The impact of the dairy industry on the Missouri
economy was estimated using the IMPLAN model developed by
the University of Minnesota. This model was used to
generate "multipliers" and to estimate the number of jobs
and the payroll for both bottling an processing plants.
The IMPLAN model generates "multipliers" that predict how dollars generated by the dairy industry ripple through the economy. IMPLAN generates three sets of multipliers. The direct multiplier reflects the affect of direct sales form a dairy farm or a processing plant. The indirect multiplier measures the increased output resulting from suppliers. In the case of a dairy farm, this would measure increased sales from farm suppliers that respond to the increase demand from dairy farmers by selling such things as veterinary services, milking equipment, feed, and other needs. The induced multiplier measures the increase in household spending arising from employment tied to the dairy industry. Employees of the service sector that supply dairy farmers, for example, would generate additional household spending patterns.
In 1993, Missouri dairy farmers sold 2.9 billion pounds of milk at an average price of $12.78 per hundredweight. Missouri dairy farms also marketed beef from the sale of cull cows. These sales were estimated to be worth $33 million. Total sales of dairy products in 1993 were estimated to be $405 million (Table A1).
Table A1. 1993 Missouri Dairy Farm Output
-------------------------------------------------- Milk sales (mil $) 372 Production (mil lbs) 2,909 Price ($/cwt) 12.78 Cull cow sales (mil $) 33 Milking cows (1,000 head) 224 Assumed average cull rate (%) 27 Cull cow price ($/head) 550 Total milk and cull cow sales (mil $) 405 -------------------------------------------------- Source: Missouri Agriultural Statistics Service.
The total economic impact of direct farm sales of $405 million translates into total statewide spending of $1.05 billion (Table A2).
Table A2. Statewide Economic Impact of 1993 Missouri Dairy farm Output
Multipliera Mil. $
-----------------------------------------------------
Direct 1.0000 405
Indirect 0.6664 270
Induced 0.9353 379
Total 2.6017 1.054
-----------------------------------------------------
aSource:IMPLAN model.
The wholesale value of output from the Missouri dairy processing industry was estimated including butter, natural and processed cheese, condensed and evaporated milk, ice cream and frozen deserts, and yogurt. Production was multiplied by the wholesale prices published in USDA's Dairy Market Statistics. The individual wholesale values were then multiplied by their respective multipliers in order to measure the direct, indirect, and induced effects, Table A3.
Table A3. Statewide Economic Impact of 1993 Missouri Manufactured Dairy Productsa
Effective
Multipliersb Mil. $
-----------------------------------------
Direct 1.0000 1,213
Indirect 0.8087 981
Induced 0.4897 594
Total 2.2984 2,788
------------------------------------------
aIncludes such products as butter, cheese, condensed and
evaporated milk, ice cream, and frozen desserts, yogurt,
and cottage cheese.
bSource: Multipliers for individual products are
from the IMPLAN model.
The results indicate that in 1993 Missouri's processing plants produced $1.2 billion in manufactured dairy products. Once the indirect and induced effects are included, manufactured dairy products resulted in a $2.8 billion impact in statewide economic activity.
Next, the economic impact of fluid milk was estimated. Missouri processed 870 million pounds of fluid milk in 1993 at a wholesale value of $119 million, Table A44. After accounting for the indirect and induced effects, bottling plants in Missouri created $268 million in statewide economic activity (Table A5).
Table A4. Missouri Output of Fluid Milk Products in 1993
----------------------------------------------------------------- July Class I milk sales (mil lbs) 72.47 Annual fluid milk production (mil lbs)a 869.64 1993 Class I milk prices for Missouri ($/cwt)b Southwest Plains order, Springfield" 13.81 S. Ill.-Eastern Mo. order, St. Louis" 13.63 Kansas City order 13.53 Missouri Class I milk price, average" 13.66 Wholesale value of fluid milk production (mil$) 119 ----------------------------------------------------------------- aEstimate based on multiplying Missouri's July Class I milk sales by 12. bSource:USDA
Table A5. Statewide Economic Impact of Missouri Bottling Plants in 1993
Multiplier Mil. $
----------------------------------------
Direct 1.0000 119
Indirect 0.7273 86
Induced 0.5259 62
Total 2.2532 268
----------------------------------------
Source: IMPLAN model.
The three major sources of economic activity generated by the dairy industry are farm product sales, fluid milk products, and manufactured products. Adding the direct, indirect, and induced effects from all three sources, it is estimated that the Missouri dairy industry generates $4 billion in statewide economics activity (Table A6).
Table A6. Statewide Economic Impact of the Missouri Dairy Industry in 1993
Direct Indirect Induced Total
----------------------------------------------------------------
-------------Million$-------------
Dairy farm products 405 270 379 1,054
Fluid milk products 119 86 62 268
Maufactured dairy products 1,213 981 594 2,788
Total output 1,737 1,337 1,036 4,109
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In addition the IMPLAN model estimates that there were 5,807 jobs directly tied to the Missouri dairy industry in 1991 (Table A7). These jobs did not include those related to hired labor on dairy farms, plant suppliers, and retail outlets for dairy products. The total employee compensation for processing plants in Missouri, which includes benefits, was $190 million, or an average $32,642 per employee.
Table A7. Employment for 1991 in the Missouri Dairy Processing Industrya
Product Number of Employee Compensation per
employees compensation (mil $) employee
-----------------------------------------------------------------
Creamery
butter 107 2.4 22,178
Cheese,
natural and
processed 2,693 79.5 29,525
Condensed and
evaporated
milk 1,489 63.6 42,704
Ice cream
and frozen
desserts 772 21.9 28,360
Fluid milk 746 22.2 29,744
Total 5,807 189.6 32,642
-----------------------------------------------------------------
aSource: IMPLAN model
