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Agriculture Industry Clusters
Duncan HilcheyDuncan HilcheyNew Leaf New Leaf Publishing and ConsultingPublishing and Consultingduncan@newleafnet.comduncan@newleafnet.com / 607.342.0259/ 607.342.0259Copyright Copyright ©© 2008 by New Leaf Associates, Inc.2008 by New Leaf Associates, Inc.
Workshop AgendaWorkshop Agenda
BackgroundBackgroundCase Study of Concord Grape Belt Case Study of Concord Grape Belt Cluster Development strategiesCluster Development strategiesSmall Farm Cluster ProjectSmall Farm Cluster ProjectDiscussionDiscussion
Industrial Cluster TheoryIndustrial Cluster Theory
Alfred MarshallAlfred MarshallMichael PorterMichael Porter
Clusters and Cluster Clusters and Cluster DevelopmentDevelopment
Clusters are geographic concentrations of Clusters are geographic concentrations of interconnected companies, specialized suppliers, service interconnected companies, specialized suppliers, service providers, and associated institutions in a particular field providers, and associated institutions in a particular field that are present in a nation or region. Clusters arise that are present in a nation or region. Clusters arise because they increase the productivity with which because they increase the productivity with which companies can compete. The development and companies can compete. The development and upgrading of clusters is an important agenda for upgrading of clusters is an important agenda for governments, companies, and other institutions. Cluster governments, companies, and other institutions. Cluster development initiatives are an important new direction in development initiatives are an important new direction in economic policy, building on earlier efforts in economic policy, building on earlier efforts in macroeconomic stabilization, privatization, market macroeconomic stabilization, privatization, market opening, and reducing the costs of doing business.opening, and reducing the costs of doing business.
Small Farm Cluster Small Farm Cluster ProjectProject
New York Certified Organic (NY)New York Certified Organic (NY)Chesapeake Fields (MD) Chesapeake Fields (MD) HmongHmong Farmers (MA)Farmers (MA)Mushroom Cluster, Chester County (PA) Mushroom Cluster, Chester County (PA) New Farmer Development Project Participants (NY)New Farmer Development Project Participants (NY)North Country Dairy Viability Initiative (NY) North Country Dairy Viability Initiative (NY) Pennsylvania WomenPennsylvania Women’’s Ag Network (PA)s Ag Network (PA)TuscaroraTuscarora Organic Growers (PA)Organic Growers (PA)
Stephen Goetz, PSUStephen Goetz, PSUInFlowInFlow 3.0 3.0 -- Social Network Analysis software for mapping and Social Network Analysis software for mapping and measuring human networks of all types.measuring human networks of all types.http://www.nercrd.psu.edu/Publications/rdppapers/rdp29.pdfhttp://www.nercrd.psu.edu/Publications/rdppapers/rdp29.pdf
Workshop ObjectivesWorkshop ObjectivesBy 10:30 YOU SHOULDBy 10:30 YOU SHOULD……
……be familiar with AIC concepts (e.g., be familiar with AIC concepts (e.g., structures, strengths and weaknesses)structures, strengths and weaknesses)
……understand the basics of understand the basics of ““cluster analysiscluster analysis””
……be familiar with cluster development be familiar with cluster development strategiesstrategies
What is What is ““FormalFormal”” Ag. Industry Ag. Industry Cluster (AIC)?Cluster (AIC)?
A group of farms and/or allied food and A group of farms and/or allied food and agricultural enterprises, individuals, agricultural enterprises, individuals, organizations, and agencies who work organizations, and agencies who work together on shared interests and toward a together on shared interests and toward a common goal.common goal.
