HARVARD MOSSAVAR-RAHMANI CENTER for Business and Government Growing Maine?s Food Industry, Growing Maine The Maine Food Cluster Project October 2015 ACKNOWLEDGMENTS A warm thanks to the Maine farming, seafood, and other food and beverage industry members interviewed as background for this study, business leaders who responded to the online survey, and the Portland-based market research team Critical Insights for their thoughtful survey guidance and diligent execution. Deep gratitude to the members of the project team, the project?s senior advisors, and the staff of the Institute for Strategy and Competitiveness at Harvard Business School and the Mossavar?Rahmani Center for Business and Government at the John F. Kennedy School of Government at Harvard University for their valuable contributions to the study. The Maine Food Cluster Project was generously supported with the proceeds from an endowment grant made by the Portland, Maine- based Libra Foundation to the John F. Kennedy School of Government at Harvard University, honoring its former board member and former Bath Iron Works president Duane ?Buzz? Fitzgerald, in 2000. Betsy Biemann Project Director The Maine Food Cluster Project Mossavar?Rahmani Center for Business and Government John F. Kennedy School of Government at Harvard University Project Team Gretchen Bartlett Manager, Project Administration, Harvard Kennedy School Betsy Biemann Richard Bryden Devin Cook Project Director, Harvard Kennedy School Technical Advisor, Harvard Business School Research Assistant, Massachusetts Institute of Technology Christian Ketels Sarah Jane Maxted Technical Advisor, Harvard Business School Technical Advisor, Harvard Business School About Harvard Kennedy School Senior Advisors John Haigh Executive Dean Co-Director, Mossavar?Rahmani Center for Business and Government, Harvard Kennedy School Karen Mills Senior Fellow, Harvard Business School and Harvard Kennedy School Michael Porter Bishop William Lawrence University Professor, Harvard Business School Harvard Kennedy School maintains an abiding commitment to advancing the public interest by training skilled, exceptional leaders and solving public problems through world-class scholarship and active engagement with practitioners and decision makers. The school offers the depth, reflection, insight, and excellence of ideas and teaching that can shape future leaders, affect public policies, and make an impact on people and their daily lives. About the Mossavar-Rahmani Center for Business and Government The Mossavar?Rahmani Center for Business and Government is dedicated to advancing the state of knowledge and policy concerning some of society?s most challenging problems at the interface of business and government. The scope of its work ranges from the local to the global levels, and brings together thought leaders from both the public and private sectors. TABLE OF CONTENTS Introduction Clusters and Cluster-Based Economic Development Strategies The Roots of Maine?s Current Food Economy Maine?s Economic Performance and Traded Cluster Composition 9 Maine?s Traded Food Cluster 1 3 Perspectives of Maine Food Company Leaders 1 5 Maine?s Food Cluster Support System 18 Lessons from Cluster Initiatives in Other Regions 20 Looking Ahead: Growing Maine?s Food and Beverage Industries 26 Can Maine Succeed? End Notes Table Notes Selected References AppendixA Traded Food Clusters and Corresponding NAICS Codes Appendix Employment in Maine?s Traded Food Cluster: Southern vs. Northern Comparison Appendix Maine?s Food Cluster Project Survey Methodology Appendix Maine?s Food Cluster Support Organizations Appendix Cluster Initiative Pro?les Vermont, Oregon and Denmark THE MAINE FOOD CLUSTER PROJECT INTRODUCTION Like many rural states in the United States, Maine has struggled to transition from its historic economy based on natural resources and manufacturing to a 2lst century economy providing a decent quality of life for its people. Today, the state lags its New England neighbors and the nation on key economic indicators like gross domestic product, per capita income, productivity and job growth. And looking ahead, Maine faces demographic trends an aging population and shrinking workforce that will make signi?cant progress on these metrics even more challenging. Maine?s current level of prosperity is a consequence of the ?xed assets that it inherited such as its location, its land and its marine resources and assets that can change over time, such as its people, its culture of entrepreneurship, its research institutions, and its public policies. Its prosperity is also a product of the industries that have emerged as a result of these inherited and evolving assets, such as the forestry and boat-building industries. Related industries, and the organizations that support and enrich them, are called clusters. The purpose of the Maine Food Cluster Project was to analyze Maine?s agriculture, seafood and food and beverage processing cluster and its potential for growth, drawing on the latest knowledge of industry clusters and cluster-driven economic development and tools for cluster analysis. This report summarizes the project?s ?ndings and outlines recommendations for how Maine could build on the of these industries as a springboard for business growth and job creation across the state. The purpose of the Maine The project drew on expertise about regional competitiveness and cluster analysis at the Institute for Strategy and Competitiveness at Harvard Business Food Cluster Project was to School (H85) and perspectives on how the private and public sectors collaborate to solve public problems from the Mossavar?Rahmani Center for analyze Maine?s agriculture, Business and Government at the John F. Kennedy School of Government at Harvard University (HKS). The team members brought research, policy and seafood and food and practitioner knowledge of regional competitiveness, industry cluster growth and cluster-driven economic development to the study. The project was beverage processing cluster funded by the Buzz Fitzgerald Endowment Fund, established at HKS in 2000 by the Portland, Maine-based Libra Foundation in honor of its former board and potential for gTOWth. member, Duane ?Buzz? Fitzgerald. As explained in more detail later in this report, the focus of the analysis was on the ?traded? industries in Maine?s food cluster, i.e. those industries that primarily sell to customers outside of their region. Industries that make up traded clusters are not constrained by a region?s population to serve as their primary market, and therefore have greater opportunity to grow. Collectively, the industries that make up Maine?s traded food cluster are agriculture (including vegetables, fruit, farmed ?sh and agricultural services), ?shing and ?shing products, food processing (including both food and beverages) and livestock processing. To investigate Maine?s food cluster, the team collected and analyzed data on: -) Maine?s economic performance and the performance of its food cluster, from national data -) Perspectives of business leaders in Maine?s food cluster, primarily through an online survey -) The support system for Maine agriculture, ?sheries and food processors, made up of nonpro?t organizations, trade associations, universities, training institutions and public agencies, via Internet research and interviews -) Cluster growth initiatives from other regions, through interviews and literature review The study focused on the business and economic development dimensions of Maine?s food system, and therefore did not examine broader food system issues such as access to affordable food or different production practices. Moreover, the project team did not examine global or local market data, dive deeply into production issues for particular crops or products, or carry out detailed analyses of speci?c supply chains or infrastructure needs. Its focus was to use cluster data and analysis tools to understand Maine?s food industries and highlight current and potential that could fuel greater company, job and income growth in the future. It also sought to understand how Maine is organized to strengthen its food cluster, and how well that support system meets the structural needs of the cluster. I The Maine Food Cluster Project 2015 CLUSTERS AND CLUSTER-BASED ECONOMIC DEVELOPMENT STRATEGIES Industry clusters are regional concentrations of companies, suppliers, specialized services and infrastructure, and related organizations, such as research institutions, training programs and business associations. Examples of well-known clusters in the US. are biopharmaceuticals in greater Boston, insurance in Hartford, wine in northern California, and automobile manufacturing and parts in greater Detroit. By viewing state or regional economic activity through the lens of a cluster rather than individual industries, a cluster analysis captures the value of spillovers from one industry?s technology know-how, skilled workers and information to companies in related industries. It can also identify opportunities for cooperative solutions and resources that bene?t multiple companies more efficiently than those that address company challenges one enterprise at a time. A region?s clusters fuel its growth in wages, employment, the creation of new businesses and innovation. A key measure of a cluster?s strength is its concentration of employment in a location (such as a county or state) either as the region?s absolute number of cluster jobs as a share of the nation?s jobs in that cluster or the relative number of cluster jobs per capita in the region, called its specialization. (Specialization takes a region?s population into account, e.g. Maine?s Fish and Fishing Products industries rank ?fth nationally in employment share but second nationally in cluster specialization.) Industries in strong clusters create new businesses and grow employment faster than those in weak clusters (Delgado, Porter, Stern, 2012). Recent research has shown that industries that are part of a strong cluster have more dynamic employment growth as well as higher wage growth, numbers of establishments, and patenting rates. Moreover, industry growth is greater in regions where there are stronger related clusters and new industries are more likely to develop in regions where there are strong clusters (Delgado, Porter and Stern, 2014). Industries in traded Regional economies are made up of traded and nontraded clusters. Nontraded clusters are associated clusters are commonly found in all regions and include clusters like local commercial services (such as printing, laundry or security services), local motor more dynamic growth in vehicle products and services (such as automobile dealerships or gasoline stations), and local entertainment (such as movie theaters). Industries in these empl0yment? higher wages clusters sell products and services locally, and therefore their growth is limited by the size of their local markets and populations; there are only so many and more new business people in a town who buy gas or need dry cleaning. 