Michigan State University: Steven R. Miller and Bernard H. Zandstra Michigan Pickle Production: Results from 2013 Discussions with Growers and Processers Michigan State University: Steven R. Miller and Bernard H. Zandstra Michigan is the largest pickle-producing state in the US. As a state, Michigan pickle growers and processers compete in an ever-changing environment. Understanding that environment is imperative to effective choices. The accompanying report details findings from personal interviews with 20 key players in the Michigan pickle industry between 2013 and 2014 including growers, graders, processors and packers. Scan of Michigan Market: Despite moderate yields, Michigan production has historically exceeded all other states in terms of acres harvested and total production. Michigan’s growth in total production from 1998 to 2011 is exceeded only by Florida, who’s growth is largely driven by acres harvested. North Carolina’s share contracted greatly between 2005 and 2011. A key issue affecting regional production is disease management, especially associated with downy mildew and Phytophthora. Scan of National Market: Domestic production of pickles and cucumbers is in steady decline since 1998, while imports exhibit steady growth. Domestic per capita consumption remains largely steady giving rise to increased consumption filled by imports. Declining domestic production with increasing domestic demand suggests a sharp decrease in domestic producers’ share of the US market. Grower Practices: Contracts with receivers may be on acres or on tonnage and generally include transportation allowances. Growers like contracting with more than one processer in a season, as they are constrained by quantity that can be delivered per day with any single receiver. Often, contracts encourage crop rotation, and most growers practice some form of rotation to control pest pressures. Many growers rely on receivers to advise plantings and harvesting and many receivers provide custom harvesting services to encourage more grower contracts. While most Michigan pickles are grown on rain-fed fields, a sizable share comes from irrigated fields with yield premiums of around 50%. Future Generation Growers: Pickle production generally requires more grower effort than grain crops and the new generation of farmers are less apt to take on this commodity. Pickle production incurs additional risk over cash crops, that further sway nascent growers from adopting. However, a pilot crop insurance program may mitigate this risk. Pickle production requires significant investment in specialized equipment, making it difficult to recruit new growers. Receivers view custom harvesting as a tool they can use to assure supply of pickles. Ethanol-supported corn prices pose a challenge in recruiting acres to pickles. Industry Concerns: Research and development remains one of the key issues facing Michigan’s pickle industry. R&D collaborations of the sixties, when the industry teamed with university research and Extension to develop varieties and mechanical harvesters to support industry growth, are largely missing. Harvesters are no longer compatible with modern varieties resulting in damaged fruit. For growers, pickles remain economically competitive, especially in the wake of declining corn prices. Though economically competitive, pickle growing requires more commitment from growers than most program crops, hence returns to pickles should exceed that of competing crops. Based on economic factors alone, pickles at $6.50/bu at yields of 208 bu/acre are profitable against corn at $7.36/bu and soy at 21.22/bu. Vertical Integration: Processers include graders, briners and packers. Many are vertically integrated, where many briners are often growers, and many packers are also briners. While there exist no trends in vertical integration of processors, there is significant consolidation among processers. Consolidation appears to be driven by processors vying for market share, where economies of scale is vital to profitability. This is most prevailing for conventional segments where competition is greatest. Artisan or specialty brands have not experienced such consolidation, though national brands increasingly pursue specialty flavors. The food service segment is quickly adopting fresh-pack and specialty flavors, largely driven by consumer demand. This project was supported by Agriculture and Food Research Initiative Competitive Grant no. 59-3655-2-619 from the USDA National Institute of Food and Agriculture