Input Manufacturers
Input Suppliers
Producers
Distributors
Retailers
ConsumersAgencies/Organizations
Labor
NYS Agricultural ClustersNYS Agricultural ClustersSome New York State Agricultural Clusters
Lake Ontario Apple Belt
Lake Erie Concord GrapeBelt
Blue Point Oyster Cluster
LI Duck Cluster
Black Dirt Cluster
Oswego Onion ClusterBatavia Agribusiness Cluster
NY Cabbage Cluster FL American ViticulturalAreasWyoming
Maple SugarCluster
North CountryMaple Sugar Cluster
NYC Watershed
Cayuga Co.Dairy Cluster
Plain SectCluster
Regional Farm andFood Project
LI Potato Cluster
PotatoCluster
North Fork, LI
Cluster
Long Island Cluster
NYC Metro FoodshedPotatoCluster
North Fork, LI
Cluster
Long Island Cluster
NYC Metro Foodshed
PRACTICALPRACTICALBenefits and AdvantagesBenefits and Advantages of of
Cluster DevelopmentCluster DevelopmentCredibility in Economic Development communityCredibility in Economic Development communityCombining Resources/Economies of ScaleCombining Resources/Economies of ScaleAchieving as a group what is difficult to do as individualsAchieving as a group what is difficult to do as individualsGood PRGood PRRegional identityRegional identity““Project packagingProject packaging””Political PowerPolitical PowerCommiseration and mutual supportCommiseration and mutual supportMultiple points of viewMultiple points of viewLarger scale networksLarger scale networks
Possible ProjectsPossible ProjectsJoint R&DJoint R&DJoint labor programsJoint labor programsJoint marketing initiativesJoint marketing initiativesJoint ventures, partnershipsJoint ventures, partnershipsJoint lobbyingJoint lobbyingAgricultural Impact studiesAgricultural Impact studiesEmpire zoneEmpire zoneCelebrationCelebration
““Growing HomeGrowing Home”” Agriculture Agriculture Development ProjectsDevelopment Projects
Heritage areasHeritage areasFarm and food trailsFarm and food trailsCulinary Bounty ProgramsCulinary Bounty ProgramsSharedShared--use kitchensuse kitchensMobile processing unitsMobile processing unitsBuyBuy--local programslocal programsAg. Industry ParkAg. Industry ParkAg Ambassador programsAg Ambassador programsBienvenidoBienvenido programprogram
Cluster Organization StructuresCluster Organization Structures
Informal NetworkInformal NetworkWorking group or task forceWorking group or task forceLegislative committee or commissionLegislative committee or commissionNonNon--profit Associationsprofit AssociationsCooperativesCooperativesLegal partnershipsLegal partnershipsFor profit CorporationsFor profit Corporations
CAUTION!CAUTION!
Proprietary interestsProprietary interestsOrganizational turfOrganizational turfCompetitionCompetitionPricePrice--fixingfixingToo many cooks spoil the brothToo many cooks spoil the brothGoing it alone can be more efficient and Going it alone can be more efficient and effective in some caseseffective in some cases
Why Are Agriculture Clusters Why Are Agriculture Clusters Located Where They Are?Located Where They Are?
Geographic DeterminantsGeographic DeterminantsHistory, culture, traditions and other human activitiesHistory, culture, traditions and other human activities
What What AreAre the Geographical the Geographical Determinants of the Following Determinants of the Following
Agricultural Clusters?Agricultural Clusters?
Geographic DeterminantsGeographic DeterminantsHistory, culture, traditions and other human activitiesHistory, culture, traditions and other human activities
Elberta Peach(Samuel Henry Rumph)
A Functional A Functional Agricultural Cluster Agricultural Cluster HasHas……
……a vision and missiona vision and mission……an organizational frameworkan organizational framework……strong leadershipstrong leadership……broad representation of stakeholdersbroad representation of stakeholders……regular meetingsregular meetings...identified and prioritized issues...identified and prioritized issues……productive project collaborationproductive project collaboration……no fear in addressing no fear in addressing differencesdifferences
A Functional Cluster is NOTA Functional Cluster is NOT……
One large vertically or horizontally One large vertically or horizontally integrated integrated businessbusiness
–– VerticalVertical integration: when you own/control all integration: when you own/control all your your supplierssuppliers
–– HorizontalHorizontal integration: when you own/control integration: when you own/control all your all your competitorscompetitors
Anatomy of a Successful AICAnatomy of a Successful AIC
