GROWING MAINE’S FOOD INDUSTRY,

GROWING MAINE
ECONOMICS

Group Members

Ali Shaharyar Shigri

Hammad Khan

Ahsen Saleem

Zain Imran

Muneeb Tariq

Aatir Salamat

Abdul Wahab
Summary

The article talks about the struggle of Maine’s historic economy based on natural resources and
manufacturing to 21st century economy that provides a good quality of life to its people but it lags behind
in key economic indicators from its neighboring state like new England despite high score in quality of life
and how the issue is viewed from different stakeholder perspective and their views on the solution to the
challenges Maine is facing. The issues that Maine is facing are multiple from aging population, low skilled
labor, limited specialized resources, shrinking resources, high supply chain/distribution cost and weak
institutions that are unable to provide support to business in terms of favorable policies, investments and
research. The traded cluster is not dependent on the size of the population whereas the non-traded
cluster is limited to the population in the area. Although the state is filled with lots of inherited and
evolving assets from agriculture, seafood, food and beverages but the traded industry is not fully realized
and non-traded industry is still ahead in market share of employment and despite favorable conditions
Maine falls under weak cluster and low rank in prosperity (44th), Wages(39th), Private job creation(40th)
and labor productivity(50th). This is because the associations are providing support to new people but
there are no specialized resources to help mid-level companies to grow. One of the reason that Maine
wasn’t able to achieve its desired goal is because they don’t have a focused strategy or cluster initiatives
to take business leader on board in forming policies that will help them expand their reach in sales and
help Maine in achieving growth and sustainability through innovation, higher wages and skilled labor
generating a greater economic multiplier effect. As mentioned in the article, there are about 35 trade
associations and most of them had very few or no resources available which is why they are not able to
collectively go in a right direction. Cluster initiatives usually bring together private, public, nonprofit and
researchers to identify key constraints holding back related industries and boost effectiveness. New
business formation has declined significantly to 38th rank from 18th. Even though Maine specialization rank
2nd in fish and fishing products but has seen decrease in job creation and so is food manufacturing has by
844. Seeing from the business leader’s perspective the advantage is the natural resource and pristine
environment and the challenge was the infrastructure gaps and high costs and poor competitive
conditions which is mainly due to lack of processing capacity and accessible storage facility and cost of
energy and affordability of labor in industries. Still as mentioned Maine farms need to expand into new
markets. Looking at the competitiveness of Maine food cluster that is low in R&D and most farms are
small and half report income loss which suggest the dire need of research to increase yield. The abundance
of resource for manufacturing and 1-2 days’ drive from the large market is a positive factor for Maine to
explore. Most of the food manufacturer are small with less than 20 employees and need support from
cluster initiative for them to scale their business. Although the business support resources are available
for beginners but limited resource for high growth food/farming industry. trade association are usually
understaffed and they haven’t capitalized their state brand image to support other niche market they are
good at. Northern Maine has largest traded cluster employment in food industry and 3rd largest in
southern Maine because of the regional shift towards business service and distribution and e-commerce.
As mentioned in the table the private non-farm employment is approximately 4 times greater in southern
Maine. The good thing about Maine economy is that it is not relying on a single crop or species. The
increase in employment of farming sector by attracting young farmers and increased focus on organic
production when demand for fresh, healthy and authentic food and beverages is growing nationally. This
has helped Maine in growing distinction as a foodie destination for locally sourced food and beverages.
Companies are doing research to lengthen Maine’s growing season, boost production and add value to
agri and marine products. Maine needs to grow its traded food cluster through strategic and well
implemented action plan that could make an impact on employment. The Maine food cluster mix consist
of lobster ($334M), Milk ($160M), Potatoes ($148M), wild blueberries ($104M) etc. All this shows that the
Maine food cluster has potential for growth. According to the survey more than half (56%) were trained
for their business on the job and only 18% received primary business training. Around 79% selling to
customer in Maine. One third of the respondents reported below $50,000 annual sales. Two third of the
companies saw increase in annual sales over last three years and one in ten saw sales decrease. The few
challenges taken from the survey was that many business leaders at Maine had very little formal training
in business to help them overcome challenges which led them to very stagnant approach in scaling the
size of their business and most of them choose the business environment of main as B (32%) or C (37%).
The result shows that there are gaps in Maine’s cluster support system as it lacks the broadly accepted
action plan focused on growing Maine food enterprises and employment which can be seen from large
no. of group but unable to translate into strong food industry performance. Maine need to focus on
growth oriented farms, provide specialized industry experience to expand production and sell outside of
Maine, require specialized equipment and facilities to scale up, need investor to fund new growth and
innovation process and create economies of scale for supplies and services. Maine need to participate in
the collaborative activities like summer beer festival to boost production quality and branding Maine.
They need to develop a data driven regional food growth focused plan with specific goals to track progress
and with support from government through state funding on development projects to train farmers for
business planning workshops, improved infrastructure and capacity building. Maine could also learn from
the three region mentioned in the article. Vermont – farm to plate initiative increase no. of food
companies by 5.9% and food manufacturing jobs by 34.5% and reduce dependence on dairy industry,
Oregon – initiative increases food manufacturing employment by 7.8% and Denmark has built a network
connecting large and small food companies and through joint marketing they were able to develop
coordinated innovation strategy. The lesson from this was that all these three models include strong
private partnerships for growth and stability and support from public sector for financial support and
implementation of plan. As mentioned in the table there were more food processing companies in Maine
than the others but due to lack of focus they weren’t able to convert it into high sales through expansion
and identifying location on map where their products were more valuable. Maine needs to tackle their
shortcomings and focus on specific growth opportunities by prioritizing and harness the collaboration of
leaders and engage food industry leaders and mobilize key support organizations. State agencies need to
support the plan set by the industry leaders through different stakeholder and reduce regulatory barriers
to increase sales and business growth. Maine focus should be to help farms and companies accelerate
their growth through entrepreneurial management and developing appropriate skills, extend supply chain
within Maine, invest in today and tomorrow promote innovation and attract young people and unlock
synergies across food and beverage cluster, boost production that is environmentally sustainable and
create transportation and distribution network as private sector wage in Maine ($38,454) is less than new
England ($42,122).Maine should look into expanding into northeast. Maine need to create opportunities
for people through public financing, investors and traditional lenders for a diverse portfolio enabling
people’s entrepreneurial skills. An action plan is needed for growth that build Maine’s assets, clear metrics
for progress, improve system level innovation and constructive teamwork between private sector, trade
association, government, non-profit groups, training and research institution and investors.
Relevance with Pakistan

