Employment Growth in Iowa's
Agricultural Commodity Processing
Industries,
1992-98
Iowa State University
Department of Economics
Authors
Liesl Eathington, Research Associate
Dave Swenson, Scientist
Daniel M. Otto, Professor of Economics
Introduction
Value-added agriculture industries currently play a prominent role in Iowa's
economic development strategies.
Iowa's traditional strength in the
production of certain commodities makes the state a logical location for many
commodity processing industries. Capitalizing on this natural advantage, the
state offers financial, educational, and marketing assistance to new and
existing businesses that process Iowa's agricultural commodities.
Processing adds value to raw agricultural commodities, and Iowa's economic
development strategies are designed to capture this added value from
processing within the state's borders. Rather than ship its raw commodities
elsewhere, the state is working to attract and support firms at new and
higher levels along the commodity processing chain.
The promoters of value-added industrial development also hope these firms
will increase demand for Iowa's commodities by developing new uses for
them.
Others believe these industries will help save Iowa's small family
farms by providing new sources of income to farmers. Still others anticipate
these industries will provide high-paying jobs to Iowa workers and increase
the state's competitiveness in attracting new labor force members.
The value-added agriculture policy and promotion push has political appeal,
as well.
By promoting value-added agricultural developments, leaders are
advocating economic development policies that appear to benefit Iowa's farm
and nonfarm sectors -- strategies that on the surface appear to enhance
rural, small town, and urban economies. In a state as heavily weighted with
agriculture and agricultural institutions as Iowa, one can see why promoting
value-added agriculture is both popular and politically practical.
Defining Value-Added
Many different groups lay claim to the term "value-added agriculture" for
political and promotional reasons, but there is a persistent absence of clarity
in terms of just what value-added agriculture is and who receives the value.
In economic terms, the “value” in value-added arises from the production
process.
It is the sum of payments made by industries to workers, plus
profits, dividends and capital gains, and indirect business taxes paid to state
and local governments. Value-added, then, is the money that remains in a
region’s economy that can be used for household spending, saving, or capital
investment. It represents the income and wealth available to the rest of the
region's economy.
Value-added agriculture strategies are concerned with increasing the local
share of income and wealth that can be squeezed from a region's
commodities before they are exported.
As defined by Iowa's Ag Initiative
20001 consortium, "Value-added agriculture transforms commodities into
1
Members of the Ag Initiative 2000 include: Iowa Farm Bureau Federation, Agribusiness Association of
Iowa, Iowa Soybean Association, Iowa Corn Growers Association, Iowa Pork Producers Association, Iowa
Cattlemen’s Association, Iowa Egg Council, Iowa State University, Iowa Turkey Federation, Iowa Poultry
Association and the Iowa Department of Economic Development.
2
products worth more to the world marketplace, resulting in increased job
opportunities and income for Iowa residents."
Defining value-added agriculture as a concept is much easier than defining it
as a set of industries. When people use the term "value-added agriculture,"
they might be describing value added to the region's economy through
improved production of agricultural commodities. Others might be describing
value added to the economy through additional commodity processing.
Some people use the term to describe both.
Adding to the confusion, the
term "value-added agriculture" often describes the value added to the
commodities themselves, rather than value added to the region's economy.
These distinctions might seem trivial, but they matter when identifying
specific industries engaged in value-added agriculture activities.
Because the term "value-added agriculture" is ambiguous, it is important to
clarify our terminology and carefully
throughout this report.
define the
industries
discussed
This paper describes employment changes in a
subset of industries frequently associated with value-added agriculture.
These industries, which we call "Agricultural Commodity Processing" (ACP)
industries, manufacture agricultural commodities into various food and
industrial products. We define our list of ACP industries below, but we begin
by describing two sets of industries not included in our definition.
Farm Industry
To some, value-added agriculture refers simply to enhancements or additions
to a product that result in higher returns to the commodity seller, who is
often the farmer.
These generally come in two forms: "Input value-added"
enhancements reduce costs of production, thus returning value to the
farmer.
Technological enhancements, labor-saving steps, or any other
innovation that allows the producer to produce more of a commodity at a
lower cost fit into this group.
"Output value-added" enhancements enable
farmers to sell their product for a premium.
These enhancements could
entail growing specialty grains or animals, or engaging in strategic marketing
3
of commodities and animals.
These output value-added activities are
associated with a growing trend toward "identity-preserved" agricultural
products.
Industries and technologies improving the production and marketing of
Iowa's commodities probably most deserve the label of "value-added
agriculture,"
and
Iowa's
innovations in these areas.
economic
development
strategies
support
However, growth in these industries doesn't
necessarily increase the proportion of Iowa's raw commodities processed
within the state. So, having described these activities, we now exclude them
from our analysis. In this paper, we focus on those Iowa industries adding
value to agricultural commodities after they are produced.
Nonfarm, Non-Manufacturing Industries
We also exclude a large group of agriculture-related service and other
industries from our list.
Many non-manufacturing industries in Iowa have
close ties to agriculture.
Examples include agricultural services industries
such as crop and veterinary services; transportation industries such as
trucking; wholesaling industries such as grain elevators and livestock
auctions; retailing industries such as farmers markets and grocery stores;
and financial services industries such as crop insurance and farm credit.
While these industries facilitate the commodity production and distribution
process, they don't substantially alter the commodities themselves. In other
words, they don't transform the commodities into products worth more in the
world marketplace. In addition, some of these industries compete with each
other, shifting income and profits around the region without adding net new
value to the economy.
