Economic Impacts of Alabama’s Agricultural, Forestry, and ...

ALABAMA

AGRIBUSINESS COUNCIL

Promoting and Developing Alabama's #1 Industry

Economic Impacts of Alabama's Agricultural, Forestry, and Related Industries

A report by

The Department of Agricultural Economics and Rural Sociology, Auburn University

February 2013

Acknowledgments

The authors would like to thank Dr. Gary Lemme, director of the Alabama Cooperative Extension System; Dr. William Batchelor, dean of the Auburn University College of Agriculture; and Dr. James Shepard, dean of the Auburn University School of Forestry and Wildlife Sciences, for their encouragement and financial support for this project. Special thanks are extended to Leigha Cauthen and the Alabama Agribusiness Council for coordinating stakeholders and providing financial support for this project. The authors are also grateful to various participating organizations and stakeholders who commented on earlier versions of this report and provided financial support through the Alabama Agribusiness Council.

Authors

The Auburn University Department of Agricultural Economics and Rural Sociology

Deacue Fields, Associate Professor and Extension Economist

Zhimei Guo, Postdoctoral Research Fellow

The University of Florida Center for Economic Impact Analysis

Alan W. Hodges, Director of the Economic Impact Analysis Program

Mohammad Rahmani, Economic Analyst

The Alabama Cooperative Extension System (Alabama A&M University and Auburn University) is an equal opportunity educator and employer. ANR-1456 ? 2013 by the Alabama Cooperative Extension System. All rights reserved.

The total output and employment impacts of agriculture, forestry, and related industries were $70.4 billion and 580,295 jobs.

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Economic Impacts of Alabama's Agricultural, 1 Forestry, and Related Industries

Highlights

Economic Impacts of Alabama's Agricultural, Forestry, and Related Industries

The agricultural and forestry industries consist of crop, livestock, timber, and fisheries production; food and kindred products manufacturing; and forest product manufacturing. Related industries encompass food and kindred products distribution and agricultural inputs and services. These also utilize goods and services from other industries as well as local labor, which additionally contributes to the state economy.

? The agricultural and forestry industries generate an additional $0.77 in the state economy per dollar of output.

? The output impact of the agricultural and forestry industries translates to $10,770 per capita.

? On average, agricultural and forestry production generates 10 jobs per $1 million in direct sales.

? On average, 1 out of every 4.6 jobs in the state is related to agriculture and forestry.

? Agricultural, forestry, and related industries generate an additional 9 jobs for each job in production agriculture, forestry, and fisheries.

? Agricultural, forestry, and related industries account for the second largest number of jobs in the state.

In summary, the agricultural, forestry, and other related industries have a significant impact on Alabama's economy in output ($70.4 billion), value added ($30.8 billion), and jobs created (580, 295 jobs). They also provide social benefits and ecosystem services, which greatly enhance the quality of life in Alabama, but are not accounted for in this analysis.

The U.S. Fish and Wildlife Services reported the output and employment impacts of hunting, sportfishing, and wildlife watching, which totaled $3.6 billion and 42,319 jobs in 2006 (see appendix). The impacts of all nature-based recreation are even higher.

2 Alabama Cooperative Extension System

Economic Impacts of Alabama's Agricultural, 3 Forestry, and Related Industries

Introduction

Alabama's Agricultural Industry

Agriculture represents a significant component of the Alabama economy. In 2010, the farm gate sales of agricultural commodities totaled $4.7 billion (Figure 1). The sales* of agricultural commodities included the following: ? $3.8 billion for livestock and poultry ? $918.3 million for crops

Agricultural production sales included the following: ? $3.1 billion for poultry and eggs ? $394.5 million for cattle ? $237.8 million for greenhouse, nursery, and floriculture production ? $139.9 million for cotton ? $122.1 million for soybeans ? $119.7 million for grain farming ? $107.5 million for catfish

*Sales are gross receipts or income (at invoice values) received for commodities or services provided.

Figure 1. Sales of Agricultural Products by Commodity Groups

Vegetable & fruit 1.4%

All other crops 2.8% Other animal production 2.1%

Catfish 2.3%

Cattle 8.4%

Commercial fishing 1.3% Cotton 3.0% Dairy & milk products 0.7% Grain 2.6%

Greenhouse, nursery & floriculture 5.1%

Peanuts 2.1% Soybeans 2.6%

Poultry & egg production 65.6%

Total Sales = $4.7 billion

Source: Federal government data as reported in IMPLAN (MIG, Inc. 2010). The sales of catfish and peanuts are disaggregated from "Other animal production" and "All other crops" using NASS and ERS data (NASS 2011; ERS 2012).

4 Alabama Cooperative Extension System

Economic Impacts of Alabama's Agricultural, 5 Forestry, and Related Industries

Value Added

The value added* of products totaled $1.2 billion (Figure 2). The value added of agricultural commodities includes the following:

? $784.9 million for livestock and poultry (the largest sector is poultry and egg with $587 million)

? $373.5 million for crops (the largest sector is greenhouse, nursery, and floriculture with $152.8 million)

Figure 2. Direct Value Added of Agricultural Products by Commodity Groups

Vegetable & fruit 3.0% Poultry & egg production 50.7%

All other crops 3.8% Other animal production 5.9% Catfish 2.9%

Cattle 5.7%

Cotton 2.5% Commercial fishing 1.6% Dairy & milk products 1.0%

Greenhouse, nursery & floriculture 13.2%

Grain 2.4% Peanuts 2.6% Soybeans 4.7%

Total Value Added = $1.2 billion

Source: Federal government data as reported in IMPLAN (MIG, Inc. 2010). The sales of catfish and peanuts are disaggregated from "Other animal production" and "All other crops" using NASS and ERS data (NASS 2011; ERS 2012).

*Value Added is a broad measure of income, representing the sum of employee compensation, proprietor income, other property income, indirect business taxes, and capital consumption (depreciation). Value added is a commonly used measure of the contribution of an industry to regional economy because it avoids double counting of intermediate sales.

6 Alabama Cooperative Extension System

Processing Sectors

The sales of primary agricultural processing sectors totaled $13.0 billion in 2010 (Figure 3). The following are the largest manufacturing sectors:

? $5.2 billion for poultry processing ? $1.5 billion for animal food manufacturing ? $1.3 billion for soft drink and ice manufacturing

Figure 3. Sales of Primary Agricultural Processing Sectors

Soybean & other oilseed 3.5% Tobacco 1.9%

Soft drink & ice 9.9%

Snack food 4.2%

Other animal slaughtering &

processing 6.3%

Seafood product

3.4%

All other food manufacturing 6.6%

Animal food manufacturing 11.4%

Bread bakery 2.5% Coffee & tea 2.0%

Fats & oils 6.0%

Fluid milk & butter 2.0%

Poultry processing 40.3%

Total Sales of Processed Agricultural Products = $13.0 billion

Source: Federal government data as reported in IMPLAN (MIG, Inc. 2010).

Economic Impacts of Alabama's Agricultural, 7 Forestry, and Related Industries

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