To some extent both the Clusters of Maine and Punjab have something similar but also there are other
things which are different. Punjab’s economy is mainly based on three key industries:

1) Agriculture
2) Textile Sector in Faisalabad
3) Sports & Surgical Instruments in Sialkot

Agriculture:

Maine’s traded food cluster is a statewide employer and that its cluster profile shows strengths upon
which to grow. These strengths are complemented by positive industry trends, including growth in niche
sectors, increases in land farmed and new farmers, Maine’s growing reputation for authentic, sustainably-
produced food, and innovation boosting production and adding value to Maine food. Working in Maine’s
favor are its abundant farmland and water, the productive Gulf of Maine and access to large markets in
the Northeast. Here in Punjab, we are facing with water challenges and there are not much value that has
been added in term of innovation. Cluster initiative is one of the potential options to solve the multiple
problems of agriculture, particularly small farmers in Pakistan.

The most important success of this initiative is the help from Maine to farmers who are at the initial stages.
We have seen in the article, that private sector plays a crucial role in growth, stability, innovation and
research & employments and wages. We have to view the Punjab cluster from a broader perspective and
with the help of private, government, trade association and training and research institute to tackle the
rising challenges collectively rather than individually and seize the opportunities for growth. We have
recently seen government support in Punjab through special service of mobile livestock farming hospital.

Growth, higher wager, sustainability & ensuring welfare of small farmers should be the most important
determinants of cluster initiative and the core objectives for which three major pre-requisites should be
harmonized. These include social, cultural and geographical harmony among the stakeholders. The quality
of life at Maine is high whereas the quality of life in Punjab is relatively less. Same is the issue with the
wages, most of the farmers in Punjab are living at below average salary compared with the average salary
at Maine but we do see potential in both agriculture sector due to fertile land. We see some common
grounds like education was more like left out in both clusters which is now a day essential for growth.

Pakistan had experienced cooperative movement in the past but it could not achieve the desired results.
This was primarily due to absence of harmony in rural areas. Furthermore, political involvement was
another impediment in the success of cooperatives. In this context, aforementioned determinants play
important role in bringing together the farmers of similar backgrounds and objectives.

One important step in this direction is the organization of only those farmers who identify problem which
is common in the people of that group. An important step in right direction may be to involve agricultural
graduates in this initiative.

The Punjab government should start a program of leasing out state land to agricultural graduates. These
graduates should be encouraged to develop agricultural services in their areas so that this concept may
further be strengthened. If properly handled this may become a revolutionary step in agricultural
economy, promoting agribusiness entrepreneurship and establishing agro-based industrial clusters.
Many critical points need to be addressed before taking up challenge of cluster development. The most
important of all is the ownership, which must be shared by the legitimate participants, the people with
common problems and passion to resolve these problems. This initiative should first be started with public
support so that success earned from first venture may be replicated as role model in other areas. The
group then should come up with a preferred joint venture they are going to start to have harmony in their
thinking and action. This priority may be crop and livestock raising or some other value-added activities
related to agriculture. Furthermore, this also may include provision of some services to rural stakeholders.

The success of this venture largely depends upon the level of synchronization, harmony and confidence
among group members. This situation demands for a written legal contract. Membership terms should be
very vivid and comprehensive. Members should join this activity voluntarily.

