copyright © 2010. university of minnesota. all rights reserved measuring the economic impact of the...

Copyright © 2010. University of Minnesota. All Rights Reserved

Measuring the Economic Impact of the

Minnesota Livestock Industry

Gary A. Hachfeld, Brigid Tuck, David Nelson, Al Brudelie

National Farm Business Management Conference

June 13-17, 2010

Fargo, North Dakota


Presentation Outline

•Rationale for the study

•Data base of information for the study

•Analysis process

•Study Assumptions

•Results of study


Study Rationale

•Livestock production In Minnesota generates

billions of dollars in revenue & many jobs.

•Production years 2007, 2008 and 2009 were financially stressful for the MN livestock industry.

•Question: What would the economic impact be to MN, if the state lost 10%, 20% or 30% of it’s livestock industry?


Study Data Base

•All livestock direct and overhead expenses as well as production levels, are from the

Minnesota State Colleges & Universities (MnSCU) and University of Minnesota Extension Adult Farm Management Program data.

•Study years included 2004 through 2008 data.


Study Data Base

•Livestock enterprises included in the study were as follows:

•Dairy•Dairy Finishing

•Hogs – Wean to Finish•Hogs – Finish Feeder Pigs

•Beef Cow-Calf•Beef Finishing


Analysis Process

•Utilized Impact Analysis for Planning (IMPLAN) software to analyze livestock farm

business expenditures.

•IMPLAN software is a very commonly used input-output economic modeling analysis software.


Study Assumptions

•Study focused on economic impact from expense side of the livestock business.

•Direct & overhead expenses from MnSCU and U of M Extension data used in the study, were representative of other Minnesota

livestock farm businesses.

•Total number of MN livestock farms calculated utilizing MN Agricultural Statistical data.


Study Assumptions

•Most major livestock production inputs were purchased locally within Minnesota.

•Assumed return to labor and management income was spent in a manner identical to any non-farm wages or income.


Study Assumptions

•Estimated labor hours per unit were 2080 hours which equaled one labor unit or one full-time job.

•Dollars were not adjusted for inflation.

•Assumed IMPLAN software was an appropriate and applicable software for this economic analysis.


Study Results

Total Livestock Production Inputs Purchased by Enterprise by Year

2004 2005 2006 2007 2008$0

$500,000,000

$1,000,000,000

$1,500,000,000

$2,000,000,000

$2,500,000,000

$3,000,000,000

$3,500,000,000

$4,000,000,000

$4,500,000,000

BeefHogsDairy

Hogs - Wean to Finish $2.40 $2.70 $2.30 $2.30 $2.30

Hogs - Farrow to Finish $2.60 $2.60 $2.60 $2.60 $2.60

Dairy $2.50 $2.50 $2.50 $2.50 $2.50

Dairy - Finishing $2.50 $2.50 $2.50 $2.50 $2.50

Beef Cow - Calf $2.50 $2.50 $2.50 $2.50 $2.50

Beef Finishing $2.50 $2.50 $2.50 $2.50 $2.50

Local Economic Impact per

Livestock Farm Dollar Spent

2004 2005 2006 2007 2008

Non-Farm Ag Business Economic Impact

2004 2005 2006 2007 2008$0

$1,000,000,000

$2,000,000,000

$3,000,000,000

$4,000,000,000

$5,000,000,000

$6,000,000,000

$7,000,000,000

BeefHogsDairy

Family Living Expenditures/Community Economic Impact

2004 2005 2006 2007 2008$0

$50,000,000

$100,000,000

$150,000,000

$200,000,000

$250,000,000

BeefHogsDairy

20042005

20062007

2008

$0

$2,000,000,000

$4,000,000,000

$6,000,000,000

$8,000,000,000

$10,000,000,000

$12,000,000,000

BeefHogsDairy

Total Economic Impact of MN Livestock Industry

2004 2005 2006 2007 2008$1.00

$1.50

$2.00

$2.50

$3.00

$3.50

$4.00

$4.50

MN Average Corn Price

2004 2005 2006 2007 2008$4.00

$5.00

$6.00

$7.00

$8.00

$9.00

$10.00

$11.00

MN Average Soybean Price

20042005

20062007

2008

$0

$2,000,000,000

$4,000,000,000

$6,000,000,000

$8,000,000,000

$10,000,000,000

$12,000,000,000

BeefHogsDairy

Total Economic Impact of MN Livestock Industry

Hogs - Wean to Finish 1.1 1.1 1.1 1.2 1.3

Hogs - Farrow to Finish 5.4 5.9 6.1 7.9 6.6

Dairy 1.3 1.3 1.3 1.5 1.7

Dairy - Finishing 1.9 1.8 2.3 2.9 3.8

Beef Cow - Calf 1.1 1.1 1.2 1.2 1.7

Beef Finishing 1.5 1.9 2.4 1.5 3.4

Local Non-farm Jobs Created per

Livestock Farm Job

2004 2005 2006 2007 2008

2004 2005 2006 2007 20080

10,000

20,000

30,000

40,000

50,000

60,000

70,000

BeefHogsDairy

Total Jobs Created by Enterprise by Year


Summary

•For MN livestock production years 2004-08:

•Average annual total economic impact of livestock production was $9.96 billion dollars.

•Average annual non-farm ag related business economic impact was $5.78 billion dollars.

•Average annual non-ag business economic impact was $213 million dollars.

•Average number of non-farm jobs created per year in MN was 61,956.

Summary

Percent of Loss 10% 20% 30%

Total Economic Impact $996.2 mil. $1.99 bil. $2.99 bil.

Non-farm Ag Related Businesses

$577.8 mil. $1.16 bil. $1.73 bil.

Non-ag Related Businesses $21.3 mil. $42.6 mil. $63.9 mil.

Job Loss 6,196 12,391 18,587

Economic Result of a 10%, 20% or 30% Loss of MN Livestock Producers


Acknowledgements

•Brigid Tuck -Extension Educator, Community Economic Analyst/Writer, U of M Extension.

•Al Brudelie, Dean of Management Education, MnSCU

•MnSCU & U of M Extension Adult Farm Management Programs

•MN Agricultural Statistics Service

Thank you !


Contact Information

Gary A. HachfeldExtension Educator

Agricultural Business Management

University of Minnesota Extension

507-389-6722

[email protected]


Thank you ! Questions - Comments

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