The entry of a new feed mill producing 10,000 tons per week (520,000 tons annually) causes a measurable increase in economic activity within Alabama, both in terms of construction and annual operations. Common measures of economic activity are employment (jobs), labor income, value-added, and output (sales). When a feed mill enters a local economy, it causes a series of new economic activities (impacts) to take place. For this summary, economic impacts are broken into construction (one-time impact) and operations (annual impact). Construction and operations will generate tax revenue through federal taxes as well as state and local taxes. Of the estimated $13.9 million generated in tax revenue, $8.5 million is from construction and $5.4 million is from annual operations. The magnitude of these new economic activities is largely related to the presence of industries which supply the needed inputs for a new feed mill. A feed mill in Alabama sources roughly 29.5 percent of all annual operations inputs locally and roughly 23.5 percent of all construction inputs locally.

The construction of a new feed mill requires purchases such as steel, concrete, and milling equipment, including grinders, mixers, pellet mills, and material handling systems. Once construction is completed, the feed mill consistently purchases feed ingredients and packaging materials, utilizes other professional services, and purchases many other inputs to produce feed for sale. The direct purchase of supplies and equipment are known as direct effects. The suppliers and vendors used by the feed mill then must purchase inputs to supply the feed mill; these are known as indirect effects. Those who work in the construction of the feed mill and for the 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 annual operations of a new feed mill.

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

¹To arrive at the total effects of a new feed mill, we used the following basic assumptions: 1) Average annual production was 520,000 tons 2) An average sales price of $260/ton 3) Cost to construct the feed mill was $30.2 million 4) All dollars are in 2020 dollars

Download a PDF of Economic Impact of a New Poultry Feed Mill in Alabama, ANR-2673.