Suggested citation
Summary
For this policy brief, I estimated the impact to Iowa’s State Gross Domestic Product (GDP), or “value added” for 60 industries encompassing agricultural production, processing or agricultural adjacent industries. Value added is the contribution to GDP, the difference between the sales output and the cost of intermediate inputs used to produce the output. I used an economic impact model maintained by the IMPLAN Group, LLC, Huntersville, NC (IMPLAN), which is often called an input-output (IO) production model. In this model, think of all industries in the economy as feeding inputs into each other to produce outputs that are then sold to consumers or sold to another industry along a supply chain. IO models make adjustments for imports and exports as well as government services while accounting for employment and taxes to the various industrial sectors in order to calculate how much additional value is added to the economy, as opposed to only examining sales receipts. IO models determine the linkages between and among different industries in the production of goods and services in the economy and can measure how dollars spent in one industry impact another.</p><p>My definition of agricultural industries includes farm production (e.g., soybeans), processing of production into a new, manufactured product (e.g., soymeal, biodiesel), as well as the creation of products used in agricultural production (e.g., nitrogen fertilizer) and affiliated services like veterinary services. The specific industries as well as their general definitions are shown in table 1. I based my definitions on those provided by IMPLAN. Along with the IMPLAN industry codes, table 1 also provides the 6-digit North American Industrial Classification System (NAICS) codes. Readers curious about the components of each industry can consult the documentation provided by these two establishments for more detail. One thing to notice is that some industries are quite broad. Ethanol, for example, is encompassed in the larger “other organic chemical” industry. Researchers are limited to the industries as defined by the NAICS and the government agencies that collect the data, and although future research could attempt to create specific industries in IO models, I do not attempt to do so here.