Down on the Farm
Michigan's booming agricultural sector, especially urban framing, offers the best hope of revitalizing Detroit.
John Hantz surveys the challenge of revitalizing the city of Detroit, with its thousands of vacant lots and abandoned buildings, along with an aging infrastructure, like he would a balance sheet. “Whether it’s a struggling business or a struggling municipality, you have assets and liabilities. And, frankly, the city of Detroit looks at everything as an asset, and that’s a major problem,” says Hantz, a long-time resident of Indian Village and Founder and CEO of Hantz Group Inc., A large financial holding company in Southfield.
Hantz believes the cure to what ails the city is straightforward: Convert its many liabilities into assets. To that end, he has started farming within a 500-acre zone (including 200 acres the city owns) located on the east side and bounded by Mack, Jefferson, St. Jean, and Van Dyke. Using a combination of his own money, public investment, and support from foundations, Hantz envisions transforming the city-owned parcels and the land he is acquiring from the private sector into the largest urban farming initiative in the world (there will be no livestock in this operation).
Raised in rural Romeo, Hantz sees opportunity in planting and harvesting fruits, vegetables, and forestry products for a profit. The first Detroit settlers, after all, were farmers, and up until 1910 — when the automotive industry made its rapid ascent — farming was one of the city’s largest industries. But as manufacturing grew (along with a corresponding rise in population), farming gave way to the demands of the Industrial Age.
The buildup to World War II, when Detroit became the Arsenal of Democracy, impacted city farmers even more, as factories were developed in urban neighborhoods and inlying areas to speed the production of munitions and armaments.
“So here we are today, we have all this vacant land, vacant homes, and abandoned factories, and there’s not much the city can do because it doesn’t have the money to invest in a large transformation of its land holdings,” says Hantz, who is also founder and CEO of Hantz Farms, one of more than two dozen companies he oversees. “What’s needed is a strategic alignment where you quickly put the city’s assets and liabilities on a balance sheet, study it, and determine how to convert as many liabilities as you can into assets, in the shortest time possible.”
By conservative estimates, the city owns more than 40,000 parcels, most of which are abandoned or occupied by vacant homes and buildings. Real estate experts say it costs millions of dollars each year to maintain these properties. “Inspiration is when your resources outpace your aspirations,” Hantz says. “Yes, we plan to make money by farming, but we won’t be the only ones. We encourage competition. The agricultural sector is a big part of the state’s economy, especially when you consider exports.”
To create a template for urban farming, Hantz started a pilot zone last year by purchasing several dozen parcels of land near Davison and Mt. Elliott. After clearing the 3.5-block area of 150 cubic yards of trash — including 430 tires — and several burnt-out homes, he planted 900 saplings. The goal is to harvest the trees, mostly oak, in the next 20 years.
“Agriculture in urban districts has already proven to be affordable and sustainable, both here and across the world,” Hantz says. “Once a neighborhood sees what we’re doing, people will want to improve their property because a rising tide lifts all ships.”
Brian Holdwick, executive vice president of business development at Detroit Economic Growth Corp., a quasi-public development agency, says the city will donate land to Hantz Farms and others interested in farming, as well as help identify funding sources to raze vacant buildings and clean lots where illegal dumping has occurred. By ridding itself of blighted property, the city can concentrate more resources on servicing established neighborhoods, he says.
“If the farms are successful, we see the potential for spinoff businesses like food processing centers,” Holdwick says. “We want to see vacant land put back into productive use. If Hantz is successful in the first three years, we plan an expansion zone of another 180 acres (of city-owned land).”
Meanwhile, Michigan State University has approached Detroit officials with its plans to establish a global food research and innovation center adjacent to Hantz’s urban farming operations. To be situated on 20 acres, with the potential to double in size, the center would develop innovative and sustainable methods of producing highly nutritious food using limited water and energy.
