By Dominique Cantelme
From the July/August 2016 Issue
The food processing industry is comprised of thousands of companies and billions of dollars in revenue with a market hungry for more. Processing food can help make the appearance and taste more universally consistent; increase seasonal availability; make preparation less time-consuming; and provide for more widespread access.
Food can be a determining factor in how long we live as well as in how well we live. While we all must eat to survive, some also live to eat. We have food festivals, go food tasting, get food poison and go into food comas. It’s the root of the good, the bad and the ugly. Food is life and therefore always will be a topic of great discussion and debate.
When people think of food being processed some think of increasing the safety and accessibility of it while others think of the chemical processes, origin and quality of ingredients and artificial colors and flavors.
According to FoodProcessing.com, five of the critical issues on the agenda for food processors in 2016 include new dietary guidelines, GMO (genetically modified organism) labeling, consolidations and buyouts, animal welfare and label cleanup.
The 2015-2020 Dietary Guidelines for Americans (DGA), issued by USDA and the Dept. of Health and Human Services (DHHS), provide recommendations on how to achieve a healthy diet. While it’s possible this may influence the American diet, it will “most definitely affect foods selected for the school lunch program and various government sponsored food assistance programs.”
GMO labeling is another issue that is not going away. Campbell Soup Company became the first major food company to label GMOs independently. Stemming from their belief in honest, transparent labeling, Campbell’s recognizes that “consumers appreciate what goes into our food,” and wants them to “feel good about the choices they make.”
Business consolidations and brand buyouts is another issue. Recent mergers see fewer food companies constituting more of the business. “Certain mergers raise the concern that reduced competition could lower farmer prices and boost prices at the supermarket, as well as narrow the product options.”
The growing issue of Animal welfare has caused more food processing companies and restaurants to lean toward practices such as using cage free eggs. The market intelligence agency, Mintel, said 56 percent of Americans stop buying from brands they believe are unethical, even if there’s no substitute available, and 27 percent stop purchasing even if they think the competitor offers lower quality.
And finally, many food processing companies are cleaning up labels to simplify ingredient statements. This provides transparency and helps gain consumer trust. Food sources are aimed at being more local and sustainable. The NPD Group reports that the big surge is in fresher, organic products and consumers will pay more for quality they trust.
Consumers not only ask questions, they answer them. Everyone has something to say about what you should eat, what you shouldn’t eat, where you should buy your food and who you should buy it from; and each has reasons as to why.
To meet the demands of consumers, some food companies are altering their processing techniques, ingredients and labeling information; as well they should. If a retail outlet continued to sell the same extra small blue shirts that either no one wanted to buy or most of their customers could not fit in, they would end up with a store full of extra small blue shirts and no customers. People will come back once or twice to check for new inventory but at some point, enough is enough; they will find another store to shop in that sells medium red shirts and has owners who actually care about what their customers want.
What was good enough before may not necessarily be good enough now. Fashion is not the only thing that changes. And with more and more options available to consumers, it makes sense to give them what they want. Forthcoming companies that care about people as much as they care about profit will most likely make more of it in the end. And while listening to consumers will help keep food processing companies competitive in an ever growing market, locating strategically in one of the following locations will help reach them.
OSWEGO COUNTY, NY: MORE TO OFFER
Situated in Upstate New York, Oswego County is located centrally to New York City, Boston, Washington, D.C., Philadelphia, Cleveland, Toronto and Montreal. Yet, Oswego County has more to offer food processors than the logistical advantage of being within hours of every major Northeast market. Oswego County has the available industrial labor force, infrastructure, import/export capabilities and supply chain for growth in the food manufacturing sector.
A skilled workforce, with previous food processing experience, is ready to work in Oswego County. The area’s workforce is supported by more than 30 institutes of higher learning and vocational training within 50 miles. Economic development partners, such as The Workforce Development Board of Oswego County and the One-Stop Career Center, create opportunities to bring workers and employers together and work with colleges and vocational schools to encourage the development of courses that enhance workers’ skills and meet the needs of employers.