0 . starts and Innovation. In contrast, traded clusters are made up of industries that sell products to customers across many regions and even countries, such as oil and gas companies and manufacturers of medical devices. Since their business is not tied to local customers, these companies can locate in regions where they have competitive advantages, such as access to natural resources, research institutions or manufacturing know-how. Because these industries compete national and globally for large markets, they are associated with more dynamic growth in employment, higher wages and more new business starts and innovation (Delgado, Porter, Stern, 2012; Porter, 2003). Unlike their nontraded cousins, traded clusters are located in those regions with inherited assets (such as proximity to oil ?elds, rich farmland, transportation and logistics hubs) and other factors (entrepreneurship culture, research institutions, favorable policies) that contribute to the proliferation and growth of companies in a set of related industries in that region. For example, according to the US. Cluster Mapping portal, California,Texas and Washington states have the strongest aerospace and defense clusters in the US. and the counties of Hall (GA), Buchanan (MO), Ford (KS) and Bladen (NC) have the strongest livestock processing clusters. Therefore, every region has its own unique mix of traded and nontraded clusters with varied levels of employment specialization that drive local productivity and growth. Although there are more jobs in nontraded clusters than in traded clusters in most communities, the wages of the traded jobs are typically higher and the traded clusters are the engine of growth as they compete nationally and globally to sell their products. Because they operate in highly competitive markets, they are characterized by higher levels of innovation and productivity. And as the traded cluster companies grow, they purchase more supplies and services from local companies and hire new and (on average) higher-paid employees, therefore generating a greater economic multiplier effect in their region. As awareness and data about the relationship between industry clusters and regional economic competitiveness and growth have expanded, some regions have launched efforts to strengthen their industry clusters. These initiatives, often organized as government- supported cluster programs, non-governmental organizations or public-private partnerships, carry out a range of activities including Mossavar?Rahmani Center for Business and Government, Harvard Kennedy School - company networking, training and attracting skilled workers, raising awareness about the region?s cluster advocating for cluster-friendly public policies and regulations, providing cluster-speci?c business development support to companies, and showcasing innovation and entrepreneurial leadership in the cluster. Europe has been a particularly fertile region for cluster initiatives, due to consistent government support for cluster-driven economic development strategies, although there are cluster organizations found in many countries across the globe.1 At their core, cluster initiatives are a mechanism for bringing together private, public, nonpro?t and university players to identify key constraints holding back related industries. They can help overcome divisions between these players by de?ning growth goals, based on data, that they can work towards together. Finally, they can boost the effectiveness of already-existing resources in the region like job- training programs, trade associations and federal and state economic development programs by focusing them in areas most likely to have broad impact across multiple companies, rather than helping one company at a time. As cluster initiatives have proliferated around the globe, they have tried different strategies and tactics to accelerate the growth of emerging and mature clusters in their regions. Researchers have begun to gather data on these efforts, identify common practices, and measure their impact boosting company success and cluster strength. The majority of these studies have found a positive impact on ?rms that participate in projects initiated by cluster organizations, comparing these ?rms to otherwise similar peers (Ketels, February 2015). In addition, case studies have highlighted different structures, strategies and impacts of successful cluster initiatives (for example, Perry, 2014). However, more experimentation needs to take place and comparative research undertaken to understand the interplay between regional context, cluster type and initiative model/activity mix and to identify those cluster initiative practices associated with the greatest impact accelerating the growth of companies, jobs and, ultimately, prosperity in regions. With this background, we now turn to Maine. THE ROOTS OF CURRENT FOOD ECONOMY In order to understand Maine?s current food economy, it is important to understand its origins. One hundred and ?fty years ago, Maine farmers had cleared the region?s forest cover to its lowest level on recent record to make space for animals to graze and for ?elds to be planted and harvested (Donahue et. al, 2014). Maine was considered the breadbasket of New England; it had more than 520 operating grist mills and fed the Union Army during the Civil War. Fishermen caught cod and mackerel in great numbers off George?s Bank for local and regional markets. And Maine entrepreneurs were in the forefront of processing innovation, with the Winslow Brothers of Portland among the ?rst canners in the U.S., canning corn (Patrick, 2015). Other Maine canners followed, canning apples, beans, peas, blueberries, sardines and lobster, for year-round consumption and for export, and other food processing proliferated. Over time, with industrialization and urbanization, food production became more intensive, and with more intensive farming the forest cover began to creep back. Maine?s food system began feeding the bigger towns and cities. Cattle were fed grain and silage to produce more milk, and the region started to import more meat and grains. Local infrastructure for producing, processing and storing crops grew, shifted, or started to disappear. On the marine side, millions of ?sh were harvested from the sea, with many processed on shore (Donahue, ibid.). And the forestry and pulp and paper industries flourished. Fast fonNard to the late 19605, when one out of six Maine jobs or around 63,000 workers was in farming, food production and forestry (Colgan and Barringer, 2007). Regional competition began to play a more signi?cant role in Maine?s food economy. The potato industry in northern Maine peaked, and midwestern and western states began to overtake Maine as the leading potato producers. Large-scale chicken production moved to southern states. And the modernization of transportation and commodi?cation of food meant that Maine farms and ?shermen were now beginning to compete with producers of fruits and vegetables and meat and ?sh from across the globe. As time went on, Maine?s manufacturing jobs as a proportion of the workforce plummeted and the service side of the economy expanded signi?cantly. Today, Maine enjoys the bene?ts and faces the challenges of being a rural, northern New England state in the 21$t century and competing in a global food system. Maine has abundant land, water and marine resources, lower energy and living costs than other New England states, and is within one to two day?s drive of large northeastern U5. and eastern Canadian markets with 78 million in population. The state scores high for its quality of life, which can help attract workers from out of state and reduce employee turnover. However, it has below-average underlying economic conditions, a low population density, and an aging workforce with lower education and wage levels than most of its neighboring New England states. ?End of the line? transportation and distribution costs pose an extra burden, particularly on companies reliant on shipping products outside of the state for sale. . The Maine Food Cluster Project 2015 Can Maine harness its heritage in farming, ?shing and food processing to drive greater business and economic growth in the let century? TO answer this question, we must ?rst look at how Maine?s economy and its food cluster are performing on key measures compared to other regions in the United States. THE EVOLUTION OF ECONOMY: NATURAL RESOURCES-BASED, MANUFACTURING AND SERVICES NATURAL FORESTRY FORESTRY FORESTRY RESOURCES-BASED 0 FARMING AND FISHING FARMING AND FISHING . FARMING AND FISHING 0 FOOD PROCESSING I A - SHOE-MAKING 0 BOAT-BUILDING - PAPER PACKAGING MANUFACTURING 0 SHIPBUILDING 0 TEXTILES 0 TEXTILES HOSPITALITY TOURISM - HEALTH CARE - BUSINESS SERVICES SERVICES 0 DISTRIBUTION ELECTRONIC COMMERCE 0 EDUCATION 0 HOSPITALITY TOURISM 1850 1900 1950 2000 THE FUTURE ECONOMIC PERFORMANCE AND TRADED CLUSTER COMPOSITION Maine?s economic performance ranks low against other states on key indicators of competitiveness, as illustrated in its performance scorecard on page 8. The state ranks 44th in prosperity, 39th in wages, 40th in private sector job creation, 50th in labor productivity, and 38th in new business formation. Two features are of particular concern. First, in addition to performing poorly on most key measures, Maine?s rankings are trending downward. This positions Maine?s industry clusters poorly for growth. Second, Maine is 48th in the nation for the portion of its employees working in traded clusters, indicating that Maine?s industry mix is concentrated in industries with limited growth potential. To shift its economy onto a stronger trajectory with greater potential for job growth and higher wages, Maine will need to expand employment in its traded clusters over time. To understand the growth potential of Maine?s traded clusters, the project team looked in depth at the concentration Of Maine?s employment in its traded clusters. Economists typically measure paid employment in terms of total or private non-agricultural employees, the standard measure as de?ned by the US. Bureau of Labor Statistics. This leaves out two categories of people who are particularly important in agriculture, ?shing and food processing industries agricultural workers and sole proprietors. The Maine Food Cluster Project team combined data from the US. Census Bureau County Business Patterns, the US. Department of Agriculture?s 2012 Census and data on sole proprietors in Maine to create a composite count of employment in Maine?s largest traded clusters, backing out overlaps to avoid double counting. Incorporating these three categories Of workers into one measure of traded cluster employment, the team determined that Maine?s traded food cluster is the second largest of the traded clusters in the state, following Business Services and just ahead Of Distribution and eCommerce. Mossavar?Rahmani Center for Business and Government, Harvard Kennedy School MAINE PERFORMANCE SCORECARD: RECENT TRENDS STARTING NATIONAL RANK CURRENT NATIONAL RANK PROSPERITY GDP per Capita, 2001-2013 WAGES Average Private Wage, 2001-2012 LABOR MOBILIZATION Proportion of Working Age Population in the Labor Force, 2001-2013 JOB CREATION Private Employment Growth, 1999-2001 and 2010-2012 LABOR PRODUCTIVITY GDP per Labor Force Participant, 2001-2013 NEW BUSINESS FORMATION Traded Cluster Establishment Growth, 1999-2001, 2010-2012 INNOVATION Patents per employee, 2010-2012 TRADED EMPLOYMENT Employment in Traded Clusters, 2007-2012 4 944 4944 9 666 6999 9 999 6999 LEADING STRONG CLUSTERS By employment size, 2012 Water Transportation: 8,817 Rank: 8 Paper and Packaging: 6,648 Rank: 25 Forestry: 2,821 (employment, national rank) Fish and Fishing Products: 7,040 Rank: 5 Wood Products: 4,156 Rank: 28 Rank: 7 NATIONAL RANK COLOR KEY . 11? 1120 2130 3140 . 