fedgazette

The district economy grew on agricultural processing

Edward Lotterman - Agricultural Economist

Published January 1, 1993  |  January 1993 issue

The history of the Ninth District states is one of economic growth fueled by the paired activities of agricultural production and agricultural processing. Although a wide range of products has been produced since the beginning of food manufacturing, the industry has always rested on the three legs of grain milling, dairy processing and meat packing.

Milling

Minneapolis was founded on the banks of the Mississippi at St. Anthony Falls. Water power from the falls was initially used to power sawmills, but in the years following the Civil War, water-powered flour mills proliferated on both banks of the river. The extension of railroads from Minneapolis across the great wheat-growing areas of North Dakota and Montana in the 1870s and 1880s spurred growth of the milling industry.

According to the 1910 Thirteenth Census of the United States, "Minnesota is by far the most important state in the flour-mill and gristmill industry, ranking first at the censuses of both 1899 and 1904 in the average number of wage earners employed in merchant mills, in value of products and in value added by manufacture." Most of this activity took place in Minneapolis, which was firmly established as the nation's "Mill City."

In 1921, 6,500 flour millers were employed in Minnesota alone, handling one-fourth of all the wheat milled in the United States. The number of millers has declined since that time, but the value of output continues to climb. And production of breakfast cereals, cake mixes and other products soon grew to surpass flour milling itself in terms of employment, earnings and value-added.

Dairy processing

The fertile rolling fields and pastures of Wisconsin and southeastern Minnesota proved ideal for dairy farming. Creameries and cheese plants were constructed in scores of towns in the first decades after settlement. By 1909 there were 3,500 commercial dairy processing plants in these two states, nearly half the total for the entire country.

Butter production peaked in the 1950s and then rapidly declined as Americans' diet preferences turned to margarine. But cheese consumption continued to climb, especially as dishes incorporating cheese, such as pasta sauces, pizzas and nachos moved from ethnic specialties to everyday items on the tables of American families.

The dairy industry has consolidated from small creameries or cheese plants in nearly every town to large, industrial facilities in regional centers. But employment in the industry held steady over the years as volume and value-added grew steadily.

Meat packing

Commercial meat packing, which was dominated by Chicago packing plants from after the Civil War until the 1920s, started later in the Ninth District than dairy processing and grain milling. But stock yards, where livestock were bought and sold, grew in cities with major rail junctions, such as South St. Paul, Minn., and Sioux Falls, South Dakota. By World War I these cities had substantial packing industries transforming cattle, hogs and sheep into a variety of fresh and processed meat products.

Geo. A. Hormel & Co. built a major hog plant in Austin, Minnesota, while its competitor, Wilson, established a plant in nearby Albert Lea. These southern Minnesota towns were ideally situated to draw cattle, hogs and sheep from the livestock feeding areas of southern Minnesota and northern Iowa.

But by the 1960s, these facilities were struggling to survive. Technological innovation in the industry, as well as high labor and energy costs, combined to make packing plants constructed in the 1920s uncompetitive with more modern facilities. As cattle feeding moved from the corn belt to the high plains of Texas, Kansas and Oklahoma in the 1970s the pinch became even tighter.

By the end of the 1970s, meat packing had practically disappeared from South St. Paul. In the 1980s restructuring led to the closing or downsizing of slaughter facilities in Austin and Albert Lea. The John Morrell plant in Sioux Falls continues to slaughter hogs and sheep, though its cattle operations were closed down in early 1992.

Meat packing has not disappeared from the district, however. There are still 13 commercial cattle slaughter facilities in the district, four of them handling over 1,000 head per day. Five hog plants have capacity of over 4,000 head per day each. Only one sheep slaughter plant remains. The most successful of these facilities are those built in smaller regional cities after 1950 using newer technology with lower labor costs.

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