Manufacturing Industries
Manufacturing firms engaged in the processing of agricultural commodities
add income and profits to the region's economy while they add value to the
agricultural commodities themselves.
These industries most closely match
4
the description of value-added agriculture in Iowa's economic development
literature. They transform crops and livestock into products worth more in
the
world
marketplace,
and
opportunities to Iowa residents.
they
provide
employment
and
income
This report describes characteristics of
employment and employment change in Iowa's agricultural commodity
processing industries.
Selection of Agricultural Commodity Processing Industries
Even within the manufacturing sector, an assortment of traditional industries,
like meatpacking, and emerging industries, like biotechnology, can be placed
in the agricultural commodity processing category.
Many of the emerging,
high-technology industries differ strongly from the more traditional food
processing industries in terms of the kinds of jobs created, the kinds of
people attracted to the jobs, earnings levels, the volume of commodity inputs
required, and the location preferences of firms.
When describing the
contributions of agricultural commodity processing industries to Iowa's
economy, it is therefore important to further refine and segregate our list of
industries.
To study the employment growth patterns and average earnings in Iowa's
ACP industries, we developed an unambiguous set of criteria to identify
them. We traced the use of beef, pork, poultry, dairy, food and feed grains,
soybeans, and other commodities through several stages of processing,
creating a list of industries related to Iowa agriculture.
We measured the
relationships using industry-by-industry requirements tables published by the
Bureau of Economic Analysis (BEA). The BEA tables can be used to find the
dollar value of commodities and other inputs required for each dollar of
output in a given industry.
While commodities produced in Iowa are used in hundreds of products and
manufacturing processes, the amounts used often are very small relative to
the value of the final product produced.
For example, pharmaceutical
5
industries add value to animal by-products by transforming them into drugs.
However, the value of animal by-products used for production is just a tiny
fraction of the total cost of producing drugs and pharmaceuticals.
To initially limit the pool of ACP industries in this analysis, we set the
following criteria: if at least one penny from every dollar's worth of final
product could be traced back to a commodity in our list, we classified that
industry as an ACP.
While this may appear to be a very generous
classification scheme, only 59 individual industries fit the criteria.
These
industries are listed in Appendix One.
Description of ACP Industries
The ACP industries described in this study fall into three major manufacturing
categories:
Food & Kindred Products, Chemicals & Allied Products, and
Leather & Leather Products.
Food & Kindred Products
Food & Kindred Products represents the vast majority of ACP employment in
Iowa.
these
In 1998, almost 95 percent of the state's ACP jobs were found in
industries.
This
category
includes
35
individual
industries
manufacturing food for humans or other animals. Some of these industries
provide intermediate processing of commodities. That means their finished
products are used as ingredients by other food processing and manufacturing
industries.
Two groups of intermediate food processing industries are of special interest
in Iowa. Jobs in meat processing and grain processing industries represent
more than 70 percent of all food processing jobs in Iowa.
The meat processing industry group includes meat packing plants; sausages
and other prepared meats; and poultry slaughtering and processing.
6
Together, these industries accounted for more than half of the state's food
processing jobs in 1998.
The grain processing industry group includes flour and other grain mill
products; cereal breakfast foods; wet corn milling; and prepared animal
feeds. These industries had just over 20 percent of all food processing jobs
in 1998.
The remaining 30 percent of Iowa's food processing jobs are distributed
among various industries, the largest of which include dairy products,
miscellaneous frozen foods, soft drinks, and bread products.
Chemicals & Allied Products
The ACP industries in the Chemicals & Allied Products group represent a
much smaller part of Iowa's economy than the food processing industries.
The group includes:
agricultural
surface active agents; industrial organic chemicals;
chemicals;
and
chemical
preparations2.
Together,
these
industries account for less than one percent of Iowa's total manufacturing
employment.
Leather & Leather Products
The Leather & Leather Products group also has a relatively small share of
Iowa's manufacturing employment.
This group includes:
leather tanning
and finishing; luggage; other leather goods; and automotive and apparel
trimmings.
Due to their relatively small size, we group the Chemicals & Allied Products
and Leather & Leather Products categories together in the remainder of this
report.
2
Surface active agents are used for wetting, emulsifying, and penetrating other substances. Industrial
organic chemicals include ethanol and other ethyl alcohol products. Chemical preparations include oils,
gelatins, and sizes.
7
The Role of ACP Industries in Iowa's Economy
Together,
the
ACP
industries
manufacturing jobs in the state.
nonfarm jobs in Iowa.
in
Iowa
account
for
one-fifth
of
all
This is slightly less than 4 percent of all
Figure 1 illustrates the relative size of ACP
employment in Iowa's overall nonfarm economy. Figure 1 also shows ACP
employment by category within Iowa's manufacturing sector.
Figure 1
The Role of ACP Industry Employment in
Iowa's Nonfarm Economy, 1998
Agricultural
Commodity
Processing
Meat
Processing Grain &
Soybean
Processing
Other Food
Processing
All Other
ACP
Industries
All Other
Nonfarm
Employment
Total Nonfarm Employment
All Other
Manufacturing
Employment
Total Manufacturing Employment
Comparison of a standard indicator of an industry’s activity, such as jobs,
with state totals gives us an idea of the overall contribution of the industry to
the state’s economic fortunes.
Along with jobs, we chose two other
measures for comparing ACP industrial outcomes relative to the rest of the
Iowa economy -- industrial output and value-added.
Industrial output is a measure of the overall value of products that are
produced by an industry in a given year whether they are produced for sale
or for inventory.
