Beyond Farm Gates
By Katie Pratt
Agriculture is an economic driver. From the Mississippi River to the Appalachian Mountains, Kentuckians and their businesses receive financial boosts from agriculture.
“Agriculture’s impact on this state is bigger than most people think, because the typical economic analyses usually only measure the number of on-farm jobs and on-farm sales and often exclude the industries that feed into or buy from farmers,” said Alison Davis, UK agricultural economist and lead author, along with Leigh Maynard and Lori Garkovich, of a report that examined the impact of agriculture on Fayette County.
In that study, they found that agriculture and the businesses clustered around it account for one in nine jobs in Fayette County and $2.4 billion in annual revenue. While all aspects of agriculture were included in the study, the researchers found that equine and its associated services contributed to 95 percent of the county’s farm sales.
“Farmers are consumers and need inputs and services to sustain their farms and way of life,” said Garkovich, professor in Community and Leadership Development. “They tend to buy these items locally or through local distributors.”
The UK report also showed businesses not directly associated with the industry take advantage of the picturesque beauty of the area to attract prospective employees.
“The equine industry spreads its benefits across many other sectors of the economy,” said Maynard, chair of Agricultural Economics. “You have this infusion of outside money, and the equine industry in Fayette County combines recreation and tourism with some very high-end services.”
Spreading the Wealth
The equine industry isn’t the only enterprise and Fayette County isn’t the only county to reap economic benefits from agriculture. The forest industry added an estimated $12.8 billion to the state’s economy in 2013.
Kentucky is one of the top producers of hardwood sawlogs in the country. The industry has over 700 facilities in 109 counties and employs around 59,000 Kentuckians. About 89 percent of the state’s forests are privately owned, with more than 430,000 owners. There’s no denying the industry is important.
“Our forest industry is not composed of a few well-known, high-profile companies,” said Jeff Stringer, UK extension professor of hardwood silviculture and forest operations. “Instead, our forest industry consists of a large number of family-owned logging firms, saw mills, and wood businesses. They are relatively small and scattered throughout the state. Many are in rural places, but there are some in urban areas too.”
On the Ohio River in Hancock County, the Domtar Paper Mill annually consumes 2 million tons of wood through paper production and boiler fuel. The wood chips, bark, and sawdust come from over 120 suppliers, of which more than 70 are Kentucky companies located from Olive Hill to Hopkinsville.
Working at the mill for 31 years, UKAg alumnus Dan Allard, ’83 forestry, has witnessed the importance of the state’s forest industry to the economy. Allard, a Hancock County native, began working at the mill during summers while he was in college. Now, as the wood procurement manager, he oversees all wood purchases for the company.
Allard is one of 450 employees at the Domtar Paper Mill. The company employs an additional 75 individuals in an Owensboro converting facility. Most live in Hawesville or surrounding counties.
“We don’t have much turnover,” Allard said. “It’s a very good place to work. It’s perceived as a job in the area that people want.”
The mill’s location was not by accident. The decision to locate here was made partially because Kentucky, Tennessee, and Indiana are some of the top hardwood producing states in the nation.
“We receive chips and boiler fuel 24/7, 365 days a year,” he said. “On an average day, we’ll receive 130 loads of chips and boiler fuel. About 45 percent of that arrives by barge, 45 percent comes by truck, and 10 percent comes by rail.”
A Community Built on Ag
Further downriver in Owensboro, Brian Wright is the president and CEO of the Owensboro Riverport Authority, whose primary marketing functions are agriculture, metal storage, and warehousing.
“From the agriculture standpoint, a lot of what we do is bulk unloading for our tenants, who are made up of local agricultural companies who serve as fertilizer distributors to Western Kentucky,” he said. “Through a partnership with a local grain company, we’re also an outbound grain facility that services Daviess County and the surrounding area.”
The 300-acre river port is one of the largest on the Ohio and imports between 250,000 and 300,000 tons of fertilizers per year. This includes most of the fertilizers for Western Kentucky with the exception of anhydrous ammonia, which is unloaded off barges in Henderson.
“We move over 900,000 tons through this facility. Of this, almost half is dedicated to the ag industry,” Wright said.
Owensboro is a community built on agriculture; its farmers generated $150 million in agriculture sales in 2013, said Clint Hardy, the county’s extension agent for agriculture and natural resources. The county ranks eighth in the state in agricultural sales, according to the 2010 county rankings by the National Agricultural Statistics Service.
“Every business in our community has a connection to agriculture,” Hardy said. “It’s an enormous part of our economy.”
Hardy said area grain farmers set the goal to make a 10 percent return on their investments each year and much of the cost for crop inputs, machinery, and labor is spent locally.
“If people made their goal of 10 percent return on investment last year, that’s $136 million that farmers spent with suppliers and labor, based on 2013 revenue,” Hardy said. “Those farmers will take that 10 percent return and use it to build or remodel homes, replace trucks, replace machinery, and allocate for family living expenses, such as education, dining out, clothing purchases, contributions to their church and other nonprofits, and taxes.”
Just south of Owensboro in the McLean County town of Livermore, Derek Miller, the general manager of B.F. Evans Ford, said there’s been a Ford dealership in the town for 90 years, partially because of the support from farmers in the Green River area.
“Agriculture is a big part of our customer base,” he said. “They are primarily buying trucks as a farm tool, but it’s also a personal tool. We are very blessed to not only have a loyal customer base of farmers, but of agri-based businesses like crop insurance salesmen and implement dealers.”
Miller said if the agricultural industry in the area weren’t there, it would definitely change the look of his business.
“The mix of the vehicles we stock and sell would be different,” he said. “We stock a lot of F-Series Super Duty diesel pickup trucks to accommodate farmers and pull in farmers from surrounding counties.”
In many communities, the success of the local economy is directly tied to the success of agriculture.
Garkovich said studies have shown that when the industry was faced with a major depression in the 1980s, for every three farms that shut down operations, one Main Street store in a rural community closed as well.
From Pike to Fulton counties, there’s no denying agriculture’s economic impact extends well beyond farm gates.