41 so EMPLOYMENT IN LARGEST TRADED CLUSTERS, 2012 BUSINESS SERVICES TRADED FOOD DISTRIBUTION ELECTRONIC COMMERCE HOSPITALITY TOURISM EDUCATION KNOWLEDGE CREATION LIVESTOCK, INPUTS WATER TRANSPORTATION FINANCIAL SERVICES INSURANCE SERVICES FISHING PAPER PACKAGING MARKETING, DESIGN PUBLISHING PERFORMING ARTS FORESTRY TRANSPORTATION LOGISTICS PROCESSING WOOD PRODUCTS COMMUNICATIONS EQUIPMENT SERVICES PRODUCTION TECHNOLOGY HEAVY MACHINERY METAL PRODUCTS CONSTRUCTION PRODUCTS SERVICES PLASTICS INFORMATION TECHNOLOGY ANALYTICAL INSTRUMENTS PRINTING SERVICES AEROSPACE VEHICLES DEFENSE BIOPHARMACEUTICALS EMPLOYEES SOLE PROPRIETORS . FARM OPERATORS LABORERS EMPLOYMENT 5,000 10,000 15,000 20,000 25,000 30,000 35,000 The Maine Food Cluster Project 2015 (www.clustermapping.us/cluster). Mossavar-Rahmani Center for Business and Government, Harvard Kennedy School 9 COMPONENTS OF TRADED FOOD CLUSTER, 2012 EMPLOYMENT 2012 JOB CREATION 2007-2012 SPECIALIZATION (LQ) SPECIALIZATION RANK AGRICULTURE 9,417 1,326 0.99 26 FISH FISHING PRODUCTS 7,040 -209 15.60 2 FOOD MANUFACTURING 4,853 -844 1.20 21 LIVESTOCK PROCESSING 103 -32 0.05 49 Looking at the components of Maine?s food cluster, we see that Maine?s are distributed unevenly across these categories. Compared to the nation, Maine has a very high specialization of employment in ?shing (ranked second) despite employment losses during the period 2007-2012 and a higher than average specialization of employment in food processing. It has an average specialization Of employment in agriculture (which includes ?sh farming), though that sector is experiencing healthy job growth. Finally, Maine has a very low specialization Of its employment in livestock processing. The overview below illustrates the industry, regulatory, research, training and other support organizations that make up Maine?s OVERVIEW OF THE MAINE FOOD CLUSTER REGULATORY AGENCIES DIRECT BUYERS (B g?otEds?AtE (BUYEESH ts DISTRIBUTION (Farm Stands, uyers 5, 00 s, o-ops, es uran CLUSTER of ?g?lgge? Farmers Markets, Retail/Specialty Stores, Distributors, Processors, ry? 0.1mm Sales) Institutions direct or via food service management of Marine companies, supermarkets) BIOPHARMA SPECIALIZED SERVICES CLUSTER (Transportation, Food Safety Testing, Packaging, Storage, Equipment CHEMICALS CLUSTER FARMERS SEAFOOD FOOD AND (Vegetables, Fruit HARVESTERS BEVERAGE SPECIALIZED FINANCING Seeds. livestock (Wild-caught Shell?sh. MANUFACTURERS (Farm Credit East, Banks, nn?Sh? KEIP) CLUSTER SUPPORT ORGANIZATIONS TRAINING INSTITUTIONS INITIATIVES RESEARCH ORGANIZATIONS (University of Maine, University of New England, GMRI, Bigelow (Kennebec Valley Community College, University of (Trade Associations, MOFGA, Maine Farmland Trust, Maine Food MAINE FOOD SPECIALIZED SUPPORTING . BEVERAGE INDUSTRIES . ORGANIZATIONS CUSTOMERS . RELATED CLUSTERS 10 The Maine Food Cluster Project 2015 traded food cluster. The boxes in the center represent the traded food cluster industries present in Maine. The boxes to the left (government policy and specialized services and ?nancing) and below (research and training institutions and cluster support organizations and initiatives) are key elements of the cluster. Of the four related industry clusters shown in blue boxes on the right, three (Distribution and eCommerce, BioPharma and Chemicals) are de?ned by the Institute for Strategy and Competitiveness as related to food, agriculture or ?sheries and one (Tourism) is listed due to Maine industry data (USDA Agricultural Census 2012). The competitiveness of Maine?s food cluster is influenced by its natural resources and infrastructure, the context shaping business strategy and competition, the existence of related and supporting industries and organizations, and the quality and size of its markets. Its advantages and disadvantages are summarized below in the chart illustrating Maine?s food cluster competitiveness. Responses from business leaders to the Maine Food Cluster Project survey, described later in this report, were consistent with quantitative data and anecdotal information collected. Advantages of operating their companies in Maine included access to a ?pristine? environment with abundant land, water and marine resources, a dedicated workforce, and being part of a heritage industry and a ?dynamic foodscape? in a state that values farming and food. Moreover, respondents cited the importance of Maine?s quality of life and its ?great reputation? for food produced in the state. Maine is ranked 2nd in the United States for employment specialization in Fish Fishing products. Business leaders noted that the biggest challenges facing their businesses were infrastructure gaps and high costs in their industries and the state?s poor competitive conditions. These included the high costs of processing and lack of processing capacity and accessible storage facilities as well as the cost of energy and affordability of labor in industries with slim pro?t margins. Distance to markets and the costs and logistics of getting the product to the customer received special mention. Competition from other Maine farms to meet local food demand was mentioned as frequently as competition from Canada and other global competitors, pointing to the need to invest in helping Maine farms expand into new markets at the same time as investing in the entry and success of new farmers. (One farmer wrote that his rural county has 48 certi?ed organic farms competing for the food dollars of less than 40,000 people, and yet serving more distant markets is dif?cult.) DETERMINANTS OF FOOD CLUSTER COMPETITIVENESS INPUT CONDITIONS Advantages: 0 Close to Northeastern population centers 0 Land abundant, less expensive than in NE region - Plentiful water 0 Highly productive Gulf of Maine, extensive shoreline 0 Average age of farmers is declining (rare in US) - Quality of life high Disadvantages: 0 Overall workforce is aging - Risk capital and high growth business expertise limited 0 comparatively low - Limited storage infrastructure 0 ?End of the line" and dispersed transport expensive 0 Landscape type, soil conditions can limit farm size CONTEXT FOR FIRM STRATEGY AND RIVALRY Advantages: Farming is growing (in number of farms, acreage, jobs) 0 Collaborative business culture craft beer) Disadvantages: - Most farms are small and half report income losses - Competition for local direct sales increasing 0 Food manufacturers are small 91% have fewer than 20 employees - Competition for local direct sales increasing RELATED AND SUPPORTING INDUSTRIES Advantages: Disadvantages: - Business support resources available - Supply chains interrupted, extend out for beginning farmers of state 0 Processing and storage infrastructure lacking or not accessible - Fish Fishing sector ranks 2nd nationally - Food Processing ranks higher than national average - Few business support resources specialize in high-growth food/farming - Agriculture, aquaculture and '"dustry "eEds ?sheries research are priorities - Trade associations mostly small, - Cooperative extension valued by under'resourced small producers - Cluster support system not collectively focused on food industry growth Mossavar?Rahmani Center for Business and Government, Harvard Kennedy School DEMAND CONDITIONS Advantages: 0 Near Northeastern markets (78M) - Regional awareness of Maine brand, lobster, blueberries, craft beer, local and organic food, Portland as a foodie destination Disadvantages: - Small state population, markets limited 0 Global markets not aware of Maine brand outside of niche products like lobster The project team also looked at the distribution of traded food cluster employment across Maine?s two Economic Areas, regions de?ned by the US. Bureau of Economic Analysis. Maine?s Economic Areas are split between southern Maine (Portland Economic Area) and northern Maine (Bangor Economic Area) and differ in levels of prosperity, employment, wages and poverty, with southern Maine?s economy on average more prosperous than northern Maine?s. Importantly, employment in the traded food cluster in both Economic Areas is signi?cant. In fact, food industries are the largest traded cluster employer in Northern Maine and is third highest in Southern Maine, after Business Services and Distribution and eCommerce (Appendix B). ECONOMIC AND TRADED FOOD CLUSTER DATA - NORTHERN VS. SOUTHERN COMPARISON ECONOMIC AREAS PROSPERITY 2013 PRIVATE, NONFARM AVERAGE PRIVATE POVERTY RATE TRADED FOOD (GDP PER CAPITA) EMPLOYMENT 2013 WAGE 2013 2013 CLUSTER EMPLOYMENT NORTHERN MAINE $31,847 117,951 $33,268 16.11% 7,870 SOUTHERN MAINE $35,964 407,329 $37,313 13.35% 13,542 Finally, the team noted a number of Maine food industry trends that are pointing in a positive direction: Niche sectors in Maine like lobsters, scallops, aquaculture, craft beer and natural and organic foods are seeing growth in sales, in new businesses, or both. Moreover, Maine?s diverse mix of food and beverage products means that its food economy is not dependent on a single crop or species. In fact, it can bene?t from synergies that come from extending supply chains (such as growing organic feed for livestock) and rotating crops (barley, a rotation crop for potatoes, can be malted for craft beer). Maine?s farming sector is growing and attracting new farmers, and ranks high nationally for direct sales in local markets. This represents a robust foundation for growing sales to wholesale and institutional buyers in Maine as well as to much larger markets outside of Maine. Employment in Maine agriculture increased by over 1,300 jobs between 2007-2012 and Maine is bucking the national trend by attracting young people to farming. Moreover, Maine?s growing natural and organic production is an asset at a time when the demand for fresh, healthy, sustainably-produced, and ?authentic? food and beverages is growing nationally. Maine?s farming sector can build on its success at direct sales, where the state is ranked high nationally, by doing more to reach consumers where they purchase most of their food and beverages at grocery stores and by building their capacity to sell to institutional buyers like universities, schools and hospitals. Maine?s growing distinction as a ?foodie? destination has put the state on the map for delicious, locally-sourced food and beverages. Over the last decade, there has been a steadily-growing ?buzz? about Maine particularly Portland in national travel, food and beverage magazines and websites.2 Maine?s reputation for award-winning restaurants, quality food and locally-produced beverages, such as craft beer, positions Maine well for a regional marketing effort connecting more consumers to the Maine people and communities that grow, harvest and make their food. Such an effort could help counter the challenges facing a food system made up mostly of small companies that individually have little marketing capacity but collectively are an attractive producer. Maine companies and researchers are experimenting with innovations designed to lengthen Maine?s growing season, boost production and add value to agricultural and marine products. Examples include energy-ef?cient greenhouses, hydroponics and aquaponics, multi- species grazing, and higher-value products like berry purees, medicinal syrups and functional foods. Maine?s basic and applied research in agriculture, aquaculture, ?sheries and food science takes place in several university and nonpro?t research organizations: Bigelow Laboratory for Ocean Sciences (East Boothbay), the Downeast Institute for Applied Marine Research and Education (Beals), the Gulf of Maine Research Institute (Portland), Maine Aquaculture Innovation Center (Orono) and the University of Maine (Orono), which operates several agriculture, aquaculture and marine research stations and centers as well as its cooperative extension service. Large grants secured during the last 18 months include for aquaculture-related research and for research on organic grain, organic dairy and shell?sh production. The Maine Food Cluster Project 2015 The bottom line: Maine?s traded food cluster has the potential to drive greater business and employment growth statewide. -) The traded food cluster is a large employer in Maine. There are approximately 21,413 Mainers working in the traded portion of these industries. Another 29,399 work in jobs that are part of the local or non-traded food industries like retail food stores, liquor stores and restaurants. A strategic and well-implemented action plan seeking to grow the traded food cluster could make a measurable impact on employment. -) Maine?s traded food cluster is a statewide employer, so a stronger, growing food cluster can bene?t Mainers across the state. It is the top traded cluster employer in northern Maine, and the third-largest traded employer in southern Maine. A concerted effort to grow Maine?s 9 food industries would be likely to expand economic opportunity statewide, AS Malne traded fOOd through growth of enterprises and jobs as well as higher wages. . cluster IS a large employer Although not meeting the de?nition of a ?strong? cluster by traditional . cluster metrics,3 Maine?s traded food cluster has upon which it In northern and can build. Its relative in ?shing and food processing and strong job growth in agriculture are areas of competitiveness that justify action. SOUthern Maine! grOWing 9 -) Maine?s food cluster mix of products is diverse and not dependent on one Malne fOOd Cluster can crop or industry. Maine?s top agriculture and seafood products include lobster sales), milk potatoes wild blueberries drlve StateWIde eggs and farmed salmon It is the leading growth and job creation. producer of these food products in the New England region. -) The underlying input and demand conditions for Maine?s food cluster are promising. Despite the relatively short growing season for some crops, Maine