Program: Agricultural development, marketing and emergency management
Special Revenue Funds:
The Market Development program is effectively a marketing
department for the state’s private agriculture industry. It also subsidizes
some charitable work with food banks in the state.
All line items underneath the Market Development Section
109 of the MDA budget for the 2003 FY should be eliminated. There are no
functions in this section of the budget that cannot or are not already being
performed by private for-profit and nonprofit organizations. The following is a
description of each individual program, and the amount that could be saved by
elimination. Savings: $2,441,700.
Marketing and Emergency Management: This program is
designed to "serve as a catalyst, coordinator, and resource to provide
promotional marketing, and economic development opportunities for Michigan’s
food and agricultural industry." It is also dedicated to "protecting the
state’s food and agriculture resources in times of emergencies."
Unfortunately, the marketing component of this line item is best described as
corporate welfare for the agriculture industry. Agriculture is a profit-making
industry and should not receive what are essentially marketing subsidies any
more than the auto, computer, and defense industries should. A prime example of
the department’s unnecessary marketing efforts is the free distribution of
Michigan Wine Country, a trade publication of the Michigan wine industry.
Author’s Note: Governor Granholm’s proposed 2005 budget reorganizes this
section of the MDA slightly. For instance, there is now a specific line item
for the state "Grape and Wine Program." This program, which helps market
Michigan’s grape and wine industries was previously just rolled up into a
general "marketing" line. Savings: $2,005,600.
Development: The Agriculture
Development Office was created in 1997 to help improve the "economic and
environmental sustainability and viability of Michigan’s food and agriculture
industry ... "
 The office also "focuses on expansion of food and
agricultural value-added processing ... "
 For example, in September 2000,
the MDA reached a grant agreement with the Midwest Nut Producers Council in
which it would grant $82,255 in federal and state money to "develop, test and
devise a marketing strategy for two products, a chestnut puree and chestnut
 The grant will help the industry "work with 15-20 Michigan chefs
to test and evaluate new chestnut products,"
 and prepare recipes in their
own restaurants using chestnuts, interview customers about the dishes, and
provide feedback to the grantee.
Private industry has its own incentives for adding value to
agricultural products — profit being one of them. By providing government money
for such research, the state is, in effect, socializing the risk of the
agriculture industry while helping to ensure profits that the industry may not
otherwise see. In addition, the Agriculture Development Office may actually
hurt agricultural processing businesses. It has used its own resources in
conjunction with the Michigan Economic Development Corporation (MEDC) to grant
special favors to particular firms, while giving none to their in-state rivals.
The Summer 2002 issue of the Mackinac Center’s
Michigan Privatization Report,
described how "Agricultural Processing Renaissance Zones" may do more harm than
The newest type of
renaissance zone created in Michigan is known as Agricultural Processing
Renaissance Zones, of which there are three, two in Oceana County and one in
Ionia. All illustrate two basic problems with state favoritism in the name of
"economic development": 1) It’s unfair to businesses that do not receive the tax
advantages offered; and 2) Officials can’t prove that the development they claim
as proof of the zone’s success wouldn’t have taken place without their
Targeted tax relief places at a competitive disadvantage
those businesses that do not get the state favors. This is why some Michigan
agricultural companies, in January 2001, actively opposed zones being granted
around the properties of their competitors, Peterson Farms, near Shelby, and
Gray & Company in Hart.
One of the zones’ critics, who asked to remain anonymous
for fear of state retribution, told
Michigan Privatization Report, "The state
has put me at a terrible disadvantage by giving my competition substantial tax
relief. How can Lansing bureaucrats possibly believe that hurting me will help
the economy?" This was generally the nature of other processing companies’
opposition, though several firms’ officers noted that they were not opposed to
the idea of helping the agricultural industry. The state took testimony in
person and by letter from businesses opposed to the way these zones were being
used, but plowed ahead anyway.
All of this might be
tolerable if state officials could prove that renaissance zones actually produce
a positive net benefit to the economy. But the literature on the subject is
very clear: Enterprise zones have little measurable impact on economic growth
and employment — but they do have huge costs.