Oswego County offers convenient access to Interstates 81 and 90, which provide north/south and east/west movement. Over 25 carriers provide both local and long-distance trucking to and from Oswego County. Connecting lines enable transport to every major U.S. market. Local carriers provide transloading from truck to rail and offer myriad warehouse storage options, including dry, climate controlled and frozen.
The Port of Oswego, a deep-water port on the southeastern shore of Lake Ontario, provides a major logistical advantage to industry in Oswego County and the Central New York region. As the first port of call and hub in the Great Lakes St. Lawrence Seaway System, it is part of over 2,300 miles of water transportation from Duluth, Minnesota to the Atlantic Ocean. The Port of Oswego provides on-dock rail and truck loading, making for a smooth transition of goods to market. Recent upgrades to the Port’s security system allow the Port to handle high-security shipments. Future expansion includes the development of an inland port.
CSX offers daily rail transportation to Oswego County. Rail service is available throughout the County, with direct access at several sites and industrial parks. With a nearby regional switching yard, CSX provides access to more than 21,000 miles of track in 23 states and the Canadian provinces of Ontario and Quebec, plus 70 ocean, lake and river ports. Coupled with nationwide transloading and warehousing, CSX makes rail a very viable transportation option for Oswego County businesses.
Syracuse Hancock International Airport is within minutes of Oswego County. In addition to worldwide passenger transport, Hancock has facilities for air freight transport, which includes a 53,000-square-foot cargo building. The Oswego County Airport boasts two 5,200-foot paved runways ideal for business, industry and private aviation.
Oswego County has many options for multimodal transport of raw materials, parts and products. The various combinations of transport are ideal for materials import and product export. As a designated Foreign Trade Zone (FTZ), Oswego County is designed for the convenient and cost effective production of goods.
Food processing has traditionally required high quality and heavy capacities of industrial infrastructure, which is where Oswego County excels. High quality potable water and available capacity for industrial waste water treatment are available in Oswego County. Depending on your location, you could tap into nearly limitless water from Lake Ontario or access up to 10,000,000 gallons available daily from the Onondaga County Water Authority (OCWA). There also are several options for water treatment including municipal treatment and a future private treatment facility with over 5,000,000 gallons of excess capacity.
Additionally, many shovel ready sites are available in Oswego County. Within the industrial parks, all sites have utilities and other necessary infrastructure in place. Some sites within the parks have had comprehensive site profiles performed. These profiles detail the site conditions, available infrastructure and provide development options suitable for that site. They expedite the selection process by eliminating much of the due diligence work for the potential purchaser.
All of these advantages have recently enabled Oswego County to attract three growing companies that have purchased existing facilities and expanded their food processing ventures. Champlain Valley Specialty (CVS) of NY, in the Town of Oswego, acquired the former Empire Fresh Cuts and Oswego Shippers and Growers. This established their apple processing facility closer to their suppliers and their market. CVS produces “Grab Apples” from locally grown apples that are sliced, packaged and shipped to local schools, retail markets, restaurants and their distributors.
Teti Bakery USA, Inc., is the newly formed U.S. subsidiary of Teti Bakery, based in Toronto, Canada. Teti Bakery’s acquisition, in the Town of Volney, is their first U.S. facility and is strategically located for product distribution in the Northeast and along the Atlantic coast. Teti makes Italian bread products that are sold in supermarkets and used in restaurants.
K&N’s Foods USA, LLC, acquired the former BirdsEye plant in the City of Fulton. They manufacture a wide variety of frozen valued-added Halal chicken products, under the brand license from K&N’s Foods Limited, Pakistan. This is the first North American facility for K&N’s, a popular international brand.
Together, at full capacity, these three projects represent 480,000 square feet of food processing space with 440 new food processing workers employed in Oswego County.
For more information about Oswego County, contact L. Michael Treadwell, Executive Director of Operation Oswego County, Inc., at (315) 343-1545 or [email protected]county.org.
HOOSIER ENERGY “GETS” AG-BUSINESSES
With more than 14.7 million acres of farmland, Indiana is a leading producer of corn, soybeans, hogs, poultry, popcorn and tomato products. Indiana agriculture contributes roughly $31.2 billion to the Hoosier GDP annually, with approximately 107,500 Hoosier jobs supported by the ag-business sector.