has an abundance of agricultural land, clean water and marine resources, and is within 1 to 2 days drive of large markets in New England (14.5 million), the Mid-Atlantic (41 million), and Eastern Canada (23 million). Furthermore, with the establishment in 2013 of a Portland shipping hub by the Icelandic transport company, Eimskip, Maine is now connected directly to Northern European markets. Therefore, Maine?s traded food cluster pro?le shows that this cluster has potential for growth. This was the project team?s conclusion based on the economic performance and cluster analysis. The next step was to solicit input from industry leaders, asking about the challenges and opportunities facing their companies and the resources that they value and need for growth. PERSPECTIVES OF MAINE FOOD COMPANY LEADERS Maine boasts large, commercially-successful name-brand food and beverage companies like McCain?s Potatoes, Stonewall Kitchen, the Smiths Farm (largest producer of broccoli in the Northeast), Cherry?eld and Wymans (Maine?s largest wild blueberry producers), Cooke Aquaculture (Maine?s large farmed ?sh operation) and Shipyard Brewery (the fourth largest microbrewery in New England). It also is the home of thousands of micro and small farms, sole proprietor ?shing and lobstering enterprises, and artisan food processors. Quantitative data is important but inherently backward looking, so hearing directly from a diversity of business leaders about the growth prospects and barriers that they expect to face in the future is an important dimension of an informed cluster analysis. With the assistance of Critical Insights, a Maine market research ?rm, the Maine Food Cluster Project carried out an online survey of Maine food industry business leaders. The purpose of the survey was to solicit information from Maine food industry business leaders about their companies, the challenges and opportunities facing their companies, and their perspectives on Maine?s business environment and resources. (See Appendix for the survey methodology.) Mossavar?Rahmani Center for Business and Government, Harvard Kennedy School Profiles of Food Company Survey Respondents 9 The majority of respondents were the company?s owner or CEO. 9 Respondents had little formal business training. More than half trained for their business on the job or as part of their family business Only 18% received their primary business training through a four-year college or an advanced degree. 9 Most company respondents sell to Maine customers. 79% were Maine businesses selling food and beverages primarily to customers based in Maine. 9 About half of the respondents were growers or harvesters and half were other company types. 56% were farmers or ?shermen/lobstermen. Another 17% were food or beverage processing companies and the remainder de?ned themselves as distribution companies, retail or wholesale food companies, or suppliers to the food industry. 9 Most companies reported low but growing sales levels. One-third reported annual sales below $50,000, half reported sales between $50,000 and $2 million, and only one in ten reported $2 million or more. Two-thirds of the companies saw annual sales increases over the last three years while only one in ten saw sales decrease during that period. Key insights from the survey were the following: Maine food industry leaders face many business challenges, but the maiority have little formal training in business to help them to overcome these challenges. The greatest challenges facing their enterprises were business challenges: managing operations and growth particularly in a competitive and/or low-margin environment, expanding markets for their products and managing company ?nances and accessing capital for company growth. Other challenges cited by business leaders included external constraints over which entrepreneurs have little control, but are issues that could be addressed by cluster-wide initiatives (availability of skilled workers, affordability of labor, processing infrastructure gaps, supply chain bottlenecks, transportation costs) or policy levers (reducing federal or state regulations, energy/fuel costs, tax levels). Only one out of ?ve of the Maine farmers, seafood company owners and food processors reported having aggressive growth goals. Half of the business leaders responded that their goal is to remain the same size, and focus on becoming more pro?table. This reflects Maine?s small business culture and emphasizes the importance of matching business supports with companies based on their desired growth trajectory and management team business. As will be covered in the next section, Maine has business planning and development resources for start-up and early stage companies, well-publicized assistance for beginning farmers, and resources for early stage aquaculture operations and food processors through their trade associations and the University of Maine?s Cooperative Extension programs. However, as companies grow, their production, food safety, packaging, distribution and logistics, sales and marketing challenges become more complex. They need more access to specialized expertise. And Maine?s food cluster support system is not as well organized to assist mid-size companies to scale. Entrepreneurs selling products outside of Maine differed in their attitudes about which types of organizations had been important to their success over the past three years. They were more likely than business leaders selling to Maine customers to cite the importance of banks and other sources of ?nancing, industry associations (national and state), other Maine ?rms, and government agencies (federal, state and local) to their growth. They were less likely to cite university research or extension programs; nonpro?t and foundations promoting Maine food, ?shing or farming; or economic development organizations as important to their success. When asked to give Maine?s business environment a grade, most food company business leaders chose a grade of or a There is clearly an opportunity for Maine?s food entrepreneurs to come together and engage with leaders of public agencies and nonpro?t organizations active in Maine?s food cluster to identify and prioritize cluster challenges and ?nd ways to address them. The Maine Food Cluster Project 2015 VERBATIM ANSWERS: GREATEST CHALLENGE FACING MY BUSINESS IN MAINE RESPONDING To COMPETITION (MAINE GLOBAL) MANAGING OPERATIONS GROWTH NEED TO EXPAND MARKET MANAGEMENT HOW TO MANAGE RISING COSTS, PRESSURE ON PRICES LABOR PROCESSING CHAIN BOTTLENECKS COSTS TRANSPORT DISTANCE COST REGULATION ENVIRONMENTAL OF RESOURCE (FISH LAND) SOLUTIONS EN COSTS TAXES RESPONSES 0 7.5 15 22.5 30 FOOD CLUSTER SUPPORT SYSTEM Recent research notes the importance of understanding the different dimensions of a cluster: its and gaps, related clusters present in the region, the policy environment for the cluster, as well as ?institutions for collaboration? (Ketels, 2013). These institutions are nonpro?t and public sector organizations that make up the cluster support system in a region (Porter and Emmons, 2003). They are typically a mix Of organizations, both generic and cluster speci?c, that carry out functions such as policy and regulation, networking and promotion, ?nancing, economic and business development, research and training relevant to a particular cluster. How these organizations work together to solve common cluster problems and pool their resources impacts cluster company success. In some regions, these groups work together through organized efforts called cluster initiatives that are made up Of companies, government agencies and other groups working to improve the competitiveness of a cluster. In order to understand the organizational make up of Maine?s food cluster support system, the project team identi?ed organizations working to advance the food cluster at a state or regional level and the primary functions of these groups, (Appendix D). Over 100 organizations found were categorized by primary function and whether they were generic supporting multiple industries, such as the University of Maine) or cluster-speci?c (primarily supporting the food cluster, such as the Maine Organic Farmers and Gardeners Association). A small subset of groups that support multiple industry clusters have staff with specialized experience in food and beverage industries, such as the Maine Manufacturing Extension Partnership and Coastal Enterprises, Inc. (CEI). of Maine?s food cluster support system include its diversity and level of activity, its breadth across key functions that are needed for cluster growth, and the collaborative spirit embodied in cross-organizational networks and initiatives. Examples illustrating the emphasis of existing cluster support activities are the promotion of natural and organic agricultural production and the sale of these products locally, the training of new farmers, the introduction Of new ?shermen and lobsterman to the trade, the introduction of aquaculture to ground ?shermen, and the start-up of new food processing businesses. Mossavar?Rahmani Center for Business and Government, Harvard Kennedy School EXAMPLES OF MAINE CLUSTER BUILDING ORGANIZATIONS (SEE APPENDIX FOR FULL LIST) PRIMARY FUNCTION NETWORKING PROMOTION 0 Lobstermen?s Association 0 Maine Aquaculture Association 0 Maine Farmland Trust 0 Maine Organic Farmers and Gardeners Association 0 Maine Potato Board 0 Maine Specialty Foods and Grocers Association 0 Coastal Enterprises, Inc. I Finance Authority of Maine 0 Farm Credit East 0 Maine Community Foundation - Maine Technology Institute - Slow Money Maine ECONOMIC DEVELOPMENT 0 Island Institute - Maine Development Foundation 0 Maine International Trade Center BUSINESS DEVELOPMENT 0 Maine Center for Entrepreneurial Development - Maine Manufacturing Extension Partnership 0 Maine Small Business Development Center - SCORE RESEARCH 0 Bigelow Lab for Ocean Sciences 0 Gulf of Maine Research Institute 0 University of Maine 0 University of New England EDUCATION SKILLS DEVELOPMENT 0 College of the Atlantic - Kennebec Valley Community College 0 Unity College - University of Maine (Including Extension Program) PUBLIC POLICY REGULATORY - Maine Dept. of Agriculture, Conservation Forestry - Maine Dept. of Marine Resources That said, the results of the business survey indicated that there are gaps in Maine?s cluster support system as well as opportunities to align activity so that Maine farms, ?sheries and food manufacturers can reach their greatest potential. The food cluster support system is less a system than a diverse community of mostly small organizations working statewide (like trade associations and nonpro?t groups promoting farming and food), with many more groups active in individual communities, such as farmers? markets. It lacks a broadly-accepted action plan focused on growing Maine food enterprises and employment. In fact, the large number of groups and their dynamism do not appear to be translating into strong food industry performance to the extent that has been observed in other states and regions. Cluster support gaps and alignment opportunities include the following: 9 Growth-oriented farms, seafood companies and food manufacturers need business support with specialized industry experience to help them expand production and sell products outside of Maine. In addition to existing one-on-one counseling resources, support organized around groups of growth-oriented companies can help build supply chains, shorten learning cycles, pool market knowledge, coordinate outreach, and create distribution ef?ciencies. Innovative distribution and sales models complementing Maine?s small business-production system could be explored, such as Red Tomato, a venture that connects fresh farm produce from New England farms to wholesale customers across the Northeast, or branded ?farm to fridge? technology platforms connecting consumers directly to food and food producers. 