The Role Of Agricultural Processing And Farm Input Manufacturing In The North Dakota Economy

Abstract

The purpose of this report is to estimate the economic impact of farm input manufacturing and value-added agricultural processing in the North Dakota economy. Economic impacts for these agriculturally-linked sectors are in addition to those for direct agricultural (crops and livestock) production. This analysis will provide state-level estimates of key economic indicators including levels of business activity, retail trade, personal income, secondary employment and tax revenues associated with these agriculturally-linked sectors. A survey of the 76 farm input manufacturing and 160 agricultural processing firms in North Dakota was conducted to obtain expenditure patterns. In-state outlays by these firms were allocated to sectors of the economy and divided by their respective number of employees to obtain a per employee expenditure for each economic sector. Per worker expenditures for the farm input manufacturing sector were multiplied by that sector's total employment (2,418) to estimate the industry's total expenditures. Agricultural processing per worker outlays were also multiplied by total employment (7,104) to estimate the total expenditures for this sector. Total expenditures for farm input manufacturing were estimated to be $146.8 million in 2002, and total agricultural processing expenditures were $361.9 million. These expenditures were applied to the North Dakota Input-Output Model to estimate economic impacts. The North Dakota Input-Output Model is a tool for tabulating and describing the linkages or interdependencies between various industrial groups within an economy. This model uses interdependence coefficients, or multipliers, to measure the total level of economic activity generated in each sector from an additional dollar of expenditures in a given sector. Total business activity generated from the in-state expenditures amounted to $482.2 million for the farm input manufacturing firms and $1,201.4 million for agricultural processing firms, giving a total of $1,683.6 million. Retail sales for the farm input manufacturing and agricultural processing firms were $105.2 million and $243.2 million, respectively. Total retail sales were estimated to be $348.4 million for the two agriculturally-linked sectors. Another indicator of the economic impact, personal income, was estimated to be $174.3 million for farm input manufacturing, $380.9 million for agricultural processing, with a total of $555.2 million. In addition to the 9,522 direct workers employed by these firms, another 16,272 secondary (indirect and induced) jobs were created. State revenue was enhanced by $27.4 million as the result of sales and use, personal income, and corporate income tax collections resulting from the business activity for the farm input manufacturing and agricultural processing firms.