Agribusiness Column: Economic impact of agriculture in New York state

People often ask just how big agriculture is in New York state? Is it New York state’s number one industry? How many jobs are created? How important is farming to local communities?

Thanks to a recent report written by Cornell University agribusiness expert, Todd Schmit, an associate professor with the Charles H. Dyson School of Applied Economics Management at Cornell, we have updated answers to these important questions. Professor Schmit analyzes the economic contributions of agriculture in the New York economy from 2014 to 2019. The report indicates that agriculture in New York state contributed $43.6 billion in total industry output, 160,100 jobs and $12.3 billion in gross domestic product across the state economy. The agricultural service sector grew over the five-year span by 36% and employment went up 49%.

Before we go further in examining agriculture’s economic impact, it is beneficial to look at New York’s overall economy. Professor Schmit points out that in terms of the state’s total value added economy of $1.746 billion, contributions to gross domestic product from the top five industry aggregates are finance and insurance (19.4%), real estate and rental properties (12.1%), professional services (10.1%), government (9.9%), and information and communications (7.8%). When looking at the state’s employment date, New York State has a total of 11.8 million jobs. The top five contributions to jobs in New York state are health and social services (14.3%), government (11%), professionl services (9%), retail trade (7.8%) and accommodations and food services (7.8%). As you examine the top five categories in gross domestic product and in employment, it is acceptable to assume all tend to have higher impact on suburban and urban areas.

The agricultural industry tends to favor rural economies. Farms, food processors and agri service businesses tend to exist in the rural areas of New York state. In many areas, such as Jefferson County, agriculture is a key driver of local economies. Jefferson County has the U.S. Army base at Fort Drum which is our largest economic engine; a strong tourism industry; manufacturing and agriculture.

In terms of agriculture across New York state, production agriculture (farms) generated $5.2 billion in sales and 52,000 jobs. Dairy farming is the largest single sector of the agricultural industry. Agricultural manufacturing contributed nearly $38 billion in sales and employed over 100,000 workers. Dairy manufacturing accounted for 23% of the sales and 12% of the employment figures.

Professor Schmit indicates in his report that the total economic contribution of agriculture to the state, measured as direct sales, indirect backward linkages, and induced effects from direct sales, is $65.2 billion, approximately 2.5% of New York state’s total sales. Schmit further reports that the economic multiplier for output sales is 1.49. So, as an example, for every dollar a dairy farm sells in milk, $0.49 of sales are generated in local businesses of their products.

Agriculture in New York state in 2019 provided 269,683 jobs. Of those, 163,148 jobs were direct employment and 106,535 jobs are generated indirectly or through induced effects. This represents approximately 2.1% of New York state employment. Every job generated in agriculture supports 0.65 jobs in backward linked non-agricultural businesses. If a farm or agricultural manufacturer in Jefferson County creates 20 jobs, it may be expected that another 13 jobs will be created in non-agricultural businesses that have some linkage to the farm or manufacturer.

Another interesting part of Professor Schmit’s report discusses labor income. Labor income represents employee wages and benefits. Agriculture supports $16.3 billion of labor income. This is 1.5% of all labor income generated in New York state. The labor income multiplier for agriculture is 2.05. For every $100,000 a farm spends on its total payroll, $105,000 of labor income is generated in non-agricultural businesses.

The agricultural industry of New York state is a $65.2 billion economic engine generating 269,000 jobs. This is smaller than the top five economic sectors we reported earlier. The economic impact is critically important across New York State when considering where this impact occurs in rural areas such as northern New York.

To obtain a copy of professor Schmit’s report, go to http://dyson.cornell.edu/outreach/-bulletins. This report is listed as 2021-04 The Economic Contributions of Agriculture to the New York State Economy: 2019 Todd Schmit.

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