Farm-Forward Economic Impacts of
Changes at the Farm Level on
Agribusiness Supply Chains and
Communities
Bridget Guerrero, Steve Amosson,
Dean McCorkle, Rebekka Dudensing,
and Dan Hanselka
Texas AgriLife Extension Service
Darren Hudson
Texas Tech University
• The Texas High Plains relies on the Ogallala
Aquifer
• More than 90% of water pumped is for
irrigated crop production
• Changes in water availability will impact
the regional economy
Farm-Forward Economic Estimates
Introduction
• Studies have analyzed potential water
conservation policies or strategies
• North Plains
• Panhandle
• GMA2
• Not all impacts are being counted
Farm-Forward Economic Estimates
Introduction
• Develop the capacity to estimate the
forward-linked regional economic impacts
for agricultural products
• More fully capture impacts of changes in
water availability across the overall
economy
Farm-Forward Economic Estimates
Objective
Traditional IMPLAN
Analysis
(Backward Links)
“Farm Forward”
Analysis
(Forward links)
Inputs
(Seed, Energy,
Labor, etc.)
Processing
(Animal Feeding,
Food, Textile Mills,
Warehousing, etc.)
Agricultural Commodity
(Farm Effects)
Farm-Forward Economic Estimates
Regional Economic Linkages
Farm-Forward Economic Estimates
Study Region
Average Planted Acreage
2006-2010
Irrigated
%
Dryland
%
Total
%
Alfalfa
20,078
0.5%
0
0.0%
20,078
0.3%
Corn
837,618
21.2%
0
0.0%
837,618
11.2%
Corn Silage
25,196
0.6%
0
0.0%
25,196
0.3%
Cotton
1,554,697
Peanuts
139,606
3.5%
Sorghum
349,129
Sorghum Silage
11,825
0.3%
Wheat
Total
39.3% 1,487,128
0
42.4% 3,041,825
0.0%
139,606
1.9%
8.8% 530,116
15.1%
879,245
11.8%
11,061
0.3%
22,887
0.3%
1,019,800
25.8% 1,477,159
42.1% 2,496,959
3,957,950
3,505,465
7,463,414
Source: Farm Service Agency
40.8%
33.5%
Farm-Forward Economic Estimates
Crop
• Three economic models
• Economic optimization model
• Backward-linked regional economic model
Changes in:
Strategy/Policy to Reduce
Water Use
Saturated Thickness
Crop Mix
Impact on the Regional
Economy (backward-linked)
Producer Gross Receipts
• Forward-linked regional economic model
Farm-Forward Economic Estimates
Methods
• Forward-linkages
• Output of each forward-linked sector
associated with the purchase of locally
produced commodities
Farm-Forward Economic Estimates
IMPLAN Model
Processing Industries
• Cattle Production
• Dairy Cattle and Milk Production
• Poultry and Egg Production
• Swine Production
• Animal Food Manufacturing
• Flour Milling
• Wet Corn Milling
• Oilseed Processing
• Peanut Processing
• Food Manufacturing
• Fiber, Yarn, and Thread Mills
• Broad Woven Fabric Mills
• Ethanol Production
• Wholesale Trade (Elevators, Storage,
and Compress Facilities)
Farm-Forward Economic Estimates
Forward-linkages
• No water conserving policy is
implemented
• Producers operate in an unregulated,
profit-maximizing manner
Farm-Forward Economic Estimates
Baseline Scenario
Farm-Forward Economic Estimates
Results
Backward-linked and Forward-linked
Effects of Crop Production
Output*
Value Added*
Employment
Output*
Value Added*
Employment
Output*
Value Added*
Employment
*Millions of Dollars
Indirect
Production Impacts
$4,261
$4,103
$657
$2,395
31,449
48,408
Processing Impacts
$1,626
$574
$424
$230
5,104
2,974
Total Impacts
$5,887
$4,676
$1,081
$2,624
36,553
51,382
Induced
Total
$1,495
$856
13,699
$9,858
$3,907
93,556
$177
$101
1,662
$2,377
$755
9,740
$1,672
$957
15,361
$12,235
$4,662
103,297
Farm-Forward Economic Estimates
Direct
Farm-Forward Economic Estimates
Projected Backward and
Forward Linked Effects
• The addition of the forward-linkages for
crop production increased the estimated
economic value of the agricultural sector
in the region
• Industry output – 24%
• Value added – 19%
• Employment – 10%
Farm-Forward Economic Estimates
Summary
• Cotton is the largest overall economic
contributor
• Crops used for feed in confined animal
feeding operations have the largest
relative forward-linked impacts with up to
1.74 times the backward-linked impacts
Farm-Forward Economic Estimates
Summary
• Farm-forward estimates requires
knowledge about the study area
• The farm-forward model is now available
for alternative water policy analyses within
the region
Farm-Forward Economic Estimates
Conclusions
Farm-Forward Regional Economic
Impacts from Changing Water Availability
in the Texas High Plains
Bridget Guerrero, Steve Amosson,
Dean McCorkle, Rebekka Dudensing,
and Dan Hanselka
Texas A&M University
Darren Hudson
