SD: Cattle provide over $2B in gross income | TSLN.com

SD: Cattle provide over $2B in gross income

BROOKINGS, S.D. – South Dakota's beef and pork industries make a significant contribution to economic output and development within the state, said Gary Taylor South Dakota State University Associate Professor of Economics.

"Agriculture is our state's number one industry, and within that industry, beef and pork operations contribute to our state's economy through employment, input purchases and taxes," Taylor said.

Based on 2012 data, the state is home to some 1.6 million cows who produce about 1.7 million calves and an estimated $2,283,766,027 gross income. During the same time frame, the state housed some 368,000 sows who produced about 3.7 million pigs and an estimated $6.2 million in gross income.

With the help of an input/output analysis program, the IMPLAN Pro3 model, Taylor was able to graph the direct and indirect impacts of both industries on the state. This information is updated about every five years by the SDSU economics department.

Beef industry

In 2012 the beef industry provided an estimated total economic impact of $4.48 billion, 12,571 full-time equivalent jobs, and a net positive tax impact of $613,762. In addition the beef industry provides a market for an estimated 44.2 million bushels of corn, 9.8 million tons of forage, and 34.5 thousand tons of soybean meal.

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The direct effect of South Dakota's beef cattle industry is $2.28 billion of gross income. The indirect effect, which consists of the business-to-business activity is $1.8 billion while the induced effect, which comprises household spending as a result of the economic activity in the beef industry is more than $334 million (Table 1).

"In 2012 the direct impact was $569 million higher than our most recent similar analysis which was based on 2008 data ($1.714 billion)," Taylor said.

He attributes the increase to significantly higher output prices, approximately $130 per hundredweight (in 2012) versus $91.30 per hundredweight (in 2008).

"This occurred despite marketing approximately 83,200,000 fewer pounds of beef in 2012, a 4.5 percent decrease relative to the 2008 data," Taylor said. "The multiplier for the beef industry used by the IMPLAN program is 1.95, suggesting that each dollar of economic activity in the beef industry generated another $0.95 of economic activity in the rest of the South Dakota economy."

When looking at the impact the beef industry had on employment, Taylor again relied on IMPLAN; see Table 2.

"The beef industry continues to provide a significant contribution to the economic health and growth in South Dakota," Taylor said, referencing Table 3. "The beef industry is expected to continue making a positive contribution to South Dakota's economy in the foreseeable future, especially in the presence of low beef supplies and high beef prices."

Pork industry

The pork industry in South Dakota is a major contributor to economic activity in the state. The direct impact of the pork production sector is $621,419,007 and it produces a total impact of $911,825,294.

"In addition, the production sector accounts for 6,080 jobs and $1,351,758 in taxes on production and imports," says Taylor referencing Table 1. "If the total impact of the pork processing sector is added the total economic impact of the pork industry rises to $5,025,146,497, the employment number increases to 20,883.5, and the tax on production and imports total is $27,016,318."

The data points to an increase over 2008 numbers by $200 million. Taylor attributes this increase to significantly higher output prices of about $71.13 per hundredweight in 2012 versus $46.80 per hundredweight in 2008.

"Producers marketed 74.8 million more pounds of pork in 2012 than in 2008," Taylor said.

–SDSU Extension