Ted McKinney is the Director of the Indiana State Department of Agriculture and the Director of Agri-Business Economic Development for the Indiana Economic Development Corporation. McKinney noted that ag-business is booming. “For the first time ever, Wal-Mart is investing in their own dairy processing plant, which looks to be one of the largest in the nation, and they’ve chosen Indiana for that plant. Krone Equipment, a producer of heavy farming machinery, will move its North American Headquarters from Memphis, TN to Shelbyville.”
Looking at Southern Indiana and the Hoosier Energy service territory where it is the electric provider for 18 distribution cooperatives (REMCs), McKinney credits the company for how they understand the industry at a fundamental level. “Modern ag production is highly automated. “When you are looking at a lot of machinery to churn commodity products, you need a reasonably priced, reliable energy supply. We can offer that. I can’t state enough how important it is that Hoosier Energy is there early on to answer questions.” McKinney added, “Hoosier Energy just ‘gets’ agri-businesses. They walk the talk and understand the needs of the industry, and that goes a long way.”
Grain Processing Corporation (GPC) is one major company Hoosier Energy and Daviess-Martin County REMC have helped in several ways. GPC is a global distributor of grain ethanol products. GPC plans to invest $70 million to expand facilities at their Washington, IN, campus over the next two years. When completed, they will double production from 17 million pounds per month to 34 million pounds per month. According to Renee Campbell, the Hoosier Energy Key Accounts Manager for the territory, GPC creates grain product through wet-milling, a process that results in high purity. “GPC is the largest producer of Maltodextrin (AKA Maltrin®), used in personal care items, food and ethyl alcohol. They produce a corn oil and corn germ used in pet foods and high gluten nutrition products.”
Hoosier Energy and their member/owner, Daviess-Martin County REMC, have worked with GPC at several levels since the facility opened in 1997. “GPC owns their own power substation and we advise them on the maintenance and service of that substation. On the expansion, we’ll work to make modern LED lighting an affordable option and also discuss advanced lighting control so they’ll be operating at maximum energy efficiency as soon as they open,” said Campbell. “We know that, with this expansion, they will need a lot more corn supply. So this is a huge opportunity for corn growers in Southern Indiana.”
Mike Owens, another Key Account Manager at Hoosier Energy, believes that nurturing good ag-business doesn’t stop at the large company accounts. “The family farms of today are the large ag-producers of tomorrow,” said Owens. “Rose Acre Farms is one of America’s largest egg producers with 17 facilities in six states. They started as a family farm in Jackson County, Indiana. Any of the family farms can end up being my next major ag-producer.” Owens referenced a “smaller” client, Riverview Farms in Orange County near Orleans, IN, a family farm which currently produces “200,000 chickens, 70,000 hogs and 250,000 tom turkeys every year.” With recent expansions, they’ve added a $4.2 million pullet barn (for raising turkey hatchlings) and a $12M feeder mill. “They’re diversifying and want to pass the business on to the next generation. They may be my next major ag-producer.”
One way Hoosier Energy and their distribution cooperatives helps family farms is by offering incentives to upgrade their lights to modern, energy efficient LEDs. “The typical barn may require as many at 220 light bulbs.” Modern LED lights run on 10 watts, are very durable and can last up to 20 years. Hoosier Energy offers family farms a rebate on LED upgrades that can result in a savings from almost $8 per bulb down to $1.89 per bulb. This can mean an average reduction of 15 percent in their overall power usage.
From the family farm to the global food producers, Hoosier Energy “gets” ag-business. By supporting farms and businesses of all sizes, Hoosier Energy and their member/owners REMCs are nurturing the growth of ag-businesses throughout Southern Indiana.
PATERSON, NJ: THE FOOD STANDOUT
When Alexander Hamilton first stopped by the Paterson Great Falls in 1778 to have lunch with George Washington and the Marquis de Lafayette, there was definitely not a choice of places to eat in the area. Fast forward 238 years and the City of Paterson has a plethora of different cuisines and food establishments—enough to satisfy any passing tourist in transit—which makes it the ideal location to become known as a future food hub in the region.