9 Processors need specialized equipment, facilities and guidance to scale from home kitchens or farms to full-scale commercial production. Maine lacks food processor-focused business accelerators as well as suf?cient infrastructure for intermediate expansion stages, like co-packers and accessible food-safety-certi?ed commercial kitchen space. These resources can connect food manufacturers to industry expertise and capital, create economies of scale for supplies and services, introduce new sales opportunities, and create a community that celebrates entrepreneurs and innovators in Maine?s food and beverage industries. Shared and mobile processing equipment can help a greater number of farms and food processors extract more value from products and create cost and time ef?ciencies. 9 Maine?s in production and processing of food for local consumers should be paired with a similar effort focused on larger, export markets. There is anecdotal evidence that the growth in Maine farming is increasing local competition to meet Maine?s consumer demand in some regions of the state, and that helping Maine farmers and food producers to reach larger The Maine Food Cluster Project 2015 institutional and wholesale markets in Maine and elsewhere is needed. To do that will require connecting Maine?s growth-oriented food and beverage producers with know-how, industry networks and experienced mentors and to potential buyers in other regions. This will also require cluster resources that help growing businesses succeed at attracting capital to fund new growth, create economies of scale for supplies and services, establish new sales channels, and celebrate growth and innovation in Maine food and beverage industries. 9 Leaders of Maine?s small companies note that their trade association Maine lacks a broad IV. is one of their most valued resources. However, most of the over 35 food trade groups have few or no staff, thus limiting their capacity to aCCe aCtion plan and support member growth. Some already cooperate, such as via network meetings of the Agricultural Council of Maine, but more ways of sharing Implementatlon CapaClty back of?ce and business growth resources, or even mergers, could be focused on growing food explored. Furthermore, the Maine Brewers Guild?s Beer School, Beer Trail and Summer Beer Festival are examples of innovative and and employment, collaborative activities boosting production quality and branding Maine products industry-wide that could be adapted by other food and and the dynamlsm Of Its beverage industry trade associations. 9 With so many organizations in Maine?s support ecosystem and despite does nOt appear to be numerous examples of collaboration there are many opportunities for inef?ciencies. The Maine Food Strategy has been working to identify tranSlatlng Into Strong ways to strengthen Maine?s food system across many dimensions, and industry_wide performance. may become an avenue for greater coordination. At the metropolitan level, food production and access projects can share information with similar efforts in other parts of the state, split consultant costs, or jointly apply for funding. Finally, the sheer number of organizations is confusing to newcomers, so a roadmap identifying groups and their functions could help start-up entrepreneurs navigate resources. Cluster-Building Networks Statewide Regional: 9 Maine Food Strategy: Foundation-funded, multi-dimensional effort to develop an action plan for Maine?s farming, ?shing and food economy. Hosted at University of Southern Maine. 9 Greater Portland Sustainable Food Production Cluster: Goal to grow Maine food system and create 2,500 jobs in food production and manufacturing. Two-year certi?cation provided by Federal government, without designated funding. Hosted by Greater Portland Council of Governments. 9 Mayor?s Initiative for Healthy Sustainable Food Systems: Volunteers from private, public and nonpro?t sectors working to develop and promote projects like community gardens, farmer?s markets, and composting programs in the City of Portland. 9 Harvesting Maine?s New Wholesale Opportunities: Business planning workshops for farmers exploring wholesaling of crops. Organized by seven Maine organizations. Conducted in 2015. 9 Other Cross-Organizational Networks include: Maine Food Atlas, Maine Food for UMaine, Eat Local Foods Coalition, Maine Network of Community Food Councils. Maine is fortunate to have many people who are passionate about farms, seafood, and food and beverage manufacturing working on association boards, as leaders and staff of cluster support organizations, and as volunteers working to strengthen different dimensions of Maine?s food system. The activities of these organizations and networks span vital functions needed to strengthen Maine?s food and beverage industries. How these organizations work together and and the extent that they pool and direct their resources strategically can make a signi?cant difference in Maine. To learn lessons that could be instructive for Maine, the project team explored how other regions have organized efforts to grow their food industries and seen positive results. Mossavar?Rahmani Center for Business and Government, Harvard Kennedy School LESSONS FROM CLUSTER INITIATIVES IN OTHER REGIONS Vermont and Oregon have Over the decades in many regions of the US. and around the world, public agencies, industry groups and nonpro?t organizations have experimented seen marked growth in with different ways to build industry competitiveness. More recently, researchers de?ned and studied clusters (Porter, 1990) and subsequently cluster jobs and new businesses organizations, and began to categorize these efforts and measure the success . . of their practices (Ketels, et. al., 2003 and 2013; Sb?lvell and Williams 2013). In their farm to plate and . . . To identify lessons that could bene?t Maine?s food cluster, the project team fOOd IndUStrles looked for comparable regions (having rural geography, modest-sized population . . . with natural resource-based economies) with food industry cluster initiatives aSSOCIated WIth the" ClUSter that appeared to be contributing to industry growth. Three regions Vermont, Oregon and Denmark were selected as examples that appeared relevant to Strengthenlng efforts. Maine and with track records of success strengthening their food clusters. All three regions have engaged food business leaders and other key cluster organizations like state agencies, trade associations and university researchers in developing data-driven, regional food cluster growth plans with speci?c goals for growing farms and food businesses and metrics for tracking progress. This has enabled them to rally entrepreneurs, government leaders and nonpro?t advocates to work together to solve problems that are constraining multiple companies such as bottlenecks in meat processing and to boost innovation and pro?tability industry-wide through spreading energy-ef?cient and other green production techniques that reduce costs while contributing to brand value. Vermont and Oregon have seen marked growth in jobs and new businesses in their farm to plate and food processing industries associated with their cluster strengthening efforts. Since the launch of Vermont?s Farm to Plate initiative in 2009, the number of food companies in the state has risen by food manufacturing jobs have growth by 34.5%, and the state has added 4,189 jobs in agriculture. In Oregon, a Northwest Food Processors Association-led initiative contributed to food manufacturing employment growth of 7.8% during the period 2007-2012, while overall manufacturing employment shrank by 15.8%. Denmark?s food cluster program, which launched more recently, has seen industry come together to identify cluster-wide business challenges, has built a network connecting large and small food companies in Denmark and has showcased innovative Danish food products and capacities to other European and global markets (Appendix E). Lessons from the review of these three regional examples included the following: 9 The cluster initiative resulted from a crisis or an opportunity, or both. In the case of Vermont, the emergence of the local and organic food movement created an opportunity to reduce Vermont?s dependence on its dominant dairy industry, which often had irregular economic performance. Oregon?s food processors industry was losing companies and jobs, which impacted the state?s economy while threatening the sustainability of its regional food processors association. And a large Danish dairy company saw an opportunity to grow Denmark?s food cluster by connecting its large and small food companies, promoting Danish companies through joint marketing, and developing a coordinated innovation strategy. 9 Engaging the private sector in an initiative targeting industry cluster was key to initiative success. The Danish and Oregon cluster initiatives were driven and led by the private sector directly or through an industry trade association. Vermont?s public-private partnership model includes strong private sector participation, and its coordinating organization, the Vermont Sustainable Jobs Fund, has a business growth and economic development mandate, staff expertise in business development, and a track record of success growing Vermont companies. Finally, focused, entrepreneurial leadership has been an essential ingredient contributing to initiative credibility and success. 9 Initiatives started with data collection and planning but soon developed speci?c goals and measurable metrics to generate momentum and sustain support. This initial period ranged from six to 18 months and engaged industry leaders as well as experts from key public and nonpro?t agencies involved in strengthening food industries and the food system in the region. 9 Constructive ties with the public sector at appropriate levels maximized learning, policy and program alignment, and speci?c regulatory improvements. Public sector support included recognition of and/or ?nancial support for implementation of the action plan. 9 Business models and cluster initiative activities differed across these regions. Despite these similarities, the three cluster initiative models were quite different and grew out of the particular context of the regional agricultural economy and industry structure. Personal leadership, organizational type and industry culture also played an important role shaping the cluster initiatives. The Maine Food Cluster Project 2015 These three food cluster initiatives demonstrate the importance of engaging private sector leadership, crafting and gaining support for a regional cluster growth agenda, setting speci?c and meaningful goals and metrics to measure initiative progress, and mobilizing support and aligning public, nonpro?t and foundation resources in support of the agenda. These are good practices that could be adapted in Maine in support of its own cluster growth efforts. COMPARISON OF FOOD CLUSTERS AND CLUSTER INITIATIVE APPROACHES VERMONT OREGON DENMARK REGION State State State Country SIZE (SQUARE MILES) 9,620 35,385 98,381 16,562 POPULATION (ESTIMATED 2014) 626,500 1,330,200 3,970,200 5,655,700 Lobster Seeds LARGEST FOOD PRODUCT Dairy Potatoes Wheat Pork Beef Dairy Fruits Dairy Wild Blueberries Fish NUMBER OF FARMS 7,338 (2012) 8,173 (2012) 35,439 (2012) 42,099 (2012) NUMBER OF COMMERCIAL FISHERMEN N.A. 8,763 (2012) 35,439 (2012) 5,400 (2012) NUMBER OF FOOD PROCESSING COMPANIES 616 (2012) 639 (2012) 637 (2012) CLUSTER INITIATIVE MODEL Public-Private Partnership Mixed Regional Indusny Private Sector Association CLUSTER INITIATIVE FOCUS State Farm to Plate Multiple Initiatives Food Processing Food Innovation DRIVER FOR CLUSTER INITIATIVE CREATION State/Business/Foundations N.A. Industry Trade Association Large Dairy Company LEAD ORGANIZATION Vermont Sustainable Jobs Fund Multiple organizations active Northwest Food Processors Association Danish Food Cluster (Founded by Aria, a global dairy ?rm based in Denmark) To enhance the competitive To facilitate innovation through LEAD To accelerate Vermont?s . .. . . branding and cooperation through the M ss 0N green economy Of Its Pac'?c NonhweSI whole food value chain, supporting the ood processor members . . .. . and growth of Its members STATE RECOGNITION OF YES OR FUNDING OF CLUSTER YES N.A. (Oregon, Washington, Idaho) YES INITIATIVES GOVERNANCE BY OR YES NA. YES YES FUNDING FROM INDUSTRY Mossavar?Rahmani Center for Business and Government, Harvard Kennedy School LOOKING AHEAD: GROWING FOOD AND BEVERAGE INDUSTRIES Tackling Maine?s food Cluster