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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
Copyright © 2010. University of Minnesota. All Rights Reserved
Presentation Outline
•Rationale for the study
•Data base of information for the study
•Analysis process
•Study Assumptions
•Results of study
Copyright © 2010. University of Minnesota. All Rights Reserved
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?
Copyright © 2010. University of Minnesota. All Rights Reserved
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.
Copyright © 2010. University of Minnesota. All Rights Reserved
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
Copyright © 2010. University of Minnesota. All Rights Reserved
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.
Copyright © 2010. University of Minnesota. All Rights Reserved
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.
Copyright © 2010. University of Minnesota. All Rights Reserved
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.
Copyright © 2010. University of Minnesota. All Rights Reserved
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.
Copyright © 2010. University of Minnesota. All Rights Reserved
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
Copyright © 2010. University of Minnesota. All Rights Reserved
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
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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 !
Copyright © 2010. University of Minnesota. All Rights Reserved
Contact Information
Gary A. HachfeldExtension Educator
Agricultural Business Management
University of Minnesota Extension
507-389-6722
Copyright © 2010. University of Minnesota. All Rights Reserved
Thank you ! Questions - Comments