Paterson, through its non-profit, the Paterson Restoration Corporation (PRC), is gearing up towards the launching of its first Food Business Incubator. Economic Development Authority (EDA) funding awarded a grant to the Rutgers Food Innovation Center to lead a feasibility study for the creation of a food incubation program.
The 30,000-square-foot facility—located at 163-177 Pennsylvania Avenue, near the Paterson Farmers Market—is within minutes of Route 80 and Route 20 as well as the Metro NYC area. This innovative space currently is being retrofitted from the “inside out”.
The Food Business Incubator will offer a fully equipped, state-of-the-art USDA/FDA certified kitchen, bottling and packaging areas, a demo-test kitchen, conference rooms and co-working spaces.
“We are pursuing this project as a way to stimulate economic development in Paterson and the surrounding region,” said Ruben Gomez, Director of Economic Development at the City of Paterson and Executive Director of the Paterson Restoration Corporation.
“We’re really excited about the possibility of a FDA-inspected commercial kitchen and food processing facility being located in Paterson, out of which food businesses in the region will be able to design, develop and commercialize their specialty products,” added Rutgers FIC Director, Lou Cooperhouse.
Having a home in The Garden State—where the food industry is estimated at more than $8.1 billion annually—is one of the big advantages for Paterson as a starting point to join the growth movement of the New Jersey food industry sector, a thriving $105 billion food and agriculture sector. New Jersey is home to 1,900 food manufacturing companies, including Campbell Soup, Mars and Goya. In addition, the state is attractive for its generally lower rent costs and home purchases and for its strategic location in the northeast corridor.
As the Paterson immigrant population proceeds along the economic ladder, new immigrants join the already 50 plus native languages spoken. Many will find their first jobs in Paterson in the growing ethnic food and beverage industry, as the Hispanic, Middle Eastern, kosher, halal and specialty industry food markets continue to expand.
“Although certain industries have seen significant declines, food manufacturing industries and food services have experienced significant growth. These companies are creating job opportunities and a new generation of successful leaders for our community, emblematic of the economic development that we seek for our City” says City of Paterson Mayor Torres.
One of the latest hot culinary trends is Peruvian cuisine. It has taken off in the United States as well as around the world. And it just so happens that in Paterson alone, Peruvians own half of the city’s 2,800 Hispanic-owned businesses, including 45 restaurants. The Embassy of Peru has opened a consulate in Paterson and it now serves the more than 75,000 Peruvians living in the state of New Jersey.
“When you think of food in Paterson you probably think of all the incredible ethnic cuisine restaurants you can find here. If you take a deeper look at the City you will find that there are large and small food manufacturing and distribution companies in Paterson as well. In fact, LT. Governor Kim Guadagno recently visited Kontos Foods and recognized them for their leadership in the industry,” said Jamie Dykes II, President of the Greater Paterson Chamber of Commerce.
The high percentage of food-related companies in Paterson and in the surrounding Northern New Jersey area, make it a food hub with exceptional access to a network of highways in the tri-state area.
“As an Urban Enterprise Zone City, we have financial incentives that have the potential to grow their business for those who want to invest in Paterson,” says UEZ Director, Penni Forestieri.
CUMBERLAND COUNTY, NJ: ADVANCING FOOD COMMERCIALIZATION
Domestic and international food companies that plan to expand or introduce their product lines require abundant space and services. Now a new Food Industry Commercialization Center strategically positioned in the Northeast will offer aspiring food industry leaders and entrepreneurs convenient and abundant resources to ensure they can successfully meet their market launch objectives.
The advanced Food Industry Commercialization Center in southern New Jersey to welcome developing companies and provide them with much-needed flex-space and business support programs, is being developed by New Jersey’s Cumberland County Improvement Authority. The Authority will work closely with Rutgers University, which runs the only Soft Landings Program for food processing in the world.
National and international food companies will be offered leased space to initiate their commercial scale operations. The new Food Industry Commercialization Center will serve as a business incubation facility where these established or new companies also will be supported by a full complement of services to ready them for facility independence and maximize their growth potential.