Value-added is the sum of labor income, returns to
investors, and indirect tax payments made to state and local governments
8
(primarily sales, use, & excise taxes). It is the money that workers, owners,
investors, and state and local governments extract from the price of the
goods that are sold (its industrial output) in the industry we are studying.
Jobs measure the number of positions in the industries, not the number of
employed persons.
instance.
Part-time and full-time jobs count the same in this
Comparisons of these three measures are contained in the
following two graphs.
Figure 2 compares ACP industries with all agriculture and agriculture services
industries and with all other manufacturing industries using the three
measures described earlier.
Agriculture and ag services perform similarly
across all three measures. They account for 7.3 percent of jobs, 7.5 percent
of value-added, and 8.7 percent of industrial output in the state.
Figure 2
ACP and Other Industry Contributions
to the State Economy, 1997
25.0%
23.4%
Jobs
Value Added
Percent of State Total
20.0%
16.8%
Industrial Output
15.0%
12.3%
11.2%
10.0%
8.7%
7.3% 7.5%
4.4%
5.0%
2.9%
0.0%
Agriculture & Ag Services
Industries
All Other Manufacturing
Industries
Agricultural Commodity
Processing Industries
9
Agricultural commodity processing industries display widely divergent shares.
These industries collectively produce 12.3 percent of the state’s industrial
output, but only 4.4 percent of the state value-added, and just 2.9 percent of
the state’s jobs.
ACP’s share of industrial output in Iowa in 1997 is more
than four times its share of jobs.
All other Iowa manufacturing accounts for 23.4 percent of the state’s
industrial output, nearly 17 percent of its value-added, and 11.2 percent of
jobs. By comparison, then, these other manufacturing industries account for
twice the industrial output as ACP industries, and just under four times as
much value-added and jobs.
The significant difference in industrial output shares and job or value-added
shares in the ACP and the other manufacturing groups indicates that, all
other things equal, these firms tend to be capital intensive.
Figure 3 gives us additional insights into the contributions of specific kinds of
ACP industries to the state economy.
Meat processing accounted for 5
percent of the state industrial output, but just 1.4 percent of its jobs and 1.3
percent of its value-added.
Foods production was 3.5 percent of state
industrial output, 1.4 percent of its value-added and 0.8 percent of its jobs.
Grain processing amounted to 3.4 percent of output, 1.5 percent of valueadded, and 0.5 percent of jobs. Finally, all of the other ACP firms in Iowa
made up 0.5 percent of its total industrial output, 0.3 percent of its valueadded, and 0.2 percent of its jobs.
10
Figure 3
Selected ACP Industry Contributions to the State Economy
Jobs
Value Added
Industrial Output
6%
5.0%
Percentage of State Total
5%
4%
3.5%
3.4%
3%
2%
1.5%
1.4%
1%
1.4%
1.3%
0.8%
0.5%
0.2%
0.3%
0.5%
0%
Foods
Grain
Meat
ACP Industry Group
Other ACP
It is also instructive to compare Iowa's ACP jobs to the rest of the nation.
Economic
development
officials
tend
to
focus
on
two
measures
of
comparative performance -- earnings and competitive advantage. The next
two graphs put Iowa's ACP employment levels and earnings into national
perspective3.
Figure 4 illustrates 1998 average earnings per job in Iowa's food and kindred
product processing industries.
These average earnings were slightly below
Iowa's average earnings per job in all other manufacturing industries. They
were, however, comparable to the national averages for food processing
industries. In the aggregate, Iowa's compensation levels are on par with the
rest of the nation.
3
These comparisons were made using Iowa and U.S. data from the Bureau of Economic Analysis.
Earnings and employment data for Iowa's non-food ACP industries were unavailable in sufficient detail for
comparison with U.S. averages, so Figures 4 and 5 illustrate comparisons for food & kindred products
industries only.
11
Figure 4
Average Earnings per Job in Manufacturing Industries,
Iowa and the United States
USA, All Other Mfg.
USA, Food & Kindred
Iowa, All Other Mfg.
Iowa, Food & Kindred
$-
$10,000
$20,000
$30,000
$40,000
$50,000
1998 Average Earnings per Job
The state's employment levels in these industries exceed the national
average. Iowa has almost 20 percent of its manufacturing jobs in food and
kindred products industries.
percent.
Nationally, this average is just below 10
Iowa's competitive advantage in food and kindred products
manufacturing is apparent in Figure 5, which shows the state's shares of
national employment in these and all other manufacturing industries.
12
Figure 5
Iowa's Shares of Manufacturing Employment
in the United States, 1992-1998
3.5%
Percent of National Totals
3.0%
2.5%
2.0%
Food & Kindred Products
All Other Manufacturing
1.5%
1.0%
0.5%
0.0%
1992
1993
1994
1995
1996
1997
1998
Iowa has almost 3 percent of the nation's employment in food and kindred
products industries. It's share of all other manufacturing employment is just
over 1 percent. Iowa's share of food and kindred products employment has
eroded slightly in recent years, while its share of all other manufacturing has
been steadily climbing. Still, compensation and employment levels in Iowa's
food and kindred products manufacturing compare favorably with the rest of
the nation.
13
Distribution of ACP Employment Within Iowa
Statewide, about one in five manufacturing jobs is found in agricultural
commodity
processing
industries.
However,
the
distribution
concentration of ACP employment varies across the state.
and
This variation
occurs by type of county, and also geographically by region.
When we study the distribution of employment within the state, we often use
population size to group the counties.
