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Chicken Farm; inside of broiler house

The entry of a new 39,600-square-foot (66’ × 600’) broiler house in Alabama causes a measurable increase in economic activity within the state in terms of construction and ongoing annual operations. Consider the following economic activity created during construction and a broiler house’s first year of operation.

Jobs

4 jobs are supported each year from ongoing operations; 6 during the construction phase.

Value Added

$504 thousand is supported each year from ongoing operations; $395,594 during the construction phase.

Labor Income

$357 thousand is supported each year from ongoing operations; $290,848 during the construction phase.

Output (Sales)

$1.5 million is supported each year from ongoing operations; $798,918 during the construction phase.

Taxes Paid

$90 thousand is supported each year from ongoing operations; $87,105 during the construction phase.

34%

A broiler house in Alabama sources roughly 34% of all inputs locally.

Construction Impacts

Broken down by phase of economic activity, a new 39,600-square-foot broiler house would generate the following estimated total impact from construction to the state economy.

 Construction
Employment (jobs)6
Value Added$395,594
Labor Income$290,848
Output (sales)$798,918
Taxes Paid (all levels)$87,105

 

Operations Impacts

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

 Operations
Employment (jobs)4
Value Added$504,614
Labor Income$356,662
Output (sales)$1,530,884
Taxes Paid (all levels)$90,021

 

Top Industries Impacted

The following are a few of the industries within Alabama most impacted by the economic activity from  construction:

IndustryValue Added
Construction of new commercial structures, including farm structures $227,091
Wholesale trade$18,521
Real estate$11,218
Architectural, engineering, and related services $6,997
Monetary authorities and depository credit intermediation$5,957
Offices of physicians $4,531
Truck transportation $4,234
Hospitals $4,160
Limited-service restaurants$3,623
Commercial and industrial machinery and equipment rental and leasing$3,225

 

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

IndustryValue Added
Poultry and egg production $260,358
Wholesale trade$42,974
Real estate $12,968
Other animal food manufacturing$12,721
Support activities for agriculture and forestry $10,449
Truck transportation $9,163
Monetary authorities and depository credit intermediation$6,073
Offices of physicians$5,501
Rail transportation $5,225
Hospitals$4,949

 

Overview1

The construction of a new broiler house requires several purchases including lumber, along with steel, concrete, and equipment. Once construction is completed, the poultry integrator provides feed and veterinary and other professional services, while the farmer provides water, equipment, electricity, and supplies. The direct purchase of supplies and equipment are known as direct effects. The suppliers and vendors used by the broiler integrator and farmer then purchase inputs to supply the broiler house; these are known as indirect effects. Those who construct the broiler house, those who work for the broiler house once complete, 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 direct, indirect, and induced effects are known as total effects and accounts for the total multiplier effect present from the construction and operation of a new broiler house.

Common measures of economic activity are employment (jobs), labor income, output (sales), and value added (output minus the cost of inputs). When a broiler house enters a local economy, it causes a series of new economic activities (impacts) to take place. For this summary, the economic impacts are broken into construction and operations. The magnitude of these new economic activities is largely related to the presence of industries that supply the needed inputs for a broiler house.

To arrive at the total effects of a new 39,600-square-foot broiler house, the following basic assumptions (from Auburn University) were used: 1) 40 pounds live weight per square foot is produced per year; 2) a 5-year average sales price of $0.55 per pound of live weight; and 3) a $0.325 per square foot “new housing bonus” is paid per year for 10 years. Construction costs to build a new broiler house were assumed to be $12.10 per square foot for a house of this size.

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 Broiler House in Alabama, ANR-2462.

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