One method would involve utilizing aeroponics, the process of embedding a seed — which subsequently grows into a fruit or vegetable — in a biodegradable material and then using a nutrient-rich mist, rather than soil, to promote growth. Michigan State’s College of Agriculture and Natural Resources also will tap different spectrums of light to rapidly produce flowers and seeds. A demonstration project is expected to open this year.
“We look at the world and how it will feed itself in 40 years,” says Rick Foster, a professor of food, society, and sustainability at MSU’s College of Agriculture. “By 2050, there will be approximately 9.3 billion people living on the planet, and 70 percent of them will be living in cities. If we don’t advance food production, along with water and energy conservation to produce that food, we won’t be able to feed all of those people.”
Foster and a team of researchers plan to set up the advanced planting system in several abandoned buildings. Along with using limited amounts of water, some of the plants would produce fuel to power lights and other energy systems. Research trials, meanwhile, will be conducted in soil remediation.
“Detroit contributed mightily to industrialization but now suffers from blight and abandonment,” Foster says. “It can be green again. It can position itself to be a leader in advanced food production and energy conservation. We want to bring the resources of a science-based university and work with the city, state, U.S. Department of Agriculture, foundations, scientists, and students to make Detroit a center of innovation that’s integrated.”
MICHIGAN: THE BIG PICTURE
From Michigan broccoli and cabbage in March and asparagus and greens in April, to Riesling grapes in October and Christmas trees in November, nearly the entire calendar year offers a harvest. It is the very essence of a primary (or extractive) industry.
In fact, the state’s $71.3 billion agricultural industry is phenomenally diverse, and includes everything from honey output on bee farms to sugar beets that are exported to Asia. Asparagus, berries, celery, and cucumbers grow in southwest Michigan; cherries, grapes, and strawberries grow in the northwest; peaches and beans come from the southeast; potatoes and maple syrup are harvested in the central counties; and myriad fruits and vegetables are grown nearly everywhere else.
To illustrate the economic role of one or two primary industries, consider, for example, that in 2010 North Dakota ranked No. 1 for income growth (7.1 percent versus 2.6 percent for the U.S.). In turn, North Dakota had the lowest unemployment rate in the nation (3.9 percent, compared with 8.6 percent on average for the U.S. at the end of last year).
Why? The answer is that North Dakota has two exceedingly “hot” extractive industries: massive deposits of shale rock containing oil and gas (the Bakken Basin), and America’s largest harvest and export of hardy spring wheat (234 million bushels annually, representing almost half of the nation’s entire output).
Were it not for such basic, primary industries — along with formidable technology and legislation that enables extraction of valuable raw product — North Dakota would still suffer relative obscurity in its economic standing among the 50 states.
Another timely example of the pivotal role played by a primary industry like oil and gas is unfolding along the northern-tier counties of Pennsylvania. Towns in those vicinities have witnessed the creation of more than 80,000 jobs over the past two and a half years, including 44,000 new jobs in the past 12 months.
More importantly, the North Dakota and Pennsylvania stories telegraph vital signals to Michigan’s primary industries, including agriculture. Surging job growth reflects an eagerness on the part of citizens and state policymakers to adopt rules, regulations, taxes, and legislation that encourage firms and individuals to exploit the land, water, and forest resources in a responsible manner in order to bring abundance, wealth, and entrepreneurial opportunity to Michigan’s marketplace.
Consider, massive natural gas deposits, known as the Marcellus Shale field, lie in great swaths beneath the entire state of Pennsylvania. The riches of Marcellus extend lavishly beneath New York, Ohio, and West Virginia.
The difference is that Pennsylvania, in contrast to New York, has encouraged business investment and risk-taking, along with the latest use of technology, in order to safely tap its energy-rich earth. New York, so far, has legislatively taken the budding shale industry off the table.
Michigan, in recent years, has foregone opportunities to exploit its natural resources, including drilling and farming. The state Legislature has taken slant (horizontal) drilling for gas and oil off the table. State-imposed costs attendant to water use and permits for farming and farming-related activities have reduced or eliminated gainful activity in the state.
