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A group of beef heifers against a blue sky.

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.

Output or Sales (Total Effects)

$595 thousand is supported each year from ongoing operations.

Jobs

8 jobs per 300 head are supported each year from ongoing operations.

Value Added

$233 thousand is supported each year from ongoing operations.

Labor Income

$191 thousand is supported each year from ongoing operations.

49%

A cow-calf operation in Alabama sources roughly 49% of all inputs locally.

Operations Impacts

The following is an estimated impact in terms of the total economic impact to Alabama’s economy from the first full year’s operations.

 Operations
Employment (jobs)8
Value added$233,236
Labor income$190,981
Output (sales)$595,316

Top Industries Impacted

The following are a few of the industries within Alabama most impacted by the economic activity from operations during the first year:

IndustryValue Added

Beef cattle ranching and farming

$80,505
All other crop farming$21,700
Wholesale trade$14,346
Monetary authorities and depository credit intermediation$12,334
Owner-occupied dwellings$11,128
Real estate$9,928
Support activities for agriculture and forestry$9,545
Truck transportation$5,265
Offices of physicians$2,942
Veterinary services$2,757

Overview1

The producer provides feed, veterinary 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 cost 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 for a cow-calf operation.

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: 1) 90 percent weaning rate; 2) average weaned calf weight of 625 pounds per calf; 3) average calf price of $1.50 per pound and $0.65 per pound cull cow price; and 4) gross returns of $943.85 per cow unit and $831.50 total cost per cow per year.

1 Additional details on methodology can be obtained through communication with the study’s author, Decision Innovation Solutions (info@decision-innovation.com).

Download a PDF of Economic Impact of a New 300-Head Cow-Calf Operation in Alabama, ANR-2504.

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