Nationwide, research indicates that enterprise zones have
had a negligible impact on economic growth and development. Professors Thomas
Lambert and Paul Coomes of Spalding University and the University of Louisville,
respectively, studied one of the nation’s oldest and biggest enterprise zones in
Louisville, Ky., and used "many measures to try and give the program every
chance of success." Yet the evidence, published last May, showed that after 14
years "it is difficult to document that this program has been effective."
Other studies concur. In their paper, "Enterprise Zones
and Local Employment: Evidence from the States Programs," published in Regional
Science and Urban Economics, Daniele Bondonio and John Engberg found "zero
impact" on local employment from enterprise zones and that "the level of the
monetary value of the incentives awarded to zone businesses does not noticeably
contribute toward enhancing the impact on local employment."
(For more on this subject, see "Make Michigan One Big
Renaissance Zone," in the Summer 2002
Michigan Privatization Report.
Development Program: This program
is similar to the marketing line item above, with an international application.
In a time of fiscal crisis, should the state of Michigan subsidize dried fruit
seminars in Taiwan? Promote dried blueberries in Japan? Should it market
pickles in Korea, apples in Israel, and cherries in Germany? Past MDA grants
have also been used to help "develop bakery recipes that utilize processed
 Indeed, should the state do these things at any
time? The case that it should is an extremely weak one.
In February 2002, the MDA gave a $5,950 grant to the
Michigan Food Processors Association so its members could attend a food show in
 In March, a delegation from the Michigan Potato Industry Commission
flew to tropical Costa Rica with the help of a $5,600 MDA grant.
 The goal?
To educate Costa Rican snack processors on the use of Michigan potatoes in their
A review of the commission’s spending indicates part of its
grant was spent before and after the trip on meals at the Budweiser Brew House
in Detroit and at a Bob Evans restaurant in Romulus. These are particularly
troubling uses of grant funds. Even if subsidizing this travel were a
legitimate function of the state, is it not fair to assume that commission
members would have eaten something, and paid for it themselves?
These are just a few examples of how Michigan subsidizes
the international marketing efforts of private business. For-profit businesses
should be required pay for their own marketing efforts. It is a basic issue of
fairness. Most business owners do not receive state help marketing their own
businesses yet they are forced to pay taxes to support those who do.
Food Bank Council: This appropriation provides a
General Fund/General Purpose subsidy to the Food Bank Council of Michigan for
handling items donated for charity. The Food Bank Council of Michigan is a
private, nonprofit charity that is comprised of 10 smaller food banks in the
Great Lakes State. Each bank provides food and funds to low-income people
through 2,500 charities.
 This is a seemingly kind, but unnecessary, state
appropriation. Europe, America, and Michigan have a long and generous tradition
of private charity. If the state took less money from taxpayers, private
citizens would have more to give to private food banks and similar
Gathering" program is a good example of how the private sector can alleviate
citizens’ hunger problems. Harvest Gathering is a private, nonprofit foundation
founded by then-MDA director Bill Schuette in 1990. Schuette and other state
officials used their high-profile positions to help raise private funds and food
for Michigan families. Last year alone, Harvest Gathering collected and
redistributed 650,000 pounds of food at 100 locations across all 83 counties in
Michigan. Savings: $630,000. Governor Granholm’s 2005 proposal
increases the gross appropriation to $630,500.
Future Farmers of America: This line item
subsidizes the Michigan chapter of the Future Farmers of America. Future
Farmers of America is a private, nonprofit organization whose mission is to make
a "positive difference in the lives of students by developing their potential
for premier leadership, personal growth and career success through
 The state should no more appropriate funds for
this organization than it should for future economists, accountants, or computer
scientists of America. To subsidize one career choice over others, the state
effectively gives its blessing to a single job category as if farming is more
important than other work choices. Government should be neutral with respect to
how free young men and women choose their occupations. In addition, career
opportunities are of sufficient importance that young people have every
incentive to find career information without government involvement.
Savings: $60,000. Governor Granholm’s 2005 proposal leaves this appropriation
unchanged over the previous year’s budget.