This grouping gives us an urban
hierarchy. Comparisons by county type allow us to study how different kinds
of firms are more or less attracted to the larger labor pools, transportation
networks, or other firms found in larger places. In this report, we use four
county groups: metropolitan, large urban, small urban, and rural4.
We can also study the distribution of employment by major geographic
region. For these comparisons, we grouped Iowa's counties into nine regions
coinciding with the state's USDA crop reporting districts.
The regional
groupings help illustrate differences in employment concentrations and
regional specialization in commodity processing activity.
The multi-county groupings are necessary, as well, because administrative
rules prevent us from reporting these data at the county level, to avoid the
accidental disclosure of the characteristics of individual firms. Appendix Two
lists Iowa's 99 counties and identifies their population size group and
geographic regional group assignments.
Distribution of Employment by County Type
Iowa’s metropolitan counties account for most of the ACP jobs in Iowa, as is
shown in Figure 6.
In 1998, 22,700 ACP jobs were in the metro counties,
4
Iowa has 10 metropolitan counties, nine large urban counties, 60 small urban counties, and 20 rural
counties. Metropolitan counties contain a central city of at least 50,000. Large urban counties are smaller
than metropolitan counties, but have a central city of 20,000 or more. Small urban counties have a city of
2,500 or more. The remaining counties are the rural counties.
14
followed by 17,500 jobs in the state’s 60 small urban counties.
The large
urban counties had 11,100 ACP jobs, and the rural counties had just under
2,400.
Similar numerical distributions are in evidence for all other
manufacturing jobs. The metros had the most (83,100), followed in turn by
the small urban counties (74,200), the large urban counties (36,600), and
the rural counties (13,300).
Figure 6
Composition of Iowa's Manufacturing Employment by
County Type in 1998
Rural
Small Urban
Large Urban
13,300
2,400
74,200
17,500
36,600
11,100
83,100
Metropolitan
-
22,700
20,000
40,000
60,000
80,000
100,000
Jobs
ACP
All Other Manufacturing
Although their share of state total ACP employment is the highest, the
metropolitan counties have the lowest concentration of ACP jobs when
measured as a percentage of all nonfarm employment.
This is because
metro counties have a disproportionately higher share of non-manufacturing
jobs than the remaining county types.
In the metropolitan counties only
three jobs per 100 nonfarm jobs were related to ACP in 1998.
The large
urban counties and small urban counties had around 5 percent of their
nonfarm jobs in ACP industries. The rural counties had about 4 percent of all
15
nonfarm jobs in ACP industries. By county grouping, there appears to be no
overwhelming concentration or deficit of ACP jobs relative to other nonfarm
jobs.
Measured as a percentage of manufacturing employment alone, the ACP
employment ratios are highest in the metropolitan and large urban county
groups. Both groups average more than 20 percent of their manufacturing
employment in ACP jobs. The small urban counties average slightly less than
20 percent of manufacturing in ACP jobs, and the rural counties average
about 15 percent.
Figure 7 shows ACP jobs as a percentage of total
manufacturing employment by county type.
Figure 7
Composition of Iowa's Manufacturing Employment by
County Type in 1998
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Metropolitan
Large Urban
Meat Processing
Other ACP
Small Urban
Rural
Grain & Soybean Processing
All Other Manufacturing
When we look at the industrial composition of ACP jobs across the county
groups,
equal.
we see the average percentage of meat processing jobs is nearly
Meat
processing
jobs
represent
about
10
percent
of
total
16
manufacturing employment in the four county groups.
Concentrations of
grain processing and other value-added industries, however, are not
consistent across the county groups.
Iowa's metropolitan and large urban
counties have relatively more of their manufacturing jobs in these industries
than the small urban and rural counties.
The differences in ACP employment concentrations by industry and county
group indicate the ACP industries have varying degrees of preference for
larger places. Figure 8 compares the percentage of Iowa's meat processing
jobs, grain processing jobs, and other ACP jobs that were located in the
metropolitan and large urban counties, the small urban counties, and the
rural counties in 1998.
Figure 8
Shares of Iowa's ACP Employment by Category and County
Type in 1998
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Metropolitan & Large Urban
Meat Processing
Small Urban
Grain & Soybean Processing
Rural
Other ACP
Together, the metropolitan and large urban county groups have almost 80
percent of Iowa's grain and soybean processing jobs, and about 60 percent
17
of the jobs in meat processing and other ACP industries. The concentration
of ACP jobs in Iowa's 19 largest counties is notable, especially when we
consider
that
value-added
agriculture
opportunities for Iowa's smaller counties.
is
frequently
promoted
for
its
In the past, at least, the ACP
industries have demonstrated a preference for larger places.
Distribution of Employment by Region
Not by coincidence, Iowa's metropolitan and large urban counties are located
along major rivers, railways, or highways. The physical characteristics of a
region, whether natural or built, help determine the number of people and
firms that locate there. Differences in the physical characteristics of Iowa's
counties have contributed to regional concentrations of ACP employment.
For example, the 10 counties bordering the Mississippi River have more than
20 percent of Iowa's ACP jobs.
Table 1 shows how Iowa's ACP jobs are distributed geographically around the
state. The table also shows the distribution of all other manufacturing jobs.
Each region contains a group of nine to 12 counties, corresponding with
Iowa's nine USDA crop reporting districts.
