Agricultural Business Council of Kansas City

Strong Foundation Makes Kansas City Renaissance Possible

KANSAS CITY—December 4, 2006—Kansas City may not be a cow town any more, but agribusiness is still a cash cow for the area economy, according to a comprehensive economic study released today.

The study, commissioned by the Kansas City Agribusiness Council, confirms that agribusiness continues to be an important economic engine for the region, ranking first in overall jobs and third in direct economic impact, i.e., jobs plus gross sales/revenues.

“While many things about agribusiness have changed, what clearly has not changed is the importance of this industry to our local economy,” said Mike Beam, chair of the Agricultural Business Council of Kansas City. “It is a primary reason the region has a strong economic foundation on which to build.”

The study, called “The Agricultural Economy: Fueling Kansas City’s Renaissance”, included the following specific findings:

• Agribusiness is responsible for 233,000 jobs, which is 16.2% of all jobs in the area or about one in every six jobs.

• Agribusiness generates $22.6 billion dollars in direct economic impact, which is 14.2% of all economic activity for the area or about one in every seven dollars.

• Agribusiness is a healthy and diverse segment of the economy that spans “farm to fork,” including major sectors such as farming, manufacturing, distribution, and retail. The study pointed out that while the retail sector—which includes restaurants, grocery stores, and farm supply stores—accounts for the most jobs, manufacturing sector provides the greatest overall economic impact.

• While virtually all major sectors of the agribusiness economy have experienced some consolidation, they also have experienced increased sales and/or productivity thanks to technologies that allow businesses to do “more with less” all along the food chain.

• Some sub-sectors of the Kansas City agribusiness economy are experiencing significant growth, including animal health, which is growing at twice the national average, and logistics/transportation.

• The percent impact of agribusiness to the overall Kansas City economy is similar to the percent impact of agribusiness to the overall national economy. This finding is noteworthy because the percent impact on the national economy includes both rural and urban areas while the Kansas City economy only includes the percent impact on urban Kansas City.

“The agribusiness economy is both a cash cow that is helping fuel Kansas City’s current renaissance but also a source of new economic growth,” said Gina Bowman-Morrill, founding executive of the Council. “It is part of our heritage and part of our future.”

The study was conducted on a pro bono basis by Jason Henderson, assistant vice president and branch executive for the Omaha branch of the Federal Reserve Bank of Kansas City. It is the most comprehensive study ever conducted on the Kansas City agribusiness economy and the first agribusiness economic study of any kind since 1997.

 

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ABOUT THE STUDY

• Commissioned by the Kansas City Agribusiness Council, a non-governmental organization representing area companies and organizations involved in the production and/or distribution of food or fiber.

• Conducted on a pro bono basis by Jason Henderson, assistant vice president and branch executive with the Omaha branch of the Federal Reserve Bank of Kansas City.

• Represents the most comprehensive agribusiness economic study ever conducted for the Kansas City area and the first agribusiness study of any kind since 1997.

• Used IMPLAN, a sophisticated economic modeling software program, to analyze the total economic contributions of agribusiness from three perspectives: direct impacts (jobs and sales), indirect impacts (i.e., business spending such as office supplies, computers, and utilities), and induced impacts (i.e., personal worker spending such as cars, houses, and haircuts).

• Focused on a 20-county area surrounding the Kansas City metro area that covers 10,522 square miles with a population totaling 2.222 million people in 2005.

• Used the North American Industry Code System (NAICS) as a basis for identifying agribusiness industries.

• Broke the agribusiness economy into several key sectors along the “farm to fork” continuum, including farming, manufacturing (food processing and inputs such as animal health products, seed, fertilizers, and pesticides), distribution (wholesale, transportation, and warehousing/storage), and retail (restaurants, grocery stores, farm supply stores, and veterinarian practices).

• Did not look at agribusiness publishing, financing, construction, research, entertainment, associations, or service firms because reliable data was not available.

• Did not include agricultural jobs within the government or energy sectors, because these jobs were accounted for within these sectors and reliable breakout numbers were not available.

KEY FINDINGS

• Agribusiness is responsible for 233,000 jobs, which is 16.2% of all jobs in the area or about one in every six jobs.

• Agribusiness generates $22.6 billion dollars in economic activity, which is 14.2% of all economic activity for the area or about one in every seven dollars of economic output.

• Every additional job in the agribusiness industry creates a total of 1.4 jobs. Similarly, every additional dollar of input in agribusiness generates $1.5 of output.

• The percent impact of agribusiness to the overall Kansas City economy is similar to the percent impact of agribusiness to the overall national economy. This finding is noteworthy because the percent impact on the national economy includes both rural and urban areas while the Kansas City economy only includes the percent impact on urban Kansas City.

• The individual “farm to fork” sectors that collectively make agribusiness an economic powerhouse are farming (2.1% of jobs, 1% of output); manufacturing (4% of jobs, 7.5% of output); distribution (1.1% of jobs, 1.3% of output); and retail (10.8% of jobs, 6% of output). The study pointed out that while the retail sector accounted for the most jobs, the manufacturing sector provided the greatest economic impact.

• The agribusiness sector is going through consolidation or efficiency gains. Sales are growing more rapidly that jobs or establishments.

o In the wholesale sector, the number of grocery and farm products wholesale sectors fell between 1997 and 2002, but the number of employees and sales appears to be growing.

o In the food manufacturing sector, the number of employees fell 0.6% from 1997 to 2002, but the value of shipments rose 12%.

o In the retail sector, the number of foodservice establishments rose only 4.9% from 1997 to 2002 while sales rose 25%.

o And in animal health, sales are growing at about 8%, twice the average of the national economy.