economic development; the team’s efforts have resulted in continuing investment throughout the region. In 2009, Novozymes, the Danish enzyme producer, announced plans to double the size of their facility in Blair, NE to the $150 million to $200 million range. Novozymes joins Cargill, Purac America Inc./PGLA-1, NatureWorks LLC, Evonik Degussa Corp and UGL Unicco on the massive, 650-acre Blair Biorefinery Campus in Blair, the single biggest industrial complex in the state and the single largest investment in the state of Nebraska, currently sitting at approximately $1.4 billion. On a typical day, there are 600 full-time employees and 500 contract employees at the Blair Biorefinery Campus. In addition, Cargill announced plans to occupy a 30,000 square foot office building in the Hayden Place development in Blair for the 90 employees in their corn milling business unit.
In Cass County to the south of Omaha, Vireo Resources, a nutritional and pharmaceutical company continues to expand at the Fourmile Industrial Park in Plattsmouth, Neb. Over the past seven years, Vireo has worked with the University of Nebraska Medical Center to market several inventions in pain management and athletic performance.
In Omaha, Farm Credit Services, the region’s leading agricultural credit and insurance provider, announced plans to expand by constructing a $17 million, 77,000-square-foot office building. At build-out, the company will have about 400 employees at their central office.
These companies are part of a vibrant agribusiness community that includes companies like, ConAgra, Omaha Steaks, Scoular Grain and Kellogg’s that have large operations in the Omaha area. Companies in Omaha are placed squarely in the middle of the food production pipeline. In total, food manufacturers employ over 12,000 workers in Omaha, representing about 3 percent of the overall workforce. Omaha companies provide marketing and financial services to agribusiness, as well. The ten largest banks in the region maintain well over $10 billion of farm loans on their books.