The next component of agreement should be the designation or division of responsibility. Keeping in view
the caliber and potential of members, responsibilities should be allocated. Educated people may take up
financial matters. As it has been suggested earlier that public sector should contribute a proportion of
total finance whereas the largest share should be collected by group members.

Such initiatives should be designed to engage participants in a well-coordinated manner. With experience
and capital gain, this group action should introduce vertical integration and value addition. Following real
spirit of cluster initiatives, this may start with simple things but may end up in modern and sophisticated
agro industry.

The success of this system demands real spirit and the sense of togetherness, at the start with supervision
and support from public sector. This practice may turn farmers into entrepreneurs because they have
characteristics which may enable them to enjoy benefits of niche market that exists in many developing
countries.

Small farmers are ready to serve the market even on Sunday and there are many buyers like restaurants
who need supplies of fresh fruits and vegetables every day. As such, acknowledging the potential of rural
households, cluster initiatives need to be taken so that legitimate right and share of small farmers can be
ensured and delivered.

Just like Maine the three potential focus areas in Pakistan are scaling up food processing to add value and
boost productivity; working with growth-oriented, mid-sized companies looking to expand sales outside
of Pakistan; and exploring industry niches where Pakistan agriculture related businesses can product
sustainable food and beverages, as the world’s demand for protein is expected to double by 2050.

Textile Sector in Faisalabad:

In Faisalabad we have a strong and huge market of textile, but over the time it has been shrunk because
of energy crisis and current country’s situation. The economy and employment of Faisalabad is majorly
depending upon textile sector of Faisalabad. Almost 500 of acres’ area is occupied by the textile sector,
following by just 86 acres of area by food sector. Almost 400 domestic industrial units of embroidery are
operational. Only 25 units of cotton ginning/processing are working which can be improved, if
government takes necessary measures. In 2014 there were 209,732 people were employed in 2,256
registered factories. In 2015 it has shown significant improvement, there were 216,116 people were
employed in 2,470 registered factories. It shows the room in the textile sector of Faisalabad, the margin
of improvement.
As we have learned in the project of Maine’s most of the owners of business entities have not taken the
formal business education that’s why they lack in growth planning and were satisfy by their current
situation by just focusing on some more profit. That’s exactly is the situation of Faisalabad as well, major
chunk of cluster depends upon small units and the owners have not taken any formal business education.

The city has skilled labor, proper financing but due to certain issues (energy crisis, taxation, government
policies & lack of future planning) it is not performing up to its full potential. That’s why plenty of
stakeholders have move out of the country also to perform better. Government of Pakistan has imposed
high taxes that is why their cost was also exceeded and it’s become difficult to compete in global markets.
Whereas the international competitors were selling same product on low cost Faisalabad’s companies
failed to give and they have to move in other countries like Bangladesh to sustain. They should focus on
expansion of cotton production by introducing new technology and then invest in the small units for
better outcome as well. Faisalabad Chamber of Commerce & Industry is the main supporting agency which
is regulating all trade related issues. They are continuously working on bringing Private & Public Sectors
on same board.

Sports & Surgical Instruments Sialkot:

Sialkot is the hub of sports good in Pakistan. The Sialkot sports industry includes footballs, hockey sticks,
bats, rugby balls, football gears, hockey gears, goal nets, and sports bags. These all industries are affiliated
with the international brands including Adidas, Nike, Puma, Reebok, Molten, Kika, Lotto, Umbro, Micassa,
Diadora, Mitre, Decathalon and Wilson. It is like the export capital of the Pakistan as 99% of the sports
goods, surgical instruments, leather garments, gloves & accessories, sportswear and musical instruments
produced are exported to different parts of the globe. Rest aside, utilizing the largest cottage industry,
only the football regime of the globe uses 70-80% of the soccer balls produced in Sialkot. Manpower of
more than 400,000 people is involved in reaching these benchmarks

The city that is making 70 percent of the Pakistan’s sports goods needs an immediate attention from the
government. There had been the opportunity to highlight the achievement of the Sialkot cottage industry
through marketing and campaigning of the Brazuca development on multiple platforms but the lack of
vision made it impossible. Hundreds of companies produce the sports goods in Sialkot and they get
extreme competitors to tackle from China and East Asia, so there is an abrupt need of introducing
changing technologies. This will lower the time consumption and increase the profit by many folds.

One key point here is that the worker per day wage is quite low and they don’t work with the needed
enthusiasm. There is a need to offer raise in the worth of wages and this will increase the working
efficiency as there is a continuous struggle by the workers in Sialkot to earn a living wage. The surveys
that conducted interviews from multiple Labors showed that the monthly wage of the workers is very low
that is sometimes lower than the retail price of the single product that they make.

Government must invest in the sector, which was one step behind its regional peers, such as China and
India, as it was unable to diversify into non-traditional products due to lack of funds. Government should
take responsibility and introduce new technology give subsidies in order to uplift the Sialkot sector to
compete with its international competitors. Sialkot Chamber of Commerce & Industry (SCCI) is the main
regulating body of trade in Sialkot.