• Carol Lea Spence, University of Kentucky

UK Study: Agriculture, related businesses, provide a third of local jobs

A study by the University of Kentucky's Community and Economic Development Initiative of Kentucky shows that agriculture in Woodford County and the businesses that support it are responsible for one out of three jobs and $565 million in annual revenue. The CEDIK study was unveiled Monday at a news conference at the UK College of Agriculture, Food and Environment's C. Oran Little Research Center near Versailles. The study examines the influence of the agricultural cluster to Woodford County's economy. "As a college, we are proud to assist counties in characterizing the value of agriculture and equine enterprises on economic development," said Dean Nancy Cox. "This research takes a lot of time and effort, and the methods used by CEDIK produce unique and sound insights." Traditionally, employment associated with agriculture has been confined solely to production. The study's authors expanded that view to include not only production agriculture, but businesses that produce agricultural inputs, wholesale and retail businesses and service-based businesses that are dedicated to agriculture, such as veterinary, finance, recreation and transportation. Authors Alison Davis, Simona Balazs, Joe Kercsmar and Melody Nall assert that including these types of businesses shows the true importance of the agricultural sector in the area. "We often focus on more traditional industry as representing a predominantly large share of employment, so the tendency is to focus on manufacturing, health care and education. But in these counties like Woodford County, agriculture and the equine industry are equally as important to their local economy," said Davis, UK agricultural economist and executive director of CEDIK. "We drive by and see these pretty farms and think, this is a beautiful place to live, but they are also significant contributors to the local economy." When the agricultural cluster is defined to include companies with some or all of their business related to agriculture in the county, it is estimated that 2,783 jobs are attributed to the cluster. Without an agricultural base in the county, many of those businesses would not exist. "Woodford County has a relatively small employment base; there are just under 10,000 full-time employees in the county," Davis said. "One of every five jobs is directly attributable to agriculture and its supporting services, and if you widen that to include the multiplier effect of the agricultural cluster, then it's one out of three. That's a pretty significant market share for a county the size of Woodford." In Woodford County, agricultural production is among the top five industries, with manufacturing leading in the number of jobs. Government, educational services and retail trade round out the top five. Woodford County has a higher concentration of employment in animal and crop production than the national average. The higher the concentration, the more likely support industries will be present in the area. In addition, it is estimated that the ag cluster contributes $1.1 million to the local tax base through payroll taxes. Approximately 14 percent of total properties in the county are farms, which generate $5.2 million in property taxes - 25 percent of the total tax base. In addition to the $565 million in annual revenue, the researchers found that the county's agricultural cluster generated more than $340 million in additional income, profits and dividends. In addition to collecting data from proprietary sources, the researchers interviewed people at 15 varied Woodford County businesses, including the Holly Hill Inn and Heirloom restaurants in Midway, asking them what makes the city or county an attractive place to do business, how the horse industry and other agriculture-related activities influence their business, and how their views of it as a place to do business would change "if the rural landscape declined significantly." One of the unique aspects the study examined were stud fees for the Thoroughbred industry in Woodford County. The county is home to 11 of the top 20 Thoroughbreds covering mares in the country. The sales tax imposed on those services gets turned around into breeders' incentive funds. "While the stud fees that are posted aren't necessarily the final prices that are negotiated, it's still a really significant source of revenue and sales tax revenue," Davis said. Because of the increasing pressures on land use, the researchers looked at the effect of a loss in production agriculture. They found that if production agriculture declined by 10 percent or $26.8 million, there will be an overall additional decrease of more than $8.4 million in output. Part of that loss would come from an approximately $2.4 million reduction in sales from business spending. Businesses involved in food products, truck transportation, warehousing, veterinary services and wholesale trade, just to name a few, would be most affected by a reduction in production agriculture in the county. The loss suffered by industries as a result of a reduction in household spending, what's known as the induced effect, would be even greater, approximately $6 million. "The ag industry is not necessarily the most important industry, it's not the largest industry, but it's important for these communities - particularly small communities - to have a diverse portfolio of economic development strategies and industries. This study illustrates that in Woodford County, it's an important part of the economy, and it should be an important part of the discussion with economic development professionals, educators and planners in the county," Davis said. Davis said a significant issue for the county's economic development is a shortage of local labor. She said the study found that 4,400 people come into the county for work. That is outweighed by the 7,070 Woodford residents who work in other counties, but the relatively large inflow helps dispel the notion that the county is just "a bedroom community," state Rep. James Kay said. Kay was among those who offered comments and questions after Davis's presentation. Another was Hampton "Hoppy" Henton, who said "what's missing in this audience" are people from the towns and the planning office, because there needs to be discussion about development, roads and so forth. Davis replied, alluding to the study's sponsors, "There's a pretty significant divide between the two groups, and it's hard to get them in the same room together." She said one person from CEDIK is trying to get such conversations going. Lexington Herald-Leader reporter Greg Kocher, who did a profile recently of Woodford County Economic Development Authority Chair John Soper, asked why Soper wasn't interviewed. Soper told the Midway Messenger that he wasn't invited to the event. Davis said the interviews were limited to businesses, but "That would be the next step. . . . I think that's a conversation that needs to occur." Earlier, she noted that interviewees called for "stronger communication between the ag and non-ag sectors." Davis said an interview with one of the county's new employers, whom she did not name, found a willingness to pay more for land and workers because of local amenities, including good schools. "We're willing to pay more for better," she paraphrased the employer as saying. (The interviewed employers are listed in the study.) Sponsors of the study, which cost about $15,000, include Kentucky Performance Products, Kentucky Thoroughbred Owners and Breeders Inc., Pisgah Community Historic Association and Woodford Forward. The full study can be found online at https://cedik.ca.uky.edu/sites/cedik.ca.uky.edu/files/final_woodford_forward_report_april_23.pdf. Al Cross, director of the Institute for Rural Journalism and Community Issues at UK, contributed to this article.

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