Table 1. Percentage Shares of State Employment by Region
ACP Manufacturing
All Other
Manufacturing
12%
6%
5%
8%
Northeast
15%
16%
West Central
12%
4%
Central
18%
20%
East Central
21%
26%
Southwest
4%
4%
South Central
4%
6%
Southeast
9%
11%
Region
Northwest
North Central
18
We can see from the table there are distinct concentrations of both ACP and
other manufacturing jobs among our regions. ACP jobs are most prevalent in
the east central and central regions of the state.
They are the least
prevalent in the southwest, south central, and north central portions of the
state.
These regional shares of state total ACP employment, and the proportional
distributions of ACP employment by kind of industry, are displayed in Figure
9. The relative differences in total ACP employment among the regions are
stark. The north central, south central, and the southwest districts account
for very small amounts of ACP jobs in Iowa -- none has more than 5 percent
of Iowa's ACP jobs.
Not only does the relative size of ACP employment differ, but the amount of
employment by industry differs from one region to the next. In 1998, more
than half of Iowa’s ACP jobs were in meat processing industries, but the ratio
varied regionally.
In several regions the number of other food processing
jobs exceeded meat industry jobs. Grain and soybean processing dominated
in only one district, the east central portion of the state.
19
Figure 9
Regional Composition of ACP Employment in 1998
(Overall size of pie charts reflects the regional
differences in the total number of ACP jobs.)
Shares of Regional Total ACP Employment in:
Meat Processing
Grain and Soybean Processing
Other ACP
The regional concentrations of meat and grain processing employment do not
necessarily align with regional concentrations of meat and grain commodity
production. Figure 10 compares state shares of ACP employment and crop
and livestock commodity production for all nine regions in 1998.
The first
chart shows livestock marketings and meat processing employment, and the
second chart shows crop marketings and grain processing employment. For
this analysis, commodity production was measured by the dollar value of
livestock and crop marketing activity and displayed as percentages of state
totals.
20
Figure 10
Shares of State Total Cash Receipts from Livestock
Marketings and Meat Processing Employment in 1998
Southeast
South Central
Southwest
East Central
Central
West Central
Northeast
North Central
Northwest
0
5
10
15
20
25
Percentage of Iowa Total
Meat Processing Employment
Livestock Cash Receipts
Shares of State Total Cash Receipts from Crop
Marketings and Grain & Soybean Processing Employment
in 1998
Southeast
South Central
Southwest
East Central
Central
West Central
Northeast
North Central
Northwest
0
10
20
30
40
50
60
Percentage of Iowa Total
Grain & Soybean Processing Employment
Crops Cash Receipts
21
In 1998, the northwest region had the largest share of livestock marketing,
while the northeast region had the largest share of meat processing jobs.
The central region had the largest share of crop marketing, while the east
central region had the largest share of grain and soybean processing jobs.
These differences suggest existing patterns of ACP employment across the
state arise from more complex factors than the location of farming activity.
These patterns continue to evolve as Iowa's ACP employment levels rise and
fall by industry, region, and county type.
Employment Change in ACP Industries
The manufacturing sector contains some of Iowa's most rapidly growing
industries, but the ACP industries are not among them.
The agricultural
commodity processing industries grew only slightly more than a third of the
manufacturing sector's average rate between 1992 and 1998.
Total
manufacturing employment in Iowa grew 14.5 percent from 1992 to 1998.
Employment in Iowa's ACP manufacturing industries grew only 5.5 percent,
while all other manufacturing industry employment grew 17 percent.
We would not expect brisk growth in mature industries, and many food
processing industries in Iowa certainly are mature.
Maturity also suggests
stability, but employment growth patterns in the collection of traditional and
emerging industries described in this paper were anything but stable.
Rather, the changes were uneven across industries and counties.
Large
gains accruing to some industries and county groups were offset by large
losses in others.
Industries that grew contributed almost 4,900 new jobs to Iowa's economy
between 1992 and 1998. These gains were substantially offset by losses of
2,100 jobs in the declining ACP industries. The net employment growth in
ACP industries from 1992 to 1998 was almost 2,800 new jobs. This growth
22
represented about 8.5 percent of all new manufacturing jobs in Iowa
between 1992 and 1998.
The net statewide employment change in meat processing industries was
only 350 new jobs from 1992 to 1998. Employment losses in meat packing
plants and poultry slaughtering and processing nearly wiped out the gains in
sausages and other prepared meats.
Iowa experienced a net loss of more than 800 jobs in grain and soybean
processing industries between 1992 and 1998. Most of these losses occurred
in animal feed industries. Minor gains in milling industry employment could
not make up the feed industry losses.
The remaining ACP industries actually performed better as a group than the
traditional meat and grain processing industries.
Among those industries
that grew, the category with the largest net employment gain was a
collection of industries called miscellaneous food preparations. This category
includes potato chips and snacks, pasta, gelatins, spices and seasonings,
packaged popcorn, honey, dry mixes, and various other food products.
These industries contributed about one third of Iowa's net, new ACP jobs
during the period. Dairy industries contributed about 20 percent of the net
job gains.
1998.
Iowa's non-food ACP industries also grew between 1992 and
Together, the chemicals and allied products and the leather and
leather products groups contributed about 20 percent of Iowa's new ACP
jobs.
The employment gains in the ACP industries were slight, when compared to
the growth in the rest of Iowa's manufacturing sector. Figure 11 summarizes
the employment changes by major ACP category and compares the
magnitude of ACP employment change to the growth occurring in all other
manufacturing industries during the same time period.