Cluster Members Commonly haveCluster Members Commonly have::Generally close geographic proximityGenerally close geographic proximityShared interestsShared interestsShared Sense of fateShared Sense of fateSignificant employmentSignificant employmentRespect of community and economic Respect of community and economic development communitydevelopment communityPolitical power (Political power (clout)clout)
Concord Grape Belt Concord Grape Belt AgribusinessesAgribusinesses
Vineyard inputs supply retailers (18)Vineyard inputs supply retailers (18)Farm Equipment (6)Farm Equipment (6)Vineyard equipment manufacturers (1)Vineyard equipment manufacturers (1)Agricultural services (15)Agricultural services (15)Agricultural agencies/programs (6)Agricultural agencies/programs (6)Trucking services (5)Trucking services (5)NonNon--CoCo--op Processors (4)op Processors (4)Cooperative Processors (3)Cooperative Processors (3)Wineries (14)Wineries (14)Food distributorsFood distributors (1)(1)Other Partners (including government, tourism) (8)Other Partners (including government, tourism) (8)
Anatomy of a Failed ClusterAnatomy of a Failed ClusterMission not well definedMission not well definedTurf issues not worked outTurf issues not worked outPoorly conceivedPoorly conceived projectsprojectsWeak leadershipWeak leadershipLack of resourcesLack of resourcesCluster based on artificial boundariesCluster based on artificial boundariesPersonalities, egosPersonalities, egosEnvironmental impact ignoredEnvironmental impact ignored
TYPOLOGY OF AGRICULTURAL INDUSTRY CLUSTERS
STATUS
FUNCTIONAL FUNCTIONALFORMAL INFORMAL DISFUNCTIONAL FAILED
RESOURCE-BASED
Oswego Onion Cluster (NY Bold),
Concord Grape Belt
Black Dirt Onion Region
Cape Cod Cranberries, ME
Blueberry BarrensLong Island Duck
PROXIMITY-BASED
Finger Lake Culinary Bounty Batavia, NY Hudson Valley
Harvest? Sonoma Select
INTEREST-BASED NY Cheese Guild IPM Small-Scale Food
Processors NEFFFCo
COMBINATION NY Wine Industry Maple Sugar Dairy Industry
BA
SIS
OF
ESTA
BLI
SH
Economic Impact of CGBEconomic Impact of CGBJobsJobs Supported:Supported: 1,9231,923TotalTotal Economic ImpactEconomic Impact:: $349 million*$349 million*WagesWages Paid:Paid: $54 million$54 millionNumberNumber of Producers:of Producers: 800800BearingBearing Acres:Acres: 30,000+30,000+RetailRetail Value of Juice Sales:Value of Juice Sales: $208 million$208 millionRetailRetail Value of Wine Sales:Value of Wine Sales: $17.5 million$17.5 millionWineWine--RelatedRelated Tourist Visits:Tourist Visits: 35,00035,000
** Total Economic Impact is the total value of sales Total Economic Impact is the total value of sales generatedgenerated by juice by juice processorsprocessors, growers and other , growers and other businessesbusinesses from whom they purchase.from whom they purchase.
New York Agricultural SocietyDuncan HilcheyCommunity, Food, and Agriculture ProgramDepartment of Development SociologyCollege of Agriculture and Life SciencesCornell University
Lake Erie Concord Grape BeltHeritage Development Project:A Case Study in Agriculture ClusterDevelopment
Lake Erie Concord Grape Belt
Lake Erie Concord Grape Belt AssociationBy Antoni Magri and Duncan Hilchey
E s c a r p m e n t o
f A l l e
g h e n y P l a
t e a uLake Erie
527 M
172 M
CGB Cluster EvolutionCGB Cluster Evolution
ElijaElija Fay: wineFay: wineTable grapesTable grapesWelch FamilyWelch FamilyNumerous Numerous businessesbusinesses locate locate inin the CGBthe CGBOther growing areas Other growing areas come on linecome on lineWineriesWineriesAgritourism studyAgritourism study
Concord Grape Belt Concord Grape Belt ChallengesChallenges
Fastest shrinking county population in NYSFastest shrinking county population in NYSWelchWelch’’s headquarters closes (2000)s headquarters closes (2000)Grape prices erraticGrape prices erraticWeather has hurt harvestsWeather has hurt harvestsCompetition from Washington StateCompetition from Washington StateConsumption of Concord may slideConsumption of Concord may slide……Vineyard consolidation (1,000 and shrinking)Vineyard consolidation (1,000 and shrinking)
Project ObjectivesProject Objectives
Work with a community with untapped Work with a community with untapped agricultural heritage.agricultural heritage.
Develop strategies, techniques and Develop strategies, techniques and approaches to food and agapproaches to food and ag--related heritage related heritage and regional identity.and regional identity.