Maine?s traded food cluster can become a stronger food production and processing engine for the state?s economy and more dynamic supplier of ShortComingS and fOCUSing foods and beverages for local, regional and national markets. The state?s abundant land, water, and marine resources, its cluster assets and its on grOWth Opportunities strategic location can provide a springboard for greater growth. But to could form the outline for an unlock that potential Maine needs to set clear goals and take strategic steps that are fact-based and help make Maine a better place for its food action agenda cultivating the and beverage companies to succeed. That business expansion can, in turn, produce greater wealth, higher wages, and ultimately, contribute to over the nex': decade. Maine?s prosperity. To succeed, Maine would need to harness the collaboration of leaders across its farming, ?sh and food processing and ?nancing community, by: -) Engaging food industry leaders to craft and guide an action plan with the parallel goals of growing scalable food and beverage companies and ?lling in cluster gaps to make Maine a region where food and beverage companies can thrive, -) Mobilizing key cluster support organizations to align resources needed by growth-oriented farms, seafood companies and food processors to accelerate their growth, and -) Prioritizing one or two speci?c growth opportunities where Maine is positioned for success over a sustained period, setting clear metrics for tracking progress. Tackling Maine?s food cluster shortcomings and focusing on growth opportunities could form the outline for an action agenda cultivating the cluster over the next decade. A growth agenda would require guidance from company leaders and trade association heads. It would involve collaboration with traditional and mission-oriented capital sources, the research and extension community, education and training programs and nonpro?ts working to support Maine?s food businesses. It would bene?t from engagement and aligned investment by state agencies responsible for ?sheries and aquaculture, agriculture, economic development and job training, as well as strategic outreach to Federal agencies like the US Department ongriculture, Small Business Administration and Economic Development Administration. The resulting cluster-wide solutions and business expansion could then translate into a more competitive food cluster, growing and sustaining more and better-paying jobs in all corners of the state. BUILDING BLOCKS FOR A SUCCESSFUL FOOD CLUSTER INITIATIVE WHAT WHO An action plan for business growth, with mutually-reinforcing Business leaders from the farming, ?shing and food processing activities (based on market and industry analysis) and clear industries draw on industry data and experience to identify metrics for tracking progress PrlOTltles arid gUIde aCth? A publicmivate partnership or industry group that oversees State agencies recognize, align with and support action plan the initiative via a steering or governance group and mduce regUIatorV barriers Food sector nonprofit groups with missions and capabilities that complement the action plan engage and collaborate with the initiative Entrepreneurial leadership that strengthens connections between companies, coordinates activities and tracks results Sustained funding for these activities from a mix of sources (private and public sector, member or activity fees, foundations seeking to grow state?s food economy and jobs) Universities and other research institutions align research programs with cluster growth priorities Training institutions like universities and community colleges engage employers in identifying critical skill areas, developing curricula, coordinating internships, etc. The Maine Food Cluster Project 2015 POTENTIAL TARGETS FOR A GROWTH AGENDA Tackling ambitious opportunities over a sustained period of time would not only drive meaningful growth but also galvanize the experienced entrepreneurs, investors, policy leaders and food system advocates who would need to be engaged for the effort to succeed. Potential targets for a growth agenda should drive resources towards pragmatic actions that: 9 Help more farms, seafood companies and food processors to accelerate their growth, with a particular focus on scalable enterprises led by entrepreneurial management teams. This will require approaches that combine identifying and expanding into new and larger markets, accessing capital, developing appropriately-skilled workers, and transitioning to higher-value, higher- margin production. 9 Extend supply chains within Maine, in order to harness the collective economic power of Maine?s small business-oriented production system. 9 Invest in skills needed by today?s and tomorrow?s entrepreneurial food and beverage enterprises, so that Maine people can help to power Maine?s food cluster growth and bene?t from its success. 9 Promote innovation and attract young people to work in the Maine food cluster, because they may be more open to operating in new ways and using technology to advance the cluster. 9 Unlock synergies across the Maine food and beverage cluster around strengthening Maine?s brand, connecting Maine producers with wholesale and institutional buyers in Maine and the Northeast, increasing transportation and distribution ef?ciencies, building new technology platforms that have not been fully leveraged, due in part to divisions in the cluster. 9 Boost production that is environmentally sustainable, and therefore maintains and enriches the natural resources that are foundational assets for Maine?s food cluster, and 9 Burnish Maine?s reputation for producing quality, authentic and sustainably-produced food and beverages, in ways that lift all Maine food and beverage producers and showcase compelling stories of Maine farmers, ?shermen and food manufacturers for consumers. A growth agenda guided by these principles would enhance economic opportunity by supporting business growth that raises, rather than lowers, wages and builds wealth in Maine. This is particularly important for a cluster with an average wage ($36,755) that is lower than the average private-sector wage in Maine ($38,454) and the average food cluster wage in New England Maine food business leaders, heads of food and beverage industry trade associations, investors and food system advocates are the players who would need to come together and de?ne a speci?c growth plan that ?ts Maine?s food cluster. To succeed, this coalition would need to bridge existing divisions between conventional and natural/organic food producers, farmers and ?shermen, rural and urban Maine, and between sometimes-competitive nonpro?ts, recognizing the collective bene?ts of working toward a better economic future for the food cluster, and contributing to greater prosperity for Maine. The following are three examples illustrating the potential of Maine?s food and beverage industries for growth: 9 Add More Value to Maine Food Scale-up Maine Food Processing 9 Expand the Production and Sale of Maine Food in Maine and the Northeast 9 Expand the Production and Sale of Sustainably-Produced Protein These as well as other options with high growth potential could be the basis for discussion and prioritization by business and cluster leaders for creating a blueprint for Maine?s food industry future. Mossavar?Rahmani Center for Business and Government, Harvard Kennedy School Add more value to Maine food support start up and scale up of Maine?s food processing Maine?s food cluster?s productivity is only 88% of the national average (Battelle, 2015). Higher productivity, which comes from innovation and adding more value to products, will boost competitiveness, leading to job growth and higher wages. Similarly, helping Maine food and beverage companies to transition from commodity to high-margin products will reduce Maine?s cost and small business production system disadvantages. HOW EXAMPLES or PRAGMATIC STEPS Target critical transitions from home kitchen Identify equipment, facility and resource gaps at key growth stages for food to commercial scale operation processing where market demand is greatest. Hold a funding competition for food processing accelerators and other models to address these gaps. Winning ventures should incorporate relevant best practices for business development, commercial kitchen facilities, and other shared resources like mobile equipment. Nonpro?t and for-pro?t models could be eligible, but all should engage food manufacturing business leadership and have realistic plans for ?nancial sustainability. Assess whether and how these ventures and the University of Maine pilot kitchen can support processors in other parts of the state. Prepare a skilled workforce that can help Fine tune skills-training programs and university extension resources accelerate sector growth to meet food processor workforce and management needs. Increase the frequency of quality ?recipe to market? programs. Emphasize business skills in training programs. Explore establishment of food processor management and operations executive education and certi?cate programs. Connect processors with larger markets across Identify high-potential New England market niches and help Maine?s small the Northeast and medium-sized business expand into these markets through activities like regional trade missions and webinars. Publicize resources for market research so that entrepreneurs can access and bene?t from them. Celebrate, inform and cultivate connections Celebrate innovative and growing food processors. Launch a across the processor community networking series and invite entrepreneurs and investors from Maine and other regions to share their stories in person and via webinars. The Maine Food Cluster Project 2015 Expand Production Sale of Maine Food in Maine and the Northeast The state can build on its strong foundation in local sales by building business capacity to sell to large nearby markets. Maine ranks 3rd in the US. for farms with community supported agriculture (CSAs). Yet, the state is only one to two day?s drive from much larger New England (14.5M), Mid-Atlantic (41.6M) and Eastern Canadian (23M) and has expanded shipping to northern Europe.5 HOW EXAMPLES or PRAGMATIC STEPS Build the capacity of Maine companies to Launch a statewide food business accelerator program targeting mid-sized supply distinctive, quality food and beverages growth-oriented Maine farms, seafood companies and food manufacturers. to institutional and grocery buyers in Maine Follow a comprehensive, cohort-based best practices model that includes and larger markets in the Northeast helping companies to secure the capital they need to grow. Create a transportation distribution working group to identify supply chain and distribution ef?ciencies between Maine producers and Northeastern customers. Investigate innovative models that have worked to enable mid- sized producers to supply large or regional purchasers. Increase the number of Maine food businesses Connect entrepreneurs with information about regional market demand, With sales to institutional and grocery Customers through matchmaking events and other activities that bring together growth- the NortheaSt oriented producers with buyers. Engage grocery chains and independent grocers where over 80% of Mainers buy their food and other wholesale and institutional customers in initiatives expanding Maine food sales in Maine and the Northeast. Support innovative ways to boost sales to regional institutional customers. Examples can include meeting the growing customer demand for sustainable foods traced to the source (similar to Gulf of Maine Sustainany Harvested Seafood) and new technology platforms to improve sales efficiencies for small and medium-sized companies. Develop an umbrella brand or campaign promoting Maine food and beverages, capitalizing on the state?s reputation for quality, authentic and sustainably-harvested food and drawing on compelling stories about Maine food producers. Consider how this relates to Maine?s long-time ?Get Real, Get Maine? marketing effort, its ?The Maine Thing? tourism campaign, and explore collaboration with other New England marketing campaigns. Mossavar?Rahmani Center for Business and Government, Harvard