Today, the question for Lansing is whether to pursue the immense Antrim Shale gas and oil fields beneath most of the northern and central Lower Peninsula. Related industries — especially auto, steel, chemical, and capital-intensive agricultural industries — are in need of competitively priced, plentiful supplements to coal.
In a world of rising food and energy prices, there is money to be made. Economic development and surging populations augment demand for food and energy, as well as real estate holdings. Exceptional profits in the oil industry, for example, accompany not only petroleum products directly, but carry over into related activities such as exploration, extraction, storage, and delivery.
PLANT AND PRODUCE
The same is true for prices and profits relative to farming. In Michigan, particularly, the rising prices of many agricultural products (field crops, fruits, grains, berries, sugar beets) promise greater income and employment. Once fruits and vegetables are grown, they must be transported, processed, and distributed. Research and the development of new and improved products plays an indispensable role, as well.
According to the Michigan Department of Agriculture, activities involving food output, processing, and distribution employ nearly 1 million individuals with direct or indirect engagements. Today, the farm industry directly employs 134,000 people in Michigan; in 2009, farming generated $1.14 billion in total net income, and accounted for roughly 20 percent of Michigan’s gross state product. Food processing activities made up for $25 billion of GSP (not including Michigan’s five ethanol-processing plants).
Exports also factor into the farm economy. From apples, beans, and cherries to asparagus and nursery products, some 112,000 Michigan workers are engaged in various stages of exporting. Internationally traded farm exports are valued at $1.6 billion annually, and account for the direct employment of just over 19,000 residents. All told, more than one-third of annual agricultural production leaves the state.
Indeed, Michigan soil supports a wide variety of crops, as many microclimates sustain the growth of more than 200 food and fiber products. In addition, the peninsula’s configuration offers a long harvesting season, which contributes to Michigan’s standing as the second most agriculturally diverse state in the union. More than 30 major farm products contributed significantly to Michigan’s overall $345 billion GSP in 2010.
To illustrate familiar samples of that success, witness the Fortune 500 firms and prosperous cities that emerged in Michigan and owe their success to cereal and baby food products whose chief ingredients were corn (Kellogg, Battle Creek), pears (Gerber, Fremont), or wheat (Jiffy, Chelsea).
Still, farmers and their fortunes are highly susceptible to many situations beyond their control. Consider weather conditions, sudden transportation disruptions, price fluctuations, crop or cattle disease, and shifts in consumer tastes, government regulations, or worldwide competition.
From a state and national perspective, 2007-08 witnessed record profit levels and expansion in the agricultural sector. Michigan’s net farm income in 2008 reached $1.93 billion, reflecting, in part, a craze for ethanol produced from grains.
In 2009, however, in the depths of the national recession, prices of some grains (e.g., corn and wheat) fell 41 percent — leading to an aggregate decline of $33 billion in farm income, to $54 billion. Weather, a shift away from ethanol, rising foreign competition, and the ubiquitous business slowdown all played a part in this decline.
But 2011 witnessed another turnaround. Within the first 18 months of a U.S. recovery, corn prices doubled to $8 per bushel last summer.
However, long-term trends support price appreciation for good farmland, as well as the products and services emanating from those properties. To account for this appreciation, there has been a steady decline in U.S. farmland over the last 40 years, from 1.1 trillion acres in 1970 to 900 billion acres in 2009.
Correspondingly, as the supply of farm acreage has diminished in the face of rising national and world populations, the price per productive acre has risen steadily, and sometimes dramatically. Between 1993 and 2010, the inflation-adjusted value of an average farm acre in Michigan doubled, to $2,200 from $1,100. For some this appreciation is a challenge, as it constitutes a price-hurdle for acquiring sufficient financial means to enter farming. For existing farmers with smaller holdings, property appreciation provides an incentive to sell land.
REPLENISH AND REPRODUCE
Another impact, one that is neither cyclical nor short-term, is an aging workforce. The average age of a farm operator, both in Michigan and across the nation, is marching upward. In 1997, state farmers averaged 52.8 years of age. The average age rose to 54.2 years in 2002 and 56.3 in 2007, and is expected to hit 60 before long.
