Michigan's agricultural industry remains as steady as a farmer's plow, bucking the norm in a state where manufacturing and other sectors of its fragile economy continue to shrink.

The state's overall agricultural industry -- which includes not only farming but also food processing and biofuels, wineries and beer-making -- grew 12 percent to $71.3 billion in revenue in 2007, following several years of single-digit growth; 2008 figures are not yet available.

"We'll see stable growth, slow growth," said Don Koivisto, director of the Michigan Department of Agriculture. "The trend is not downward at all. We'll continue to plod ahead in 2009."

Major companies like Kellogg Co. and Gerber Products Co. are in the midst of multimillion dollar expansions that will boost their businesses, create new jobs, and mean more sales for Michigan farmers who supply them.

Agri-energy firms such as Alternative Green Energy LLC and Renewafuel LLC also are spending tens of millions of dollars to create and sell alternative energy sources such as ethanol, a corn-based auto fuel.

Some 100 agri-food businesses have started in Michigan during the past five years, according to the MDA.

Agriculture remains one of the best ways for Michigan to diversify its troubled economy, experts say. While consumers may delay big ticket purchases, they have to eat and, in many cases, are shopping for locally grown food and products, anecdotal evidence suggests.

"Food is a good industry to be in because it's something very predictable," said Bill Knudson, an agricultural marketing and economics instructor at Michigan State University.

Agriculture is Michigan's second- largest industry, behind manufacturing.

Michigan farms saw sales skyrocket 53 percent during the five-year period from 2002 to 2007, with revenues jumping from $3.77 billion to $5.75 billion, according to a report by the Michigan State University Product Center for Agriculture and Natural Resources. The agri-foods sector, which includes commodity production, food processing, manufacturing and retail, will create 12,000 to 23,000 new jobs each year until 2011 in the state, a 2007 report by the center found.

Michigan's overall agricultural economy expanded nearly six times faster than the general economy (11.9 percent versus 2 percent) between 2006 and 2007. Revenue figures for 2008 are not available yet, but are expected to show some growth over 2007. However, 2009 won't be as robust because the agricultural industry is closely tied to the credit market, said Jim Byrum, president of the Michigan Agri-Business Association. If growers and entrepreneurs can't get credit, they can't expand their farms, buy new equipment or livestock, or make other improvements.

Byrum said exporting is the only sector unlikely to expand in 2009 because of a drop in worldwide demand and a weaker dollar. Food processing and other types of agriculture-based companies are expected to continue growing, she said. Several agri-businesses, including Gerber and Kellogg, are expanding operations to better compete in a global economy.

"That's where we have tremendous potential," he said.

Fremont-based Gerber is spending $75 million to modernize its manufacturing facility, creating 200 new jobs. The company buys agricultural products from more than 200 Michigan growers.

Kellogg is expanding its W.K. Kellogg Institute for Food and Nutrition Research in Battle Creek, creating 300 jobs. Products created at the institute are produced and marketed worldwide. About 18 percent of the grain, flour, fruit, honey and other food products used in Kellogg's products are from Michigan.

Near Lansing, the Michigan Milk Producers Association is expanding its processing facility. Expected to be completed in January 2010, the project will create 10 jobs at the facility, 166 indirect jobs and 344 construction jobs, generating $182.6 million for the state, according to the association.

Milk is the state's No. 1 agricultural commodity. The project will save Michigan milk producers money because they won't have to pay the extra cost of hauling their milk to a plant in another state.

"If there was no facility here, the milk would have to be shipped to Wisconsin or New York," said Clay Galarneau, director of sales and operations. "It gives more money back to the farmers. "Renewafuel LLC is building a $10 million plant near Marquette to make biomass-dense fuel cubes, which can be made of material such as wood, crops, manure or garbage and used to create energy as a substitute for coal. Renewafuel also is investing nearly $1 million to expand its Battle Creek facility. The company says twenty-five jobs will be created.

University of Michigan economist Don Grimes wouldn't have considered agriculture the state's saving grace until he attended an economic outlook conference in November and saw the numbers.

"It's not going to be huge," he said, "but in rural areas, it could be vital."

For the full article, see Jennifer Youssef, "Agriculture industry holds up even as Michigan economy declines", Detroit News, May 4, 2009.