The Cumberland County Improvement Authority is partnering with the Cumberland Empowerment Zone Corporation and the City of Bridgeton to develop, own and manage the 27,000-square-foot Food Industry Commercialization Center. The building is expected to be completed in the fourth quarter of 2017.
As the state’s acclaimed Agribusiness Center, due to its abundance of farmland and farmland production, Cumberland County is called home by brands including General Mills/Progresso, Perdue, Hanover Foods, Rich’s Products and White Wave. By offering food entrepreneurs or established food corporations three- to five-year or short-term tenancies before their move to fully independent facilities, the Cumberland County Improvement Authority hopes to attract additional companies to this strategically positioned area.
Gerard Velazquez, Executive Director of the Improvement Authority explains, “Resources at this new facility, when completed, will range from processing space, freezer and cold storage, warehousing with loading dock areas to food safety regulation, marketing and sales support.” He added, “Developing companies will better understand the requirements and advantages to locating to an independent industrial space in a stand-alone facility.”
Lou Cooperhouse, Director of the Rutgers Food Innovation Center said, “A number of our clients and our graduates at the Food Innovation Center routinely require between 2,000 to 3,000 square feet of space to meet their growing commercialization needs. In addition, we have a number of domestic and international companies that we work with, that are looking immediately for this amount of space as they launch their business to serve the U.S. marketplace.” Cooperhouse says tenants of the new Food Industry Commercialization Center also will have an opportunity to access the customized business consulting and technical mentoring services of the Rutgers Food Innovation Center, that will be located immediately adjacent to this new facility. Services include assistance with product and process development, market and customer research, engineering support, food safety training, and other areas.
“Yes is one of the most confident words spoken in the English language and Cumberland YES—Your Economic Solution—best reflects the assurance our Cumberland County team brings to any company’s development needs,” Velazquez says. According to Velazquez, the Authority’s track record demonstrates their proven ability to say “YES” to their business partners in varied industries who consequently succeed. He further explains, “Through national and international strategic alliances, we continue to secure funding for development needs such as job training, infrastructure, equipment and to identify suitable sites where companies can remain viable and expand their operations.”
The Cumberland County Improvement Authority is a multi-faceted financing, development and project management agency. Projects that have been brought to fruition by these advanced developers are often hailed as models throughout the Garden State.
Their most recent investments totaling more than $100 million have resulted in New Jersey’s premier technical education high school and a new center for workforce and economic development now positioned strategically on the county’s college campus.
The three facilities, hailed as the Improvement Authority’s masterminded “economic development triangle”, now provide companies a host of workforce solutions. Programs for entry and advanced level workers include customized and on-the-job training as well as specialized and focused education all aimed at creating and maintaining a highly skilled workforce for county businesses.
“Developing companies will see both the merits of the new Food Commercialization Center and locating their planned independent facility here,” James Watson, Cumberland’s Director of Economic Development explains.
A whole host of local, state and federal incentives make it attractive for businesses to locate here including:
- Urban Enterprise Zones provide tax credits and low interest rates to reduce development costs.
- The GROW New Jersey Program offers significant tax credits for job creation and retention.
- The New Jersey Economic Redevelopment and Growth Program features special financing for businesses addressing revenue gaps in their projects.
- USDA Rural Development provides businesses with financial backing and technical assistance, loans and loan guarantees to stimulate business creation and growth.
- U.S. EDA Public Infrastructure Funding extends public infrastructure to development sites or provides public improvements for qualifying projects.
- The Cumberland Empowerment Zone supports job creation businesses with federal loans, bonds and tax incentives.
“Our incentive package is hard to match,” Watson says. Local empowerment and enterprise zones offer not only tax abatements and low-interest loans, but also sales tax exemptions for construction, equipment and supply purchases. Generous GROW New Jersey money is even available to companies with as few as 10 employees. “Imagine receiving nearly $1 million over 10 years for hiring just 10 employees,” he explains.
For more information about making Cumberland Your Economic Solution, visit www.CumberlandYES.com.