Minnesota food system study — building trust is good business
I just published a new study of the Minnesota food system. The main take-home message is that building trust is good for business. Close relationships with suppliers and customers are exactly what allow food firms to respond to changing conditions.
The report, “Mapping the Minnesota Food Industry,” was commissioned by Blue Cross and Blue Shield of Minnesota’s Center for Prevention, which has launched a Healthy Eating Minnesota initiative. The full study is available for free download at http://www.crcworks.org/mnfood.pdf.
My favorite part of the work was interviewing food businesses. Even some of the more successful, multi-million dollar firms felt they could not do everything they need to do because economic structures get in the way.
One apple grower complained that his apples, lovingly tended for a full season, gain more value in the 36 hours after he picks them, once they enter the distribution stream, than they gain during the five-month growing season. He added that the food economy has no way of rewarding producers for quality, since daily transactions are based on price and quantity.
Minnesota is a global center for food business. Of the state’s top 20 manufacturing firms, seven are food manufacturers and distributors. These seven earn $114 billion of revenue each year, two-thirds of all revenue earned by the state’s leading firms. The state has 17,000 food-related businesses, hiring a combined 316,000 employees who earn $7.8 billion of wage and farm income.
With 80,000 farms selling over $13 billion of crops and livestock each year, Minnesota is also the seventh-largest farm state. However, over the past decade, state farmers have lost an average of nearly one half billion dollars each year producing these foodstuffs. Despite doubling productivity, Minnesota farmers earned $1.1 billion less from commodity sales in 2007 than they did in 1969, in inflation-adjusted dollars.
Meanwhile, state consumers buy $12 billion of food each year. Experts estimate that 90% of this ($10 billion) is sourced outside of the state, meaning consumers spend a great deal of money that leaves Minnesota. Only $23 million of the foods farmers sell (three-tenths of one percent) are sold directly to consumers.
The study also shows that outcomes for consumers have not been positive. Two of every three Minnesotans are overweight. Nearly a third of all residents are obese. The Centers for Disease Control estimates the costs of treating obesity-related diseases in the state to be $1.3 billion – and other researchers report twice those costs. Food-related medical conditions, combined with a lack of exercise, have become a leading cause of death. Although mortality rates for diet-related diseases in the Twin Cities are among the lowest for metro areas in the U.S., only 24% of adults eat the recommended five servings of fruit and vegetables per day.
I would add that three themes characterize the emerging businesses that are leading the way in creating a new, more community-oriented food economy in the state. First, these firms value trusting relationships. Second, they plan for an uncertain future – especially the fact we don’t know if we will have oil, or at what cost, in a few years. Third, successful firms build a business that recycles resources within the state, rather than exporting them.
I would welcome comments and discussion as people read the study.