UK economic study snaps agriculture’s bigger picture

By Carol Lea Spence, University of Kentucky Agricultural Communication Specialist

A new CEDIK study has found agriculture’s total impact on Kentucky’s economy equaled $45.6 billion in 2013, an 8.3 percent increase over 2007’s figures.

The Community and Economic Development Initiative of Kentucky study was authored by researcher Shaheer Burney and Professor Alison Davis of the UK College of Agriculture, Food and Environment’s Department of Agricultural Economics. They examined three aspects of agricultural activity: on-farm production, processing and agricultural inputs.

“It’s important to think of agriculture as a more comprehensive picture than just production,” said Davis, CEDIK’s Executive Director. “There can be a miscomprehension that, because there is not a significantly large number of on-farm workers, agriculture is an insignificant contribution to the state’s economy. Agriculture has a broader scope than just on-farm employment, and this study illustrates that.”

Total output for the entire agricultural industry crested $31.3 billion, accounting for nearly 8 percent of Kentucky’s total output. Output is measured by the dollar value, or market value, attached to the product. The sector employed nearly 136,000 workers, a 5.6 percent share of employment across all of Kentucky’s industries.

SalesValueAg_KYAll agricultural sectors, which include production, processing and manufacturing, added $2.8 billion to the economy in terms of labor and wages, accounting for 2.8 percent of total wages earned from all of Kentucky’s industries.

The average market value of agricultural products per farm increased from $56,586 to $65,755 and farm-related income rose by almost 60 percent from 2007 to 2012. Both factors helped to offset a 9 percent decrease in the number of farms and a 6.7 percent decrease in agricultural acreage in the state during the same period.

A goal of the study was to quantify agriculture’s multiplier effect, that is, the dollars generated from every dollar spent within the sector. Certain figures stood out in the researchers’ calculations. For every job within the agricultural inputs sector, an area that includes such things as fertilizer, feed and pesticides, 1.71 other jobs were created. Within the production sector, $8.09 was generated for every dollar spent to grow vegetable and melon crops, while cattle ranching generated an additional 43 cents and oilseed and grain crops generated an additional 44 cents from every dollar spent.

Taking into account the multiplier effect, production agriculture represents approximately $9.5 billion of output, 128,855 jobs, and almost $889 million in labor income. Including other agriculture-related industries, the researchers calculated that agriculture is responsible for 258,605 jobs in the state and $6.2 billion in labor income.

“Agriculture isn’t the only important industry in Kentucky,” Davis said. “Though it’s only 8 percent of the state’s total economy, that’s not a trivial amount. It’s important that Kentucky focuses on a diverse economy, and agriculture has an important part to play in that.”

The entire study is online at http://cedik.ca.uky.edu/files/REPORT_Importance_of_Ag_KY_2015.pdf.

Overview of Kentucky Agriculture, part 1

Recently, CEDIK released the updated Agriculture & Food County Data Profiles (click here to see) for 120 Kentucky counties. Using data from the 2012 Census of Agriculture released last year from the US Department of Agriculture National Agricultural Statistics Service (USDA/NASS), these profiles offer an overview of the agricultural industry and food system at the county level, but not for the entire state. So in this blog post, we examine some of the data included in the Agriculture & Food County Profiles across all of Kentucky.

Kentucky Animal Sales by TypeWe started by examining the major categories of animal sales in Kentucky. While Kentucky is known as the Horse Capital of the World, horse sales along with breeding/stud fees only accounted for 19% of animal sales. Poultry and cattle were 40% and 37% of animal sales, respectively.

Next, we consideKentucky Crop Sales by Typered sales from crops and related products in 2012. When looking at the pie chart of crop sales, it is important to not that corn, soybean and wheat are often grown in rotation; together, they accounted for 72% of all crop sales. Tobacco also made a significant percentage of crop sales at 16%.

While these two pie charts provide a good overview of the types of sales for crops, animals and related products for Kentucky as a whole, they do not show how agricultural sales vary from county to county across the state of Kentucky. So we asked ourselves: in Kentucky, how do the counties vary by the volume of total sales? And do the counties vary based on the share of agricultural sales that come crop versus animal sales?

KY Counties by Volume and Source to Total Ag SalesThe map above shows Kentucky counties by the total volume of annual sales and the type/source of sales in 2012. The volume of annual sales for each county is represented by the size of the maroon circle located on it, with the smallest circles representing less than $25 million annual sales and the largest circles representing over $150 million in annual sales. The map shows that most agricultural sales are clustered around the Bluegrass (likely equine) and Western Kentucky (likely a mix of crops and poultry). On the other hand, most of Eastern Kentucky is comprised of small circles, indicating relatively fewer agricultural sales in 2012.

The type/source of sales for each county is represented by its color with green representing a majority share of crop sales, red representing a majority share of animal sales, and yellow falling somewhere in the middle. The map shows a high concentration of counties that rely heavily on sales from animals and animal products in Bluegrass (likely equine) and part of South-Central Kentucky area (likely cattle and poultry). Conversely, some counties in the Northern Kentucky and Western Kentucky bring in more in crops sales.

Interested in a particular county? Check out CEDIK’s Agriculture & Food County Data Profiles by clicking here.

Kentucky’s Retail Sector by Area Development District (ADD)

retail_sector_thumbnailCEDIK has released the fourth county profile in our data series.  This profile reports county level data on the retail sector of the county economy.  Our goal was to provide economic analysis of the retail sector, and to also provide explanation of the economic analyses used.  You can find all four of our county profiles on our website.

Data at the Area Development District (ADD) level was reported on each county profile as well.  However, the data for the 15 ADDs cannot be easily compared from the county data profiles themselves.  So we have provided some comparison of the retail sector across the ADDs in the tables and graphs below.

Let’s start by taking a look at the share of employment the retail sector provides for each ADD.  In the graph below, we see that as a whole, the retail sector in Kentucky provides 10.7% of all employment for the state.  The orange line across the chart shows us the statewide percentage.  There are only a few ADDs that have a higher share of their employment coming from the retail sector than the state average. Big Sandy ADD in particular stands out has having the largest share of employment coming from their retail sector of all the ADDs.

2010_ADD_Retail_Sector_Percent_Employ

Now let’s take a closer look at the ADD retail sector pull factors.  To refresh everyone’s memory, a pull factor measures a county’s ability to attract shoppers in the retail sector. If the pull factor is less than 1, its own residents are shopping in other counties. If greater than 1, the county is pulling in retail shoppers from other counties.

2010_ADD_Retail_Sector_PF

As you can see, most ADDs are able to attract shoppers into their area to make retail purchases (ADDs with a Pull Factor >1).  There are four ADDs though that are not able to capture enough retail shopping to equal their average resident’s spending on retail purchases (ADDs with a Pull Factor <1).  This means that these four ADDs have residents meeting some of their retail needs outside of the ADD.

This points to an opportunity for economic development for these ADDs.  How might an ADD work to attract more shoppers into their retail establishments?

CEDIK can assist communities with developing a retail strategy that attracts more shoppers. Contact us if you are interested in learning how.

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