MSU Agricultural, Food, and Resource Economics
The grain system (grain producers and the grain industry) in Michigan finds itself in a transition period. Production (yield) and price limitations along with escalating cost factors have left producers in a situation where, without government assistance, many more would have to exit the farm. The grain industry (in this study, the industry refers to the grain handlers and processors), while in a stronger financial situation than producers, would suffer negatively if volume of grains bought and sold through their facilities decreased, and more in the industry would have to exit.
A transition is needed to increase profitability of grain producers and the grain handlers and processors in Michigan. Without a transition, the trend of decreasing farms and acres will continue, to the detriment of the Michigan grain system. But how does the system make a transition, and what kind of transition is needed? This study strives to find the strategies, through understanding the history and organization of the system, that will provide direction.
This study uses two analytical approaches to understand the grain system from the producer level and the industry level. By comparing the Industrial Organization approach and the Strategic Management approach, a clearer understanding of the problems should be ascertained. That understanding, with a background of the history of the grain system development in Michigan allows a thorough discussion of the possible solutions that can helpboth producers and grain handlers and processors be more profitable and continue to be an important economic factor in the state.
The findings of the study indicate that there are several partial solutions to the problems, depending on the region of the state, the attitude of producers and companies within the industry, and the markets themselves. The situation can be improved by differentiating, coordinating, cooperating and adjusting processes in those areas that can successfully be addressed and changed by individual producers and each firm. Further research could overcome constraints of this study to find alternative and successful adaptations for the system.