At a time when the nation's slowing economy is tipping toward recession, one of the largest and most stable sectors of Florida's economy continues to thrive, according to a new University of Florida study released recently.
In fact, the $101.9 billion annual value-added impact of agriculture, natural resource, food and fiber product manufacturing, distribution and related service industries is larger than ever, and these industries will continue to play a vital role in Florida's economy for the 21st century as they have in the past, say economists with UF's Institute of Food and Agricultural Sciences (IFAS).
“Make no mistake about it, these industries are big in Florida, and their impact is statewide,” said Alan Hodges, an agricultural economist and lead author of the study.
“This sector of Florida's economy continues to be strong,” he said. “When industries such as construction, travel and entertainment are affected by an economic downturn, agriculture, natural resource and related industries continue to be more stable components of the state's economy.”
Hodges said this economic sector generates the second largest number of jobs in the state, behind professional and technical services and ahead of real estate and financial services, construction, education, and travel and entertainment.
“From 2001 through 2006, Florida agricultural, natural resources and related industries have grown at a rate roughly equal to overall economic growth in the state, at an annual average of about 4 percent,” Hodges said. “Moreover, these industries manage about two-thirds of the state's land area — 24 million acres — land that is critical to water supplies, water quality, pollution abatement, erosion control, shoreline protection, carbon sequestration and climate stabilization, wildlife habitat and outdoor recreation.”
He said agriculture, natural resource and related industries not only produce food and fiber commodities, but they are closely linked to a broad range of economic sectors for food processing, wholesale and retail distribution.
In addition to farms, forests and fisheries, the economic sector includes activities such as mining, fertilizer manufacturing, sawmills, fruit and vegetable processing, landscaping, food stores, restaurants, building material and garden stores, pest control, golf courses and recreational fishing, he said.
The total economic impacts of these industry sectors were estimated using a regional input-output model, which captures the multiplier effects of the input supply chain and employee household spending.
Assisting Hodges with the study were David Mulkey, a professor in the UF/IFAS food and resource economics department, and Mohammed Rahmanni, an economic research coordinator in the department.
Hodges said output, employment and value-added impacts are the three principal measures of economic activity. Industry output represents total income or sales plus inventory change. Employment includes both full-time and part-time or seasonal positions. Value-added impacts represent the value of output less the value of purchased inputs used the production of goods or services for final consumption.
Agriculture, natural resource and related industries produced $137 billion in output or sales revenues, expressed in 2007 dollars. They also generated $61 billion in revenues for other economic sectors due to supply chain and employee spending multiplier effects, thereby providing nearly $200 billion in total output sales. The economic sector also had foreign and domestic exports, and sales to Florida visitors valued at $46 billion, which represents “new” money to the state and gives rise to the multiplier effects.
When it comes to value-added impacts, the industries generated $66 billion in personal income and business profits, which represented 9.3 percent of the $704 billion gross state product.
Including multiplier effects, the total value-added impact was $102 billion. Since 2001, the growth in value-added impacts has increased by $27 billion, representing an average annual growth rate of 3.9 percent.
Agriculture, natural resource and related industries provide direct employment of 1.5 million people in fulltime and part-time jobs, representing 14.2 percent of all jobs in the state and ranking second among Florida's top five major industry groups.
Including multiplier effects, these industries generated total statewide employment impacts of nearly 2 million jobs. They also generated labor income impacts of $65 billion, and indirect taxes paid to local, state and federal governments amounting to $11.4 billion.
A background paper, “Economic Contributions of Florida's Agricultural, Natural Resource, Food and Kindred Products Manufacturing and Service Industries in 2006,” is available at the UF/IFAS Extension EDIS (Electronic Document Information Source) Web site: http://edis.ifas.ufl.edu/fe702.