Economic Benefits Of The Livestock Industry

A recent report commissioned by the United Soybean Board highlights the economic importance of domestic animal agriculture to the nation as a whole and to the state of South Dakota. For the report, estimated economic impacts were calculated by a modeling process that quantified the effects U.S. animal agriculture has on employment, income, and taxes for the entire economy.

These include impacts created by all employment connected to the U.S. livestock and poultry industries – including activities from associated industries. For example, total employment in U.S. animal agriculture includes not only jobs in livestock production (such as ranching), but also jobs in the feed industry. Some employment in manufacturing, marketing, finance, insurance, transportation, food retail and wholesale, for example, also support U.S. animal agriculture and those estimated impacts are included in this report.

Livestock and Poultry Industries Benefit U.S. Economy

Highlights of the report include estimates of the positive impacts from U.S. animal agriculture to the domestic economy in 2012. These are:

• 1,851,000 jobs
• $346 billion in total economic output
• $60 billion in household income
• $15 billion in income taxes paid, and
• $6 billion in property taxes paid

These estimates of U.S. total economic output, income, and taxes are contributions originating directly from the nation’s animal livestock industry. These values can be compared to estimates associated with other industries to help assess the importance of domestic livestock and poultry production to the U.S. economy. It is also crucial to note that these annual estimates have increased over time as animal agriculture in the U.S. has gained economic importance.

Livestock and Poultry Industries Benefit SD Economy

The report also contains estimates of the positive impacts from South Dakota animal agriculture to the state’s economy in 2012. These are:

• 29,020 jobs
• $7.3 billion in total economic output
• $1.1 billion in household income
• $235 million in income taxes paid, and
• $149 million in property taxes paid

Again, these estimates are not limited to those that occurred strictly in the state’s livestock and poultry production industry, but include impacts from all related industries that are directly traced to originating from South Dakota animal agriculture. Essentially, without animal agriculture in South Dakota, the benefits to the state’s economy listed above would cease to exist.

Relocation of Animal Agriculture

The report documents changes in production levels that have occurred in animal agriculture from 2002 to 2012 on a state-by-state basis. The location of different U.S. livestock and poultry production activities have shifted over time, and reasons for these shifts are varied but likely include changes in laws and regulations, demographics, income, and cost of production, among other factors. In South Dakota over this period, growth has been pronounced for the following industries:

• Milk production increased 52.7%
• Pork production increased 32.4%
• Turkey production increased 22.2%, and
• Egg production increased 17.3%

Production increases can occur for many reasons. One common example in U.S. agriculture has been technological advances. However, according to this report, increases in South Dakota livestock and poultry production occurred while other states lost production. As a result, the increases reported are at least partially the result of shifts in animal production between states and do not just represent overall increases in productivity or efficiency.

For the animal agricultural industries in South Dakota that showed growth, one likely reason is easy access to affordable feed. In other words, South Dakota’s production of feed grains and oilseeds has directly supported the state’s growth in dairy, pork, turkey, and egg production. However, not all South Dakota livestock industries grew. For example, the production of South Dakota cattle and calves showed a slight decrease (-2.5%) from 2002 to 2012.

SD Changes Compared to Other States

Table 1 shows the ten-year change in various economic impacts by state attributed to animal agriculture. Some states, such as Iowa, fared better than others. Other states experienced negative impacts. For example, in North Dakota and Kansas, jobs, economic output, wages, and tax revenue associated with animal agriculture all decreased during this time period. South Dakota along with Nebraska, Iowa, and Minnesota had economic gains because of animal agriculture. Again, multiple reasons explain shifts in location of animal agriculture production.

Table 1. Change in Economic Impact by State (2002 – 2012)

The economic impact of animal agriculture in the U.S. is large and growing. Overall, the increased value of animal agriculture production in the nation resulted in more than $25 billion in additional total economic output from 2002 to 2012. This produced a $4.5 billion increase in household earnings and 124,000 new jobs. In South Dakota, over this same period, increases totaled $463 million in economic output, $76 million in household wages, 1,900 jobs, and $15 million in tax revenue.

Source:SDSU