23
Figure 11
Composition of Iowa's Manufacturing Employment Change
from 1992 to 1998
All Other
Manufacturing
Other ACP
Grain & Soybean
Processing
Meat Processing
(5,000)
-
5,000
10,000
15,000
20,000
25,000
30,000
35,000
Jobs
Employment Change by County Group
The most rapid ACP employment growth occurred in Iowa's 60 small urban
counties.
The total number of ACP jobs in these counties increased by
almost 18 percent. The increase in rural county ACP employment was just
short of 5 percent. The metropolitan county increase was 1 percent, and the
large urban counties actually lost about 1 percent of their ACP employment.
The gains by county group, like the statewide gains, should be compared to
gains in all other manufacturing to keep them in perspective. In every case,
gains in other manufacturing were substantially more than ACP gains. Large
urban county jobs in all other manufacturing grew by 15 percent, and metro
jobs grew by 9 percent. In the small urban group, all other manufacturing
grew by 28 percent -- 10 percentage points higher than the ACP growth rate.
In the rural counties, all other manufacturing grew by 21.2 percent -- over
four times faster than ACP industry jobs.
24
Figure 12 compares the magnitude of employment gains and losses among
the county groups in three different manufacturing categories:
meat and
grain processing industries, other ACP industries, and all other manufacturing
industries.
Figure 12
ACP and All Other Manufacturing Employment Change by
County Type
Rural
Small Urban
Large Urban
Metropolitan
(5,000)
-
5,000
Meat & Grain Processing
10,000
All Other ACP
15,000
20,000
All Other Mfg.
The small urban counties differed strongly from the other three county
groups in their patterns of ACP employment growth. The small urban county
group had the largest share, as well as the most rapid rate, of total ACP
employment growth.
This growth was split almost evenly between the
categories of meat and grain processing and all other ACP industries.
The patterns of ACP employment change in the metropolitan, large urban,
and rural county groups resembled each other in pattern, although they
differed in magnitude.
These groups all lost jobs in meat and grain
25
processing industries, but gained nearly equivalent numbers of new jobs in
all other ACP industries. In the metropolitan and rural county groups, ACP
employment gains slightly exceeded the losses. However, ACP employment
gains in the large urban counties were insufficient to offset their losses. The
large urban counties ended the 1992-98 period with a slight decline in total
ACP employment.
In Figure 13, we illustrate the distribution of statewide ACP employment
change again, this time to highlight the differences by industry. The chart
shows how Iowa's statewide gains and losses in four ACP manufacturing
categories were distributed among the county groups.
It also shows the
distribution of gains in the "all other manufacturing" category.
Figure 13
County Group Shares of Manufacturing Employment
Change by Category, 1992 to 1998
All Other Mfg.
Non-food ACP
Other Food Processing
Grain Processing
Meat Processing
-100%
-50%
Metropolitan
0%
Large Urban
50%
Small Urban
Meat processing employment grew in only one county group.
100%
Rural
The small
urban counties posted employment gains totaling almost 1,400 net new jobs.
26
Net losses in the metropolitan, large urban, and rural county groups totaled
almost 1,050 jobs.
Gains to the small urban group in meat processing,
then, came largely at the expense of the other county groups.
The grain processing industries were less selective.
In all four types of
counties, losses in these industries matched or exceeded any gains, resulting
in
overall
net
declines
in
employment.
The
metropolitan
counties
experienced the greatest share of these losses.
Other food processing industries grew in all four county groups.
The
metropolitan and small urban county groups had nearly equal shares of these
new jobs. The non-food ACP industries, which include chemical and leather
manufacturers, grew everywhere except the large urban counties. The small
urban counties had the largest share of these non-food ACP employment
gains.
Still, the small urban counties had even larger shares of all other
manufacturing growth in the state.
Regional Distribution of Employment Change
Agricultural commodity processing employment growth ebbed and flowed
across the state between 1992 and 1998. The south central region had the
most dramatic increase in total ACP employment, while the east central
region experienced the sharpest decline.
All three regions along Iowa's
eastern border suffered net losses in ACP employment.
The remaining six
regions in central and western Iowa had net gains in total ACP employment.
Figures 14 and 15 illustrate the nature of these shifts geographically.
The
first map shows the composition of regional ACP employment gains, while the
second map shows the composition of regional ACP employment losses. The
size of the pie chart in each region reflects the magnitude of the region's
total ACP employment gains and losses, respectively, relative to other
regions.
27
All nine regions had at least some share of employment gains in one or two
major ACP categories, but only the south central region gained in all three.
All in all, the gains and losses by geographic region and county type suggest
that ACP employment shifted spatially much more than it grew from 1992 to
1998.
Figure 14
Regional Shares of Statewide Employment Gains
in Iowa's ACP Industries, and
the Composition of Gains by Region, 1992 to 1998
Gains
Meat+
Grain+
Other+
28
Figure 15
Regional Shares of Statewide Employment Losses
in Iowa's ACP Industries, and
the Composition of Losses by Region, 1992 to 1998
Losses
MeatGrainOther-
Conclusions
Iowa's agricultural commodity processing industries have an undeniably
important role in the state's economy.
However, expectations about their
promise for Iowa's economic future have been growing far more rapidly than
the industries themselves.
The current popularity of value-added agriculture promotions and policies
suggests newness, but in fact, most agricultural commodity processing
industries are not new to the state of Iowa.
Ninety-five percent of Iowa’s
ACP industries involve meat processing, grain processing, or other food
production.
While
new
technologies
are
expanding
uses
for
Iowa
commodities, most meat and grain products grown in the state still are
29
channeled through existing, traditional feed and food processing industries.