Kennedy School Expand production and sale of sustainably-harvested protein According to the Food and Agriculture Organization of the United Nations, world demand for animal protein will double by 2050. Along with this massive growth in demand, public concern is increasing about environmentally-sustainable meat production, health and traceability. With abundant farmland and marine resources, can Maine leverage its seafood, dairy, livestock or egg production potential? HOW EXAMPLES or PRAGMATIC STEPS Identify niche opportunities for Maine companies Create a protein demand and supply chain working group to map global market to meet the growing demand for protein niches in seafood, livestock, eggs and dairy where Maine has production promise and can be cost competitive. Consider ways to modernize Maine?s protein processing in ways that move protein production up the value chain. Develop a ?ve-year action plan to meet current protein demand in promising market segments, such as building out supply chains in aquaculture/seafood processing or organic dairy/organic feed supply chains. Develop a long-term action plan to expand Maine?s protein production targeting future market opportunities, including research, extension and demonstration as well as business development. For example, sustainable expansion and intensi?cation of livestock production in line with projected changing weather conditions between 2015 and 2050. Launch a targeted initiative to compete in this Launch a business accelerator program targeting growth-oriented Maine highly competitive sector protein producers by segment (seafood, meat, dairy) OR a cross-cutting protein group. Expand state and private sector investment in protein production and processing innovation as well as global market and trade promotion. The Maine Food Cluster Project 2015 SUPPORTIVE ACTIONS TO ENHANCE BUSINESS ENVIRONMENT FOR FOOD INDUSTRY GROWTH A business-led effort aiming to grow Maine?s food cluster will have the greatest impact if accompanied by supportive actions in the state?s broader policy, research and training, and ?nancing environment, through steps such as those that follow. PUBLIC SECTOR Align policies, resources and regulations in support of the cluster growth plan. Adopt an economic development agenda that encourages public and private investment in production and processing innovation and equipment upgrades, skills training, and development of distribution and sales channels to larger markets outside of Maine. Target state funding from programs such as Farms for the Future, Agricultural Development Grants and Loans towards projects likely to yield the greatest economic impact for Maine, such as high-value crops, growth-oriented companies, activity that impacts multiple companies, and entering larger markets. Engage public-private agencies like the Finance Authority of Maine, the Maine Technology Institute and the Maine International Trade Center that ?nance companies and promote innovation and exporting in the design and execution of the plan. RESEARCH AND TRAINING Marshal university and community college resources in support of industry growth priorities. Connect curricula, research and extension in agriculture, aquaculture and marine science more closely to business needs. Expand internships and course projects with Maine food and beverage companies. Increase degree, non-degree and certi?cate options for in-demand occupations. Add business school faculty with agribusiness experience. Do more outreach to inform the business community about resources that are underused, or shift resources to higher-impact uses. Align workforce training resources with industry needs. Raise awareness about skills needed by growth-oriented farms, seafood companies and food processors and direct job training resources towards these needs. Consider launching a workforce attraction partnership involving employers constrained by chronic workforce needs and organizations working with job seekers interested in agriculture, ?shing, aquaculture or food processing careers. INVESTMENT Build bridges between traditional lenders and investors, public ?nancing sources, foundations and impact investors and with food industry entrepreneurs - to increase ?nancing for food industry growth. Create opportunities for people investing diverse types of capital to come together and learn about investment opportunities along the life cycle of high-growth and steady- growth food companies. Include New England-based investors specializing in relevant industries and foundation of?cers dedicated to the region?s food systems and ?sheries. Encourage expansion of ?nancing that ?ts food cluster growth risk and return pro?les and timelines (such as royalty-based ?nancing, public-private ?nancing structures, peer-to-peer lending, pooled loan funds) and needs (such as ?nancing equipment modernization and companies integrating vertically along the producer/ processor/customer supply chain). Build in opportunities for entrepreneurs to network with investors, get guidance on how to position their companies to succeed at raising needed capital, and get feedback when their efforts fall short. CLUSTER PROMOTION Boost cluster awareness, innovation and networking. Recognize Maine?s innovative and growing farms, seafood companies, food and beverage processors with awards for leadership and growth. Promote creation and adaptation of models for aggregating, distributing and marketing food and beverages in this cluster populated largely by small businesses. Build the capacity of trade associations to grow their member companies, through skill-building and joint marketing activities such as the Maine Brewers Guild has done with the Beer School, Beer Trail and Summer Beer Festival. Engage in ongoing assessment of cluster gaps and opportunities. Periodic analyses should draw on cluster data, business leader perspectives, food buyer input and consumer trend information. Include regular assessments of Maine?s food cluster position relative to other regions in the US. Leverage complementary clusters. Explore tapping Maine?s strength in tourism by collaborating with the Maine tourism industry to boost agritourism. Assess growth opportunities that intersect with the biopharmaceutical and chemical clusters. Mossavar-Rahmani Center for Business and Government, Harvard Kennedy School I CAN MAINE Food is hot nationally and in Maine. Across the U.S., large agribusiness and food and beverage corporations continue to innovate and make strategic purchases to position themselves as food preferences evolve, prices shift and as weather conditions (particularly precipitation patterns) change, affecting some ofAmerica?s largest agricultural regions. In parallel, Federal and state economic development agencies and foundations are seeing greater connections between food production, environmental sustainability and expanding economic opportunity, particularly in rural regions. In Maine, there are daily articles in newspapers and online about the newest restaurants, the growth of independent grocers and coops featuring natural and locally-produced foods as well as reporting regularly on production levels of the state?s signature potatoes, wild blueberries and lobsters and the next moves of its large food and beverage companies. Shifting global and local consumer demand and the potential of new and different investment and funding is prompting some Maine companies to innovate, new types of companies and business support efforts are being launched, and some reshuffling of the farming, seafood, food processing industry landscape and support system is taking place. With change, comes opportunity. Maine possesses abundant farmland, water and marine resources, a cluster pro?le with some strong highlights, and is within one-two days shipping of large markets in the northeast US. and Canada. It has an expanding reputation for being a region known for producing healthy, authentic, locally-produced and delicious food and beverages. Its farming, seafood and food manufacturing industries are still dominated in numbers by micro and small companies, but a smaller group of mid-sized farms and companies are striving to scale and ?nd their ?sweet spot? by adding new lines of business, by integrating vertically to capture more value and by innovating to take advantage of growing and changing consumer demand. A few of Maine?s cluster support organizations are working with selected Maine farms, seafood enterprises and food processors to scale to the next level of growth; other support organizations are themselves small and have few resources to dedicate to that mission, lack specialized staff with expertise in scaling food companies, or are focused on other dimensions of Maine?s food system. Despite these efforts there is not yet a broadly-accepted agenda on the part of industry, nonpro?ts, research groups and public agencies focused on advancing growth of Maine?s food cluster and beverage industries. Maine can seize this opportunity. Its food cluster has but needs to organize itself more strategically over a sustained period to make Maine a region where signi?cantly more food and beverage companies thrive in local and export markets. The recipe for success calls for engaged business leadership, an action plan for growth that builds on Maine?s assets, clear metrics for progress, greater company- and system-level innovation, and constructive teamwork between the private sector, trade associations, government, nonpro?t groups, training and research institutions, and investors. I The Maine Food Cluster Project 2015 ENDNOTES www.tci-network.org http://www.clustermapping.us/content/glossary-terms Mossavar-Rahmani Center for Business and Government, Harvard Kennedy School 27 TABLE NOTES The Evolution of Maine?s Economy Source: Maine Food Cluster Project, from Colgan and Barringer, Donahue et. al., and other secondary sources. Maine Performance Scorecard Source: Prof. Michael E. Porter, Cluster Mapping Project, Harvard Business School; Richard Bryden, Project Director. Employment in Maine?s Largest Traded Clusters Source: Prof. Michael E. Porter, Cluster Mapping Project, Harvard Business School; Richard Bryden, Project Director; Census CBP, Census Nonemployer Stats, USDA NASS. Traded Cluster Composition of the Maine Economy Source: Prof. Michael E. Porter, Cluster Mapping Project, Harvard Business School; Richard Bryden, Project Director; Census CBP, Census Nonemployer Stats, USDA NASS. Components of Maine?s Traded Food Cluster Source: US. Cluster Mapping Project, Rich Bryden. Census CBP, Census Nonemployer, USDA NASS. Overview of the Maine Food Cluster Source: Maine Food Cluster Project, interviews. Determinants of Maine?s Food Cluster Competitiveness Source: Maine Food Cluster Project, interviews, online survey and varied data sources. Economic and Traded Food Cluster Data Northern vs. Southern Comparison Source: Prof. Michael E. Porter, Cluster Mapping Project, Harvard Business School; Richard Bryden, Project Director; Census CBP, Census Nonemployer Stats, USDA NASS. Pro?les of Food Company Survey Respondents Source: Maine Food Cluster Project online survey. Verbatim Survey Responses: Greatest Challenge Facing My Business in Maine Source: Maine Food Cluster Project and Critical Insights, survey responses, January 2015. Examples of Maine Cluster-Building Organizations Source: Maine Food Cluster Project interviews and websites. Maine Cluster-Building Networks Statewide and Regional Source: Maine Food Cluster Project interviews and websites. Cluster-Building Networks Statewide/Regional Source: Maine Food Cluster Project, interviews and websites. Comparison of Food Clusters and Cluster Initiative Approaches Source: Maine Food Cluster Project interviews and websites. Employment in Largest Traded Clusters Southern vs. Northern Comparison Source: Prof. Michael E. Porter, Cluster Mapping Project, Harvard Business School; Richard Bryden, Project Director; Census CBP, Census Nonemployer Stats, USDA NASS. The Maine Food Cluster Project 2015 SELECTED REFERENCES http://www.vtfarmtoplate.com/uploads/CaseStudy-VermontFarmtoPlateNetwork.pdf http://efc.muskie.usm.maine.edu/docs/Brief_History_of_Rural_Dev_Policy.pdf http://www.clustermapping.us/sites/default/files/files/resource/Clusters_and_the_New_ Economics_of_Competition.pdf http://mainefoodstrategy.com/wp-content/uploads/2014/05/maine-food-strategysconsumer-survey-report.pdf http://www.clustermapping.us/sites/default/files/files/resource/Clusters_of_Innovation_ national_report _Regional_Foundations_of_U.S._Competitiveness.pdf http://www.clustermapping.us/sites/default/files/files/resource/DelgadoPorterandSternClustersConvergenceandEconomicPerformance.pdf http://www.foodsolutionsne.org/sites/default/files/LowResNEFV_0.pdf http://www.clusterobservatory.eu/system/modules/com.gridnine.opencms.modules.eco/ providers/getpdf.jsp?uid=7a70a31d-3f8a-41c9-b415-f88e464d116a http://digitalcommons.library.umaine.edu/mpr/vol20/iss1/ http://www.czechinvest.org/data/files/the-cluster-initiative-greenbook-3916-cz.pdf http://www.clustermapping.us/ http://cjres.oxfordjournals.org/content/6/2/269.abstract http://www.state.me.us/labor/labor_stats/ https://www.mainememory.net/sitebuilder/site/163/page/422/display?use_ mmn=1&popup=1 Mossavar-Rahmani Center for Business and Government, Harvard Kennedy School 29 APPENDIX A TRADED FOOD CLUSTERS AND CORRESPONDING NORTH AMERICAN INDUSTRY CLASSIFICATION SYSTEM (NAICS) CODES Agricultural Inputs and Services 311340 Nonchocolate Confectionery Manufacturing This cluster includes establishments primarily engaged in farming and 311351 Chocolate and Confectionery Manufacturing from related services. Farming includes soil preparation, planting, cultivation, Cacao Beans harvest, fertilizer creation, and post harvest activities. It also includes 311352 Confectionery Manufactured from purchased Chocolate services that supply farm labor, support for animal production, and additional operations management. Number of Industries - 9 311411 Frozen Fruit, Juice, and Vegetable Manufacturing 311412 Frozen Specialty Food Manufacturing 311421 Fruit and Vegetable Canning 311422 Specialty Canning 311423 Dried and Dehydrated Food Manufacturing 311511 Fluid Milk Manufacturing 115111 Cotton Ginning 115112 Soil Preparation, Planting, and Cultivating 115113 Crop Harvesting, Primarily by Machine 311512 Creamery Butter Manufacturing 115114 Postharvest Crop Activities (except Cotton Ginning) 311513 Cheese Manufacturing 115115 Farm Labor Contractors and Crew Leaders 311514 Dry, Condensed, and Evaporated Dairy 115116 Farm Management Serwces . . . . . Product Manufacturing 115210 Support ActIVItIes for Animal Production 311520 Ice Cream and Frozen Dessert Manufacturin 325311 Nitrogenous Fertilizer Manufacturing 325314 Fertilizer (Mixing only) Manufacturing 311813 Frozen Cakes, Pies, and Other Pastries Manufacturing 311821 Cookie and Cracker Manufacturing Fishing and Fishing Products 311824 Dry Pasta, Dough, and Flour Mixes Manufacturing from Establishments in this cluster are engaged primarily in Flour catching ?sh and other seafood and processing the catch 311830 Tortilla Manufacturing for consumption. 311911 Roasted Nuts and Peanut Butter Manufacturing Number OfINdUStries 4 311919 Other Snack Food Manufacturing 311920 Coffee and Tea Manufacturing 114111 Fin?Sh FIShing 311930 Flavoring Syrup and Concentrate Manufacturing 114112 Shell?Sh 5 311941 Mayonnaise, Dressing, and Other Prepared Sauce 114119 Other Marine Fishing Manufacturing 311710 Seafood Product Preparation and Packaging 311942 Spice and Extract Manufacturing 311991 Perishable Prepared Food Manufacturing 311999 All Other Miscellaneous Food Manufacturing 312111 Soft Drink Manufacturing 312112 Bottled Water Manufacturing 312113 Ice Manufacturing Food Processing and Manufacturing This cluster includes ?rms involved in the processing of raw food materials and the manufacturing of food products for end users. This includes millers and re?neries of rice, flour, corn, sugar, and oilseeds. These upstream products contribute in part to producing specialty foods, animal foods, baked goods, candies, teas, coffees, beers, 312120 Breweries wines, other beverages, meats, packaged fruits and vegetables, and 312130 Wineries processed dairy products. 312140 Distilleries Number oflndustries - 44 327213 Glass Container Manufacturing 424510 Grain and Field Bean Merchant Wholesalers 311111 Dog and Cat Food Manufacturing 311119 Other Animal Food Manufacturing Livestock Processing 311211 Flour Milling This cluster contains establishments engaged in processing meat 311212 Rice Milling from livestock and livestock wholesaling. 311213 Malt Manufacturing Number oflndustries - 5 311221 Wet Corn Milling 311224 Soybean and Other Oilseed Processing 311611 Ammal (except Slaughtering 311225 Fats and Oils Re?ning and Blending 311612 Meat Processed from Carcasses 311230 Breakfast Cereal Manufacturing 311613 Rendering and Meat Byproduct Processing 311313 Beet Sugar Manufacturing 311615 Poultry Processing 311314 Cane Sugar Manufacturing 424520 Livestock Merchant Wholesalers The Maine Food Cluster Project 2015 APPENDIX EMPLOYMENT IN TRADED FOOD CLUSTER: SOUTHERN VS. NORTHERN COMPARISON SOUTHERN MAINE ECONOMIC AREA EMPLOYMENT IN LARGEST TRADED CLUSTERS, 2012 BUSINESS SERVICES DISTRIBUTION ELECTRONIC COMMERCE TRADED FOOD HOSPITALITY TOURISM EDUCATION KNOWLEDGE CREATION FINANCIAL SERVICES INSURANCE SERVICES (AGRICULTURE, LIVESTOCK, INPUTS MARKETING, DESIGN PUBLISHING PAPER PACKAGING PERFORMING ARTS WATER TRANSPORTATION FISHING FISHING FOOD PROCESSING TRANSPORTATION LOGISTICS WOOD PRODUCTS CONSTRUCTION PRODUCTS SERVICES INFORMATION TECHNOLOGY ANALYTICAL INSTRUMENTS FORESTRY PLASTICS COMMUNICATIONS EQUIPMENT SERVICES PRODUCTION TECHNOLOGY HEAVY MACHINERY EMPLOYEES SOLE PROPRIETORS . FARM OPERATORS LABORERS EMPLOYMENT 5,000 10,000 15,000 20,000 25,000 30,000 NORTHERN MAINE ECONOMIC AREA EMPLOYMENT IN LARGEST TRADED CLUSTERS, 2012 TRADED FOOD BUSINESS SERVICES EDUCATION KNOWLEDGE CREATION (AGRICULTURE, LIVESTOCK, INPUTS DISTRIBUTION ELECTRONIC COMMERCE HOSPITALITY TOURISM LOCAL INDUSTRIAL FISHING PRODUCTS FISHING AND FISHING FORESTRY PAPER PACKAGING TRANSPORTATION LOGISTICS WOOD PRODUCTS FOOD PROCESSING FINANCIAL SERVICES MARKETING, DESIGN PUBLISHING PERFORMING ARTS WATER TRANSPORTATION PRODUCTION TECHNOLOGY HEAVY MACHINERY METAL PRODUCTS COMMUNICATIONS EQUIPMENT SERVICES PRINTING SERVICES FURNITURE EMPLOYEES SOLE PROPRIETORS . FARM OPERATORS LABORERS EM PLOYME NT 1 .000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 Mossavar?Rahmani Center for Business and Government, Harvard Kennedy School APPENDIX MAINE FOOD CLUSTER PROJECT SURVEY METHODOLOGY A survey was conducted of leaders of Maine food cluster companies, with the support and guidance of Critical Insights, a Portland-based market research ?rm. An introduction of the project and link to the survey tool was sent via email to food cluster company leaders. Contact lists of companies were secured via internet research and outreach to organizations working with Maine food cluster companies. Companies were also reached via industry trade associations. Survey questions covered characteristics of the respondents? companies, perspectives on the industry, and views on the elements of Maine?s business environment helping and hindering their companies? growth. Data were collected between January 13-31, 2015 via an online survey developed by project team. Critical Insights of Portland provided guidance on and conducted the survey. 320 businesses responded; 235 completed all questions. Responses were con?dential. The Maine Food Cluster Project 2015 APPENDIX MAINE FOOD CLUSTER SUPPORT ORGANIZATIONS This list includes organizations carrying out cluster-building functions statewide that support Maine?s traded food industry clusters. Some work only with farms, seafood industry or food manufacturers, while others also work with industries not related to food. A few initiatives hosted by other organizations were also included (in italics). The list does not include local organizations, such as farmers markets. Moreover, it does not include regional of?ces of key Federal agencies such as the Economic Development Administration, the Food and Drug Administration, the Small Business Administration and the US. Department of Agriculture. BUSINESS DEVELOPMENT Casco Bay Technology Hub Maine Aquaculture Innovation Center Maine Center for Entrepreneurial Development Maine Manufacturing Extension Partnership Maine Small Business Development Centers Portland Fish Exchange SCORE Startup Portland Target Technology Incubator ECONOMIC DEVELOPMENT Androscoggin Valley Council of Governments Aroostook Partnership for Progress Eastern Maine Development Corporation Envision Maine Greater Franklin Economic Development Greater Portland Council of Governments Island Institute Kennebec County Valley Council of Governments Maine Company New Ventures Maine Maine Development Foundation Maine International Trade Center Mayor?s Initiative for a Healthy Sustainable Food System Mobilize Maine Northern Maine Development Commission Piscataquis County Economic Development Council Somerset Economic Development Corporation University of Maine Cooperative Extension Service Western Maine Economic Development Council EDUCATION SKILLS Central Maine Community College College of the Atlantic Cultivating Community Eastern Maine Community College Kennebec Valley Community College Maine Academy of Natural Sciences Northern Maine Community College Southern Maine Community College Unity College University of Maine University of Maine Cooperative Extension University of Maine - Machias University of Maine - Presque Isle University of New England University of Southern Maine Washington County Community College Wolfe?s Neck Farm FUNDING Broad Reach Fund Coastal Enterprises, Inc. Elmina B. Sewall Foundation Farm Credit East Farms for the Future Finance Authority of Maine Harvard Pilgrim Foundation Maine Community Foundation Maine Angels Maine Harvest Credit Union Maine Initiatives Maine Technology Institute Maine Venture Fund Quimby Family Foundation Sandy River Charitable Foundation Slow Money Maine NETWORKING PROMOTION Agricultural Council of Maine Associated Fisheries of Maine Cobscook Bay Resource Center Eat Local Foods Coalition of Maine Good Shepherd Food Bank Heart of Maine Dairy Goat Association Lobster Institute Maine Angus Association Maine Aquaculture Association Maine Association of Conservation Districts Maine Beef Producers Association Maine Brewers Guild Maine Cheese Guild Maine Coast Fisherman?s Association Maine Cranberry Growers Association Maine Dairy Industry Association Maine Dairy Promotion Board Maine Dry Bean Growers Association Maine Farm Bureau Maine Farmland Trust Maine Federation of Farmers Markets Maine Food Strategy Maine Grain Alliance Maine Grass Farmers Network Mossavar?Rahmani Center for Business and Government, Harvard Kennedy School Maine Greenhouse Association Maine Grocers Food Producers Association Maine Highland Cattle Association Maine Lobster Marketing Collaborative Maine Lobstering Union Local 207 Maine Lobsterman?s Association Maine Maple Producers Maine Milk Commission Maine Network of Community Food Councils Maine Organic Farmers and Growers Association Maine Organic Milk Producers Maine Pork Producers Association Maine Potato Board Maine Poultry Growers Association Maine Restaurant Association Maine Seaweed Council Maine Sheep Breeders Association Maine State Beekeepers Association Maine State Chamber of Commerce Maine State Pomological Society Maine Sustainable Agriculture Society Maine Vegetable and Small Fruit Growers Association Maine Winery Guild Midcoast Magnet Mid-Maine Greenhouse Growers Association Penobscot East Resource Center Wild Blueberry Commission of Maine POLICY REGULATION Maine Dept. ongriculture, Conservation and Forestry Maine Dept. of Economic and Community Development Maine Dept. of Marine Resources RESEARCH Bigelow Laboratory for Ocean Sciences Downeast Institute Gulf of Maine Research Institute Maine Aquaculture Innovation Center University of Maine (includes agriculture, aquaculture and marine research stations and centers) Vermont Farm to Plate Initiat vtfarmtoplate.com nwfpa.org 34 The Maine Food Cluster Project 2015 danishfoodcluster.dk Mossavar-Rahmani Center for Business and Government, Harvard Kennedy School 35 ACCESS THIS REPORT AND A SUMMARY OF PROJECT HIGHLIGHTS ONLINE AT HKS.HARVARD.EDU/CENTERS/MRCBG/PROGRAMS/MAINE