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Study reveals ag sector feeds U.S. economy

Andrey_Kuzmin/iStock/Thinkstock fork and knife on wood table with chalkboard speech bubble
More than one-fourth of American employment tied to food and ag industries.

A nationwide economic impact study found that more than one-fifth of the nation’s economy is linked, either directly or indirectly, to the food and agriculture sectors and that more than one-fourth of all American jobs (28%) are similarly connected.

The food and agriculture industries are dynamic contributors to the U.S. economy, accounting for about $6.79 trillion in output, or about 20.4% of total national output. The latest research found that 43.3 million jobs are directly or indirectly related to agriculture, with earned wages and benefits of about $1.99 trillion. Members of the industries and their employees paid $894.13 billion in federal, state and local taxes. This does not include state and local sales taxes or excise taxes that may apply for specific retail services.

“These numbers tell an essential story, reminding us that food and agriculture remain absolutely central to our nation’s well-being. We not only produce three square meals a day for most Americans; that same work supports one in four American jobs: 28% of all U.S. employment can be tied to our industries,” said John Bode, president and chief executive officer of the Corn Refiners Assn.

The food and agriculture industries reach into all corners of the U.S., employing 22.82 million people and generating $763.12 billion in wages. Retail grocery businesses directly generate $2.82 trillion in economic activity nationally. The direct employment of the food and agriculture industries is equivalent to 14.9% of total U.S. employment.

Millions of food scientists, grocers and truck drivers work in more than 200,000 food manufacturing, processing and storage facilities to keep food fresh and deliver it on time. The journey may conclude at one of the nation’s 1 million restaurant locations staffed by some of the 14.7 million Americans employed there.

To measure the total economic impact of the sectors, the analysis also includes the indirect and induced economic activity surrounding these industries, which captures upstream and downstream activity. For example, when a farm equipment retailer hires new employees because farmers are buying more tractors, experts consider the new salaries an indirect impact. Similarly, when a retail associate spends her paycheck, an induced economic impact occurs. Together, these have a multiplier effect on the already formidable direct impact of food and agriculture.

Other firms are related to the food and agriculture industries as suppliers. These firms produce and sell a broad range of items, including tools, equipment, trucks and shelving. In addition, supplier firms provide a broad range of services, including personnel services, financial services, advertising services, consulting services or transportation services. Finally, a number of people are employed in government enterprises responsible for the regulation of the food and agriculture industries. All told, it is estimated that the industry is responsible for 9.43 million supplier jobs.

Spending on everything from housing to food to education and medical care makes up what is traditionally called the “induced impact,” or multiplier effect, of the food and agriculture industries. For 2017, the induced impact of the industry was generating 11.07 million jobs and $1.96 trillion in economic impact, for a multiplier of 0.69.

Exports generated $146.32 billion. The total economic impact of the food and agriculture industry was $6.7 trillion.

American Bakers Assn. president and CEO Robb MacKie noted the results of the study further illustrate the powerful economic impact of the food and agriculture sector on the U.S. economy that is felt in every part of the country.

“This study reinforces the previous Council for Economic Development study that listed the food and beverage industry as the largest manufacturing sector of our economy and has a significant positive trade balance impact," MacKie said.

“We have long understood that the food and agriculture industries play an absolutely vital role not only in feeding Americans but also in feeding and growing the nation’s economy. This historic farm-to-fork economic analysis quantifies the impact of the jobs, wages, taxes and exports the industry makes possible,” said Leslie G. Sarasin, president and CEO of the Food Marketing Institute. “As policy-makers consider tax reform and other means to expand economic activity, I hope they will have a better understanding of how the food and agriculture sector not only feeds Americans but also feeds the U.S. economy.”

Twenty-two food and agriculture organizations commissioned this research, which is available at www.FeedingTheEconomy.com. The site also provides detailed state-level information.

For the purpose of the study, the food industry included any businesses involved in food product agriculture, food manufacturing, food wholesaling and food retailing (so-called “farm to fork”). John Dunham & Associates conducted the research, which was funded by The Goodstone Group.

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