Three business trends favor Tennessee’s “value-added” agricultural enterprises.

a growing overall food-products industry
a general increase in the number of business starts in the agriculture, forestry and fisheries sector
and two Tennessee cities listed in the top-20 best cities for small business
Let’s look at each of these trends favoring those who take Tennessee’s agricultural products and turn them into products such as salsa, jellies and jams.
A growing industry--After three consecutive years of decline (1993-1996), employment in Tennessee’s food-products industry substantially increased from 1997-1999. It’s forecast to increase a quarter of 1 percent each year during the next four years.

Output from the state’s food-products industry reached a five-year high in 1998 at $3.56 billion. It’s forecast to peak at $4.19 billion in 2003. This growth in the state’s overall food industry could be good for smaller, value-added food businesses.

First of all, the trend helps the state industry gain momentum as a major player in the food-processing business.

Second, growth is creating distribution channels, complementary goods and loyalty purchases.

Growth in agricultural businesses --Despite a 7 percent decline in the number of U.S. business start-ups in 1998, entrepreneurial activity is still quite aggressive.

Although the number of startups has declined, employment generated by start-ups fell by only 4 percent. The strong economy may have provided some would-be entrepreneurs with better options with larger, more-established firms. Forecasts of low unemployment, high consumer spending and moderate inflation may continue to depress start-ups in the future.

Service and retail sectors continue to maintain the largest number of start-up companies and employment. These two sectors account for 53 percent of the 1998 business start-ups and 54 percent of the jobs created.

Despite the overall decline, business starts in the agriculture, forestry and fisheries sector registered an 8 percent increase in startups. There were 2,275 in 1997 and 2,451 in 1998. In addition, the only regions to register increases in start-up jobs in 1998 were the South Atlantic and East South-Central states. This last group includes Tennessee.

Top-20 best cities--According to the Dun & Bradstreet Corporation, two of the nation’s top-20 best large cities for small businesses include Memphis (number 11) and Nashville (number 17). The two Tennessee cities were selected for their favorable standings for entrepreneurial activity, small-business growth, economic growth, low business-failure rates, relative costs of doing business and the number of businesses less than five years old with fewer than 20 employees.