Conduct Extension and OutreachConduct Extension and Outreach
Encourage the state or federal government to Encourage the state or federal government to recognize recognize ““Agricultural Heritage AreasAgricultural Heritage Areas”” and and provide them with resources and incentives provide them with resources and incentives which support their integrity and sustainability.which support their integrity and sustainability.
A Place at the TableA Place at the TableNomination ProcessNomination Process
CriteriaCriteria–– Palpable identityPalpable identity–– No previous activitiesNo previous activities–– Organizational capabilityOrganizational capabilitySolicited nominationsSolicited nominationsSelected two finalist communitiesSelected two finalist communitiesFinalist site visitsFinalist site visitsChose Concord Grape BeltChose Concord Grape Belt
Members of the Team: Members of the Team: PartnersPartners and and StakeholdersStakeholders
CCE Chautauqua CountyCCE Chautauqua CountyLake Erie Regional Grape ProgramLake Erie Regional Grape ProgramCommunity, Food, and Agricultural Program, Department Community, Food, and Agricultural Program, Department ofof Development Sociology and AEM at Cornell UniversityDevelopment Sociology and AEM at Cornell UniversityChadwick Bay Regional Development CorporationChadwick Bay Regional Development CorporationChautauqua County Agritourism CommitteeChautauqua County Agritourism CommitteeSeaway Trail, Inc.Seaway Trail, Inc.Westfield Development CorporationWestfield Development CorporationNorth East, PA, Chamber of CommerceNorth East, PA, Chamber of CommerceFredonia Chamber of CommerceFredonia Chamber of CommerceSilver Creek/Irving Chamber of CommerceSilver Creek/Irving Chamber of CommerceChautauqua County Chamber of CommerceChautauqua County Chamber of CommerceDays Inn, FredoniaDays Inn, FredoniaNational Grape Cooperative Growers Cooperative Grape National Grape Cooperative Growers Cooperative Grape Juice Co., Inc.Juice Co., Inc.Cliffstar CorporationCliffstar CorporationCanandaigua Wine CorporationCanandaigua Wine CorporationArrowhead Wine CellarsArrowhead Wine CellarsBaran VineyardsBaran VineyardsWestfield Historical SocietyWestfield Historical SocietyPresque Isle WineryPresque Isle WineryChautauqua County Planning DepartmentChautauqua County Planning Department
CGB Heritage Area ProcessCGB Heritage Area Process
Core group formedCore group formedStakeholders identifiedStakeholders identifiedVisioning and strategizingVisioning and strategizingMission statementMission statementCommittee developmentCommittee developmentProject implementationProject implementationFormalization Formalization (Incorporation)(Incorporation)EvaluationEvaluationGrowth and sustainabilityGrowth and sustainability
The Community AgricultureDevelopment Process
MISSION: A dynamic and expanding region built upon its Concord grape heritage and embracing all facets of the region’s grape and tourism industries to collectively improve the opportunities and quality of life for all its citizens.
— Tom Davenport, National Grape Coop
CGB HeritageCGB HeritageProject CommitteesProject Committees
Heritage CommitteeHeritage CommitteeMuseum CommitteeMuseum CommitteeTourism/Promotion CommitteeTourism/Promotion CommitteeCulinary Bounty CommitteeCulinary Bounty CommitteeInterInter--industry industry CommitteeCommittee
Lake Erie Concord Grape Belt Lake Erie Concord Grape Belt Heritage Association, Heritage Association, Inc.Inc.
Potential benefits:Potential benefits:–– Preservation grantsPreservation grants–– Vineyard Vineyard
preservationpreservation–– Greater local Greater local
appreciationappreciation–– Industry unityIndustry unity–– Tourism developmentTourism development
Community and Economic Community and Economic Development ProjectsDevelopment Projects
CGB Heritage CenterCGB Heritage CenterInterpretive trail and Interpretive trail and DVDDVDCulinary Bounty Culinary Bounty programprogramEconomic impact studyEconomic impact studyCertified labelingCertified labelingFarmFarm--toto--schoolschoolMicroenterprise Microenterprise developmentdevelopment
Welch’s Building
CGB Cluster OpportunitiesCGB Cluster Opportunities
PackagingPackagingAgritourism cluster developmentAgritourism cluster developmentMicroenterprise developmentMicroenterprise developmentNew Vineyard labNew Vineyard labHeritage areaHeritage areaCertified heritage productsCertified heritage productsWineriesWineriesOrganic grapesOrganic grapesEmpire ZoneEmpire ZoneExpand cluster to include nonExpand cluster to include non--grape food processing?grape food processing?