These industries already have a strong presence in Iowa.
Much of what is intended in promoting value-added agriculture refers to
high-technology firms paying high wages to workers; average earnings in the
traditional food processing industries, however, are lower than average
earnings in the rest of Iowa's manufacturing sector.
In addition to high
wages, the value-added agriculture movement promises opportunities for
nonfarm employment growth.
Yet the industries processing the bulk of
Iowa's commodities are generally slow-growth or declining industries in the
state.
Iowa's dependence on ACP employment has decreased in recent
years.
With growth rates lagging other manufacturing industries, the ACP
industries dropped from 22 to 20 percent of total manufacturing employment
between 1992 and 1998.
The
newer,
high-technology
firms
associated
with
the
value-added
agriculture movement might represent greater opportunities for employment
growth than the traditional, food processing industries, although this
potential is difficult to assess. For this paper, we tried to identify a set of
industries with close ties to Iowa agriculture. We may have overlooked some
industries that don't have strong, traditional links to Iowa's commodities. At
the present time, however, these industries represent just a small fraction of
Iowa's nonfarm economy.
Agricultural commodity processing produces a high amount of output, and it
is important in moving the state's agricultural commodities along in the food
and industrial products chain.
Its contribution to the state's job base is,
however, quite small. Economic evidence for the 1990s suggests it is neither
instrumental nor emerging as a major job producer in the state of Iowa.
Even if new technologies and new production practices emerge in the state to
allow higher growth in these sectors, history suggests they will produce
comparatively few jobs.
30
Recent employment growth in Iowa's agricultural commodity processing
industries, while appearing on the surface to benefit Iowa's smaller counties,
may merely represent a shifting in the location of employment from one
county to another.
Almost half of the gains to small urban counties occurred
in meat processing industries, while meat processing employment declined
by an almost equivalent number of jobs in Iowa's other county groups.
Employment gains in the remaining ACP industries actually showed weaker
preference for Iowa's smaller counties than other kinds of manufacturing
industries.
In other words, agricultural commodity processing employment
growth is not an economic cure-all for Iowa's small counties.
Iowa's future growth will depend on capitalizing on its strengths, such as
production agriculture, agricultural services, and agricultural commodity
processing industries. However, a "Value-Added Agriculture" label does not
guarantee the contributions of a firm or industry to Iowa's future.
This is
especially important to remember if public policies result in a form of
economic development tunnel vision that blinds us from seeing new
opportunities in other industries.
31
Appendix 1. Agricultural Commodity Processing Industries
SIC Code
Industry Description
ACP Industry Group
2011
Meat packing plants
Meat Processing
2013
Sausages and other prepared meats
Meat Processing
2015
Poultry slaughtering and processing
Meat Processing
2021
Creamery butter
Other Food Processing
2022
Cheese, natural and processed
Other Food Processing
2023
Dry, condensed, evaporated products
Other Food Processing
2024
Ice cream and frozen desserts
Other Food Processing
2026
Fluid milk
Other Food Processing
2032
Canned specialties
Other Food Processing
2033
Canned fruits and vegetables
Other Food Processing
2034
Dehydrated fruits, vegetables, soups
Other Food Processing
2035
Pickles, sauces, and salad dressings
Other Food Processing
2037
Frozen fruits and vegetables
Other Food Processing
2038
Frozen specialties, n.e.c.
Other Food Processing
2041
Flour and other grain mill products
Grain & Soybean Processing
2043
Cereal breakfast foods
Grain & Soybean Processing
2045
Prepared flour mixes and doughs
Grain & Soybean Processing
2046
Wet corn milling
Grain & Soybean Processing
2047
Dog and cat food
Grain & Soybean Processing
2048
Prepared feeds, n.e.c.
Grain & Soybean Processing
2051
Bread, cake, and related products
Other Food Processing
2052
Cookies and crackers
Other Food Processing
2053
Frozen bakery products, except bread
Other Food Processing
2064
Candy and other confectionery products
Other Food Processing
2066
Chocolate and cocoa products
Other Food Processing
2068
Salted and roasted nuts and seeds
Other Food Processing
2075
Soybean oil mills
Grain & Soybean Processing
2076
Vegetable oil mills, n.e.c.
Other Food Processing
2077
Animal and marine fats and oils
Other Food Processing
2079
Edible fats and oils, n.e.c.
Other Food Processing
2082
Malt beverages
Other Food Processing
32
SIC Code
Industry Description
ACP Industry Group
2083
Malt
Other Food Processing
2084
Wines, brandy, and brandy spirits
Other Food Processing
2085
Distilled and blended liquors
Other Food Processing
2086
Bottled and canned soft drinks
Other Food Processing
2087
Flavoring extracts and syrups, n.e.c.
Other Food Processing
2092
Fresh or frozen prepared fish
Other Food Processing
2096
Potato chips and similar snacks
Other Food Processing
2098
Macaroni and spaghetti
Other Food Processing
2099
Food preparations, n.e.c.
Other Food Processing
2231
Broadwoven fabric mills, wool
Leather & Leather Products
2299
Textile goods, n.e.c.
Leather & Leather Products
2396
Automotive and apparel trimmings
Leather & Leather Products
2843
Surface active agents
Chemicals & Allied Products
2865
Cyclic organic crudes, dyes, and pigments
Chemicals & Allied Products
2869
Industrial organic chemicals, n.e.c.
Chemicals & Allied Products
2879
Agricultural chemicals, n.e.c.
