Economic Contribution of a New Cow-Calf Operation in Alabama
The entry of a new 300-head cow-calf operation in Alabama causes a measurable increase in economic activity within the state in terms of ongoing annual operations. Consider the following total economic activity created during the first full year of operation:
- Total Effects (output or sales): $595,000 is supported each year from ongoing operations
- Jobs: 8 per 300 head are supported each year from ongoing operations
- Labor Income: $191,000 is supported each year from ongoing operations
- Value Added: $233,000 is supported each year from ongoing operations
A cow-calf operation in Alabama sources roughly 49% of all inputs locally.
Top Industries Impacted
The entry of a new 300-head cow-calf operation in Alabama causes a measurable increase in economic activity within the state in terms of ongoing annual operations. Consider the following total economic activity created during the first full year of operation:
- Beef cattle ranching and farming: $80,505 value added
- All other crop farming: $21,700 value added
- Wholesale trade: $14,346 value added
- Monetary authorities and depository credit intermediation: $12,334
- Owner-occupied dwellings: $11,128
- Real estate: $9,928
- Support activities from agriculture and forestry $9,545
- Truck transportation: $5,265
- Offices of physicians $2,942Veterinary services: $2,757
Overview
The producer provides feed, animal care services, equipment, and various supplies. The direct purchase of supplies and equipment are known as direct effects. The suppliers and vendors used by the producer then purchase inputs to supply the cow-calf operation. These are known as indirect effects.
Those who work for the cow-calf operation and those who work for the farm’s suppliers and vendors then use their additional income to make household purchases. These are known as household, or induced effects. Taken together, the sum of the direct, indirect, and induced effects are known as total effects. This accounts for the total multiplier effect present from the operations of a new cow-calf operation.
Common measures of economic activity are employment (jobs), labor income, output (sales), and value added (output minus the costs of inputs). When a new cow-calf operation enters a local economy, it causes a series of new economic activities (impacts) to take place. The magnitude of these new economic activities is largely related to the presence of industries that supply the needed inputs of the cow-calf operation.
The Results
To arrive at the total effects of a new 300-head cow-calf operation in Alabama, the following basic assumptions (from Auburn University) were used:
- 90% weaning rate
- Average weaned calf weight of 625 pounds per calf
- Average calf price of $1.50 per pound cull cow price
- Gross returns of $943.85 per cow unit and $831.50 total cost per cow per year