Farm Management
The overall economic contribution of Alabama’s agricultural and forestry industries for 2022 is $77.3 billion. This includes $55.3 billion in direct output and $22 billion in indirect and induced effects. The direct employment in the agricultural and forestry industries is 166,410, including business owners and full-time, part-time, and seasonal workers. Including the effects in indirect and induced employment (106,861 jobs), the total employment contribution is 273,271. Labor income, including employee wages, fringe benefits, and proprietor income, is $15.4 billion.
The economic contribution is broken down into eight categories throughout the report. These include the agriculture-related categories: agricultural inputs, agricultural production, food processing, and fiber processing as well as the forestry-related categories: forestry inputs, forestry production, and forestry processing. A final category, agricultural and forestry services, includes input and support services for both agriculture and forestry.
Share of Total Economic Contribution of Agricultural and Forestry Categories
One way to evaluate total economic contribution is to separate it into two major categories: food-and-fiber agriculture and forestry. Food-and-fiber agriculture makes up 56% of the total contribution, but the largest single sector is forestry processing at 38% of the total. However, these two cannot be completely separated, as 4% of the total contribution comprises service industries facilitating activity in both major categories.
Components of the Total Economic Contribution
The agricultural and forestry services sector includes landscape and horticulture services, which could be considered a hybrid of production agriculture and forestry. This category also contains agricultural and forestry support activities, a bridge between the two major categories, helping facilitate both contributions.
Trends in the Economic Contribution of Alabama’s Agricultural and Forestry Industries
The changes over time show that Alabama agriculture and forestry have been on an upward trajectory of growth over the last decade, holding constant for inflation. The induced effects of agriculture and forestry increased by 31% over 10 years. The direct effects increased by 24%, and the indirect effects increased by 19%.
Top 15 Industries Supported
The agricultural and forestry sector supports other industries by purchasing supplies and services (inputs) used for production (indirect effects). Other industries are also supported by household purchases as a result of income earned through the agricultural and forestry industries (induced effects).
Indirect Effects
A total output of $12.9 billion is generated in the Alabama economy through the agricultural and forestry industries’ purchase of inputs for production, representing the indirect effects. More than $7.5 billion is generated in the top 15 industries. Truck transportation, wholesalers of durable goods, and wholesalers of nondurable goods represent the top 3 industries providing inputs to agriculture and forestry. Some other industries provide agricultural lending (in monetary authorities and depository credit intermediation) and insurance for agricultural production (in insurance agencies, brokerages, and related activities).
Table 1. Top 15 Industries Supported Through Indirect Effects
| RANK | Industry Display | Indirect Effects (in $1,000) |
|---|---|---|
| 1 | Truck transportation | $1,397,969 |
| 2 | Wholesale—Other durable goods merchant wholesalers | $978,281 |
| 3 | Wholesale—Other nondurable goods merchant wholesalers | $947,922 |
| 4 | Other real estate | $618,017 |
| 5 | Wholesale—Grocery and related product wholesalers | $589,456 |
| 6 | Electric power transmission and distribution | $543,662 |
| 7 | Management of companies and enterprises | $413,799 |
| 8 | Employment services | $307,534 |
| 9 | Petroleum refineries | $298,566 |
| 10 | Rail transportation | $297,830 |
| 11 | Monetary authorities and depository credit intermediation | $279,003 |
| 12 | Wholesale—Machinery, equipment, and supplies | $238,220 |
| 13 | Insurance agencies, brokerages, and related activities | $229,109 |
| 14 | Natural gas distribution | $215,639 |
| 15 | Other local government enterprises | $190,943 |
Induced Effects
A total output of $9.1 billion is generated in the Alabama economy through household purchases from income earned through agricultural and forestry industries, representing the induced effects. More than $4.6 billion in output is generated in the top 15 industries. Housing surpasses all other categories as the top industry supported by income earned in agriculture and forestry, followed by medical services. Some of the other industries include food-related retailers and restaurants.
Table 2. Top 15 Industries Supported Through Induced Effects
| RANK | Industry Display | Induced Effect (in $1,000) |
|---|---|---|
| 1 | Owner-occupied dwellings | $1,223,983 |
| 2 | Offices of physicians | $386,324 |
| 3 | Hospitals | $367,526 |
| 4 | Other real estate | $325,966 |
| 5 | Limited-service restaurants | $318,752 |
| 6 | Monetary authorities and depository credit intermediation | $315,767 |
| 7 | Retail—Nonstore retailers | $294,220 |
| 8 | Full-service restaurants | $249,643 |
| 9 | Insurance carriers, except direct life | $219,614 |
| 10 | Retail—General merchandise stores | $169,882 |
| 11 | Electric power transmission and distribution | $163,959 |
| 12 | Other local government enterprises | $157,210 |
| 13 | Tenant-occupied housing | $152,447 |
| 14 | Insurance agencies, brokerages, and related activities | $146,114 |
| 15 | Retail—Food and beverage stores | $131,954 |
Employment
Interpreting Employment
For nonagricultural production sectors, employment is classified based on their NAICS classification, even if they produce in more than one sector. For agricultural production, employment is split between sectors in partial units based upon several assumptions, including the distribution of the value of output. For example, a cattle producer also grows cotton, corn, peanuts, and hay. This producer’s employment is split among the agricultural production sectors in which they produce.
Total Employment Contribution of Agricultural and Forestry Categories
The agricultural sectors make up more than half of the employment from the combined agricultural and forestry industries with agricultural production being the largest source of direct employment. However, when considering indirect and induced employment, the forestry processing sector is the largest single sector, accounting for 30% of the total.
Adam N. Rabinowitz, Associate Professor and Extension Economist, and Dennis Brothers, Associate Extension Professor, both with Auburn University
This is an excerpt of Agriculture & Forestry Grow Alabama: An Economic Contribution Study, ACES-2817