For large-farm operators, labor is intensive. The growing season is a full week’s sunup-to-sundown business. In the off-season, an operator is absorbed with planning, repairing capital equipment, maintaining housing, overseeing finances, and performing other tasks that were short-changed during the planting and processing months. These activities leave little time for a vacation or interruptions due to illness.
For smaller operations, the challenge is twofold. As a result of the advancing age of proprietors and the size of individual properties, 55.7 percent of “farming” enterprise is part-time. Therefore, operators who engage in grain, berry, vegetable, or poultry farming increasingly rely on nonfarming employment for their primary sustenance.
Marketing farm output can be another challenge. To relieve farmers from overseeing marketing campaigns for each and every product, various regions have set up multidisciplined co-ops. Jennifer Fike, executive director of the Food System Economic Partnership in Ann Arbor, coordinates a regional farming program that facilitates cooperative marketing of produce in agriculturally rich pockets of Wayne, Washtenaw, Jackson, Lenawee, and Monroe counties.
The partnership works with small family farmers, attempting to supplement their income by forming central locations for marketing goods under a common label. Aggregating larger numbers of part-time farmers, they achieve better returns on volume, product variety, transportation, and advertising. Longer term, the idea is to promote farming continuity for those families remaining on the land. Also, the organization ties into the Michigan State Extension offices and local schools and hospitals.
Another example of adaptive organizing occurs in Michigan’s Saginaw Valley, one of three regions in the state blessed with extraordinarily bountiful soil and climate. As it stands, most sugar beets produced in the region are shipped to Michigan Sugar Co., a farmer-owned co-op in Bay City. The arrangement has helped Michigan’s sugar beet producers survive myriad crises and threats from overseas competitors.
Technological advances also are crucial to the retention of agricultural pre-eminence. As advances in chemistry, genetics, bioengineering, vehicle design, transportation, and dairy equipment stream out of universities and specially funded research labs, farm productivity rises.
Greater output per farm worker instantly translates into higher remuneration. The entire history of industrial progress, beginning with agriculture, has a common thread: The more capital put into the hands of each worker (i.e., intellectual knowledge and tools), the fewer workers are required to generate a given amount of quality output. The farm economy is the epitome of that economic axiom. The same principle applies to other extractive industries, and to every other economic endeavor that will ever arise.
For Michigan’s farm sector, a good example of technology’s positive application is dairy farming. Dairy, of course, is highly favored, owing to Michigan’s comparative advantages in water, feed, and transportation. According to the Michigan Milk Producers Association, most milk processing in the state occurs thanks to technological developments that allow powdered milk and cheese to be stored and transported. Both elements are conducive to expanding sales and income for Michigan dairy exports beyond the state’s borders.
Another example is wheat. With the help of transportation, half of the wheat crop stays in Michigan (e.g., Jiffy in Chelsea), while the rest is shipped to Ohio (Nabisco in Toledo).
Despite ongoing challenges, the state’s farm sector is performing well, compared with many others. Global population trends and the technical savvy and marketing prowess of research institutions and co-ops bolster the likelihood of the continued expansion and profitability of the state’s agricultural output.
It is noteworthy that Michigan’s agricultural sector has survived many difficulties, and leads the nation in numerous farm outputs. Fortunately, a critical mass of land, labor, and capital resources encourage growth and efficiency.
Farming might very well lead to Detroit’s revival following decades of ruinous politics, declining population, and disinvestment. In a study conducted by national economist Michael Shuman, if the city of Detroit shifted 20 percent of its food spending to local sources, more than 4,700 jobs could be created — and the city would receive nearly $20 million more in business taxes each year.
“As we get going, we’re hoping that people won’t sell us their property, because it rose so much in value because the surrounding area is vibrant, clean, and safe,” Hantz says. “As property values rise, the banks step in with financing to improve things even more. That’s the ultimate end game for urban farming.” db