Heritage Heritage ProjectsProjectsPhoto collectionsPhoto collections““FoxfireFoxfire”” interviewsinterviewsFarm implement Farm implement collectionscollections
New New BusinessesBusinessesJuiceries;Juiceries; stained stained TT--shirtsshirtsWineriesWineriesDiversification Diversification opportunitiesopportunitiesRecreation and Recreation and entertainmententertainment
Cuisine Cuisine and and ValueValue--addedadded PossibilitiesPossibilities
Grape chutneyGrape chutneyGrape catsupGrape catsupJams, jelliesJams, jelliesGrape piesGrape piesPork loin in Pork loin in grape saucegrape sauce
Restaurantagriculture
Buy-local campaign
Co-packing
Shared-usekitchens
Farm-to-school
Institutionalpurchasing
Blessing of the Blessing of the grape harvestgrape harvestGrape stompGrape stompJuice and wine Juice and wine samplingsamplingEntertainmentEntertainment
Coordinated Grape Coordinated Grape FestivalsFestivals
TourismTourism ProjectsProjects
Roadside info kiosksRoadside info kiosksMapsMapsBrochuresBrochuresSignageSignageTrailsTrailsVineyard and Vineyard and processing plant toursprocessing plant toursPullPull--over vistasover vistas
Lake Erie Concord Grape Belt
Lake Erie Concord Grape Belt AssociationBy Antoni Magri and Duncan Hilchey
E s c a r p m e n t o
f A l l e
g h e n y P l a
t e a uLake Erie
527 M
172 M
Label of Controlled Origin (LCO) Label of Controlled Origin (LCO) (proposed)(proposed)
Agricultural Heritage Area owns the license.Agricultural Heritage Area owns the license.–– Lake Erie Concord Grape Belt Heritage Area Label Lake Erie Concord Grape Belt Heritage Area Label
of Controlled Origin. This label certifies that the of Controlled Origin. This label certifies that the producer of this product has met all heritage area producer of this product has met all heritage area qualifications and standards, and that 100% of the qualifications and standards, and that 100% of the key ingredients were produced in the heritage area.key ingredients were produced in the heritage area.
Producer must be a member in good standing of the Producer must be a member in good standing of the AHA; producer applies to use the label and pays an AHA; producer applies to use the label and pays an annual fee.annual fee.AHA designates how the label is used.AHA designates how the label is used.AHA can revoke the license if abuse is AHA can revoke the license if abuse is discovered.discovered.
How How Are WeAre We DoingDoing??Figure 1. Concentration on process versus Concentration on results N=18
x
x x
xx x xx
xx
xxx x x
xx
x
1 2 3 4 5 6 7 8 9
Con
cent
ratio
n on
PR
OC
ESS
Concentration on RESULTS
9 8 7 6 5 4 3 2 1
X
Keys to SuccessKeys to SuccessShared sense of fateShared sense of fateShared visionShared visionStrong local organizations and leadersStrong local organizations and leadersPassionate belief that they can affect their futurePassionate belief that they can affect their futureChecked egos at the doorChecked egos at the doorStrong sense of Strong sense of inclusiveness:inclusiveness:–– Stakeholders included competitorsStakeholders included competitors–– PennsylvaniaPennsylvania
Industrial cluster approach Industrial cluster approach (growers,(growers, processors, processors, tourism)tourism)Infectious Infectious enthusiasmenthusiasm
New York State New York State ““Heritage AreaHeritage Area”” DesignationDesignation
Formerly called Formerly called ““Urban Urban Parks.Parks.””Certified local government may make a Certified local government may make a nomination.nomination.LegislationLegislation must be must be passed.passed.ManagementManagement plan must be plan must be produced.produced.Finally, the heritage area Finally, the heritage area maymay apply for apply for certain preservationcertain preservation--related related grants.grants.