Texas Tech University
Backward-linked and Forward-linked
Effects of Alfalfa Production
Output*
Value Added*
Employment
Output*
Value Added*
Employment
Output*
Value Added*
Employment
*Millions of Dollars
Indirect
Production Impacts
$37
$27
$13
$17
118
315
Processing Impacts
$37
$16
$11
$5
122
75
Total Impacts
$74
$43
$24
$23
240
389
Induced
Total
$11
$7
104
$75
$37
536
$3
$1
24
$56
$18
221
$14
$8
128
$131
$55
758
Farm-Forward Economic Estimates
Direct
Backward-linked and Forward-linked
Effects of Corn Production
Output*
Value Added*
Employment
Output*
Value Added*
Employment
Output*
Value Added*
Employment
*Millions of Dollars
Indirect
Production Impacts
$940
$927
$138
$518
7,520
6,770
Processing Impacts
$974
$363
$216
$135
2,768
1,801
Total Impacts
$1,915
$1,289
$354
$653
10,287
8,571
Induced
Total
$266
$152
2,445
$2,133
$809
16,734
$88
$50
824
$1,425
$401
5,393
$353
$202
3,268
$3,557
$1,210
22,127
Farm-Forward Economic Estimates
Direct
Backward-linked and Forward-linked
Effects of Corn Silage Production
Output*
Value Added*
Employment
Output*
Value Added*
Employment
Output*
Value Added*
Employment
*Millions of Dollars
Indirect
Production Impacts
$136
$109
$40
$61
433
598
Processing Impacts
$136
$58
$41
$19
447
271
Total Impacts
$272
$168
$81
$81
880
869
Induced
Total
$31
$18
285
$276
$119
1,316
$9
$5
88
$204
$65
806
$40
$23
373
$479
$184
2,122
Farm-Forward Economic Estimates
Direct
Backward-linked and Forward-linked
Effects of Cotton Production
Output*
Value Added*
Employment
Output*
Value Added*
Employment
Output*
Value Added*
Employment
*Millions of Dollars
Indirect
Production Impacts
$2,041
$1,987
$290
$1,184
15,139
30,121
Processing Impacts
$137
$35
$73
$16
693
232
Total Impacts
$2,178
$2,021
$363
$1,200
15,832
30,353
Induced
Total
$825
$472
7,554
$4,852
$1,946
52,813
$29
$17
272
$200
$106
1,198
$854
$489
7,826
$5,053
$2,052
54,011
Farm-Forward Economic Estimates
Direct
Backward-linked and Forward-linked
Effects of Peanut Production
Output*
Value Added*
Employment
Output*
Value Added*
Employment
Output*
Value Added*
Employment
*Millions of Dollars
Indirect
Production Impacts
$100
$97
$12
$60
318
1,318
Processing Impacts
$38
$6
$6
$3
254
39
Total Impacts
$138
$104
$19
$63
572
1,357
Induced
Total
$37
$21
340
$234
$94
1,976
$6
$3
57
$50
$13
349
$43
$25
396
$285
$106
2,325
Farm-Forward Economic Estimates
Direct
Backward-linked and Forward-linked
Effects of Sorghum Production
Output*
Value Added*
Employment
Output*
Value Added*
Employment
Output*
Value Added*
Employment
*Millions of Dollars
Indirect
Production Impacts
$257
$229
$54
$133
2,054
2,478
Processing Impacts
$105
$27
$30
$13
334
160
Total Impacts
$362
$256
$84
$146
2,388
2,639
Induced
Total
$93
$53
833
$579
$239
5,365
$15
$8
139
$146
$52
633
$107
$61
971
$725
$291
5,998
Farm-Forward Economic Estimates
Direct
Backward-linked and Forward-linked
Effects of Sorghum Silage Production
Output*
Value Added*
Employment
Output*
Value Added*
Employment
Output*
Value Added*
Employment
*Millions of Dollars
Indirect
Production Impacts
$27
$24
$6
$14
85
293
Processing Impacts
$27
$12
$7
$4
89
56
Total Impacts
$53
$36
$13
$18
174
349
Induced
Total
$9
$5
80
$60
$25
458
$2
$1
18
$41
$12
163
$11
$6
98
$100
$37
621
Farm-Forward Economic Estimates
Direct
Backward-linked and Forward-linked
Effects of Wheat Production
Output*
Value Added*
Employment
Output*
Value Added*
Employment
Output*
Value Added*
Employment
*Millions of Dollars
Indirect
Production Impacts
$723
$702
$103
$408
5,783
6,516
Processing Impacts
$173
$57
$40
$33
397
339
Total Impacts
$896
$759
$143
$440
6,180
6,856
Induced
Total
$224
$128
2,059
$1,650
$639
14,358
$26
$15
241
$256
$88
977
$250
$143
2,300
$1,905
$726
15,336
Farm-Forward Economic Estimates
Direct
Direct
Output*
Value Added*
Employment
*Millions of Dollars
Indirect
Total Impacts
$354
$70
$166
$41
2,676
716
Induced
$47
$27
443
Total
$470
$234
3,835
Farm-Forward Economic Estimates
Backward-linked Impacts - Seed Sales
Forward-linked Impacts - Livestock
Output*
Value Added*
Employment
Output*
Value Added*
Employment
Output*
Value Added*
Employment
Output*
Value Added*
Employment
*Millions of Dollars
Indirect
Beef
$474
$255
$82
$85
1,703
1,220
Dairy
$309
$112
$117
$37
956
503
Swine
$21
$5
$11
$2
264
29
Total Impacts
$804
$371
$209
$124
2,923
1,751
Induced
Total
$38
$22
360
$767
$189
3,282
$19
$11
179
$440
$165
1,638
$2
$1
22
$29
$14
315
$60
$34
560
$1,235
$367
5,234
Farm-Forward Economic Estimates
Direct