Chemicals & Allied Products
2899
Chemical preparations, n.e.c.
Chemicals & Allied Products
3111
Leather tanning and finishing
Leather & Leather Products
3131
Boot and shoe cut stock and findings
Leather & Leather Products
3142
House slippers
Leather & Leather Products
3143
Men's footwear, except athletic
Leather & Leather Products
3144
Women's footwear, except athletic
Leather & Leather Products
3149
Footwear, except rubber, n.e.c.
Leather & Leather Products
3151
Leather gloves and mittens
Leather & Leather Products
3161
Luggage
Leather & Leather Products
3171
Women's handbags and purses
Leather & Leather Products
3172
Personal leather goods, n.e.c.
Leather & Leather Products
3199
Leather goods, n.e.c.
Leather & Leather Products
33
Appendix 2. County Groupings
County Name
FIPS Code
Population Size
Group
Geographic
Region
Adair
19001
Rural
Southwest
Adams
19003
Rural
Southwest
Allamakee
19005
Small Urban
Northeast
Appanoose
19007
Small Urban
South Central
Audubon
19009
Small Urban
West Central
Benton
19011
Small Urban
East Central
Black Hawk
19013
Metropolitan
Northeast
Boone
19015
Small Urban
Central
Bremer
19017
Small Urban
Northeast
Buchanan
19019
Small Urban
Northeast
Buena Vista
19021
Small Urban
Northwest
Butler
19023
Rural
North Central
Calhoun
19025
Rural
West Central
Carroll
19027
Small Urban
West Central
Cass
19029
Small Urban
Southwest
Cedar
19031
Small Urban
East Central
Cerro Gordo
19033
Large Urban
North Central
Cherokee
19035
Small Urban
Northwest
Chickasaw
19037
Small Urban
Northeast
Clarke
19039
Small Urban
South Central
Clay
19041
Small Urban
Northwest
Clayton
19043
Rural
Northeast
Clinton
19045
Large Urban
East Central
Crawford
19047
Small Urban
West Central
Dallas
19049
Metropolitan
Central
Davis
19051
Small Urban
Southeast
Decatur
19053
Rural
South Central
Delaware
19055
Small Urban
Northeast
Des Moines
19057
Large Urban
Southeast
Dickinson
19059
Small Urban
Northwest
Dubuque
19061
Metropolitan
Northeast
Emmet
19063
Small Urban
Northwest
Fayette
19065
Small Urban
Northeast
Floyd
19067
Small Urban
North Central
Franklin
19069
Small Urban
North Central
34
County Name
FIPS Code
Population Size
Group
Geographic
Region
Fremont
19071
Rural
Southwest
Greene
19073
Small Urban
West Central
Grundy
19075
Rural
Central
Guthrie
19077
Rural
West Central
Hamilton
19079
Small Urban
Central
Hancock
19081
Small Urban
North Central
Hardin
19083
Small Urban
Central
Harrison
19085
Small Urban
West Central
Henry
19087
Small Urban
Southeast
Howard
19089
Small Urban
Northeast
Humboldt
19091
Small Urban
North Central
Ida
19093
Rural
West Central
Iowa
19095
Rural
East Central
Jackson
19097
Small Urban
East Central
Jasper
19099
Small Urban
Central
Jefferson
19101
Small Urban
Southeast
Johnson
19103
Metropolitan
East Central
Jones
19105
Small Urban
East Central
Keokuk
19107
Rural
Southeast
Kossuth
19109
Small Urban
North Central
Lee
19111
Large Urban
Southeast
Linn
19113
Metropolitan
East Central
Louisa
19115
Rural
Southeast
Lucas
19117
Small Urban
South Central
Lyon
19119
Small Urban
Northwest
Madison
19121
Small Urban
South Central
Mahaska
19123
Small Urban
Southeast
Marion
19125
Small Urban
South Central
Marshall
19127
Large Urban
Central
Mills
19129
Small Urban
Southwest
Mitchell
19131
Small Urban
North Central
Monona
19133
Small Urban
West Central
Monroe
19135
Small Urban
South Central
Montgomery
19137
Small Urban
Southwest
Muscatine
19139
Large Urban
East Central
O'Brien
19141
Small Urban
Northwest
Osceola
19143
Small Urban
Northwest
Page
19145
Small Urban
Southwest
Palo Alto
19147
Small Urban
Northwest
35
County Name
FIPS Code
Population Size
Group
Geographic
Region
Plymouth
19149
Small Urban
Northwest
Pocahontas
19151
Rural
Northwest
Polk
19153
Metropolitan
Central
Pottawattamie
19155
Metropolitan
Southwest
Poweshiek
19157
Small Urban
Central
Ringgold
19159
Rural
South Central
Sac
19161
Rural
West Central
Scott
19163
Metropolitan
East Central
Shelby
19165
Small Urban
West Central
Sioux
19167
Small Urban
Northwest
Story
19169
Large Urban
Central
Tama
19171
Small Urban
Central
Taylor
19173
Rural
Southwest
Union
19175
Small Urban
South Central
Van Buren
19177
Rural
Southeast
Wapello
19179
Large Urban
Southeast
Warren
19181
Metropolitan
South Central
Washington
19183
Small Urban
Southeast
Wayne
19185
Rural
South Central
Webster
19187
Large Urban
Central
Winnebago
19189
Small Urban
North Central
Winneshiek
19191
Small Urban
Northeast
Woodbury
19193
Metropolitan
West Central
Worth
19195
Rural
North Central
Wright
19197
Small Urban
North Central
36