Agricultural Heritage AreasAgricultural Heritage Areas……
…… recognize a recognize a placeplace--basedbased product.product.…… are geographically bounded.are geographically bounded.…… celebrate the communities that have celebrate the communities that have
evolved with the product.evolved with the product.…… protect unique agricultural landscapes.protect unique agricultural landscapes.…… reward traditional production practices.reward traditional production practices.…… encourage stewardship of local encourage stewardship of local
resources.resources.
Potential Benefits of an Potential Benefits of an Agricultural Heritage AreaAgricultural Heritage Area
WhatWhat We Hope ForWe Hope For……Tax incentives and grants from state and Tax incentives and grants from state and federal governmentfederal government
New dollars coming in from outside the New dollars coming in from outside the communitycommunity
Plugging of economic leakagesPlugging of economic leakages
Greater sense of community prideGreater sense of community pride
Protection of natural and cultural resourcesProtection of natural and cultural resources
Conventional Industrial Cluster Conventional Industrial Cluster Development ApproachDevelopment Approach
Business Gap AnalysisBusiness Gap Analysis
Business recruitment/developmentBusiness recruitment/development
Job trainingJob training
Cluster AnalysisCluster Analysis
What cluster(s) What cluster(s) presentlypresently exist in my region?exist in my region?
How big are they?How big are they?
What cluster(s) are emerging?What cluster(s) are emerging?
What cluster(s) What cluster(s) potentiallypotentially exist?exist?
PROCESSPROCESS–– Quantitative (location quotients, shiftQuantitative (location quotients, shift--share analysis, share analysis,
inputinput--output analysis)output analysis)–– Qualitative (keyQualitative (key--informant interviews, focus informant interviews, focus groups)groups)
SWOT AnalysisSWOT Analysis
Informs vision, mission, and project planningInforms vision, mission, and project planningESSENTIALS:ESSENTIALS:–– Representative participationRepresentative participation–– Interviews, focus groups or bothInterviews, focus groups or both–– Facilitation is criticalFacilitation is critical–– Some people will complain about how obvious Some people will complain about how obvious
some comments aresome comments are……thatthat’’s OKAYs OKAY
What What AreAre Some Ways to Help?Some Ways to Help?LeadershipLeadership–– Hosting meetingsHosting meetings–– Establishing core groupEstablishing core group–– Stakeholder analysis and Stakeholder analysis and ForcefieldForcefield analysisanalysis–– Lead visioning session and SWOT analysisLead visioning session and SWOT analysis–– Key informant interviewsKey informant interviews–– Chairing a committeeChairing a committee
Organizational Organizational SupportSupport–– Newsletter, mailings, meeting spaceNewsletter, mailings, meeting space–– Serve as a funding Serve as a funding ““passpass--throughthrough”” agencyagency
Project Development and ImplementationProject Development and Implementation–– Grant writingGrant writing–– Report writingReport writing–– EvaluationEvaluation
Annual EvaluationAnnual Evaluation
QuantitativeQuantitative–– Annual survey of cluster stakeholdersAnnual survey of cluster stakeholders–– Cluster sustainability indicatorsCluster sustainability indicators
Examples:Examples: # of farm foreclosures, loan defaults, # of farm foreclosures, loan defaults, changes in processing employment, changes in processing employment, agag parcel parcel counts, CAFO violationscounts, CAFO violations
QualitativeQualitative–– Focus groupsFocus groups–– Cluster Panel Cluster Panel TechniqueTechnique
ResourcesResources
Industrial cluster literature Industrial cluster literature reviewreviewhttp://www.planning.unc.edu/courses/261/leveen/litrev.htmhttp://www.planning.unc.edu/courses/261/leveen/litrev.htm
Location Quotients, ShiftLocation Quotients, Shift--Share AnalysisShare Analysishttp://www.epa.gov/greenkit/pdfs/howto.pdfhttp://www.epa.gov/greenkit/pdfs/howto.pdf
2002 Census of Agriculture2002 Census of Agriculturehttp://www.nass.usda.gov/Census_of_Agriculture/index.asphttp://www.nass.usda.gov/Census_of_Agriculture/index.asp
County Business PatternsCounty Business Patternshttp://www.census.gov/epcd/cbp/view/cbpview.htmlhttp://www.census.gov/epcd/cbp/view/cbpview.html