Samuel N. Addy, University of AlabamaAhmad Ijaz, University of Alabama
The food products sector in Alabama includes crop and animal production and food products manufacturing. The dollar value of Alabama crop and animal production was $1.5 billion in 2006, accounting for about 1.0 percent of the state's real gross domestic product (GDP). GDP is defined as the total value of goods and services produced in the economy. The food products manufacturing industry's share of Alabama GDP (ALGDP) has declined from 2.0 percent in 1990 to about 1.0 percent in 2006, yet employment in the food products manufacturing industry has increased from 27,200 in 1970 to approximately 34,000 in 2008. The number of workers in animal slaughtering and processing alone has increased from more than 19,000 in 1990 to 25,500 in 2008.
However, the number of farms in the state has steadily declined during this period as some private farmland was sold to housing developers and large farming conglomerates. Employment at privately owned farms has declined from 100,900 in 1969 to 43,600 in 2007. Exports of the food products sector totaled $908 million in 2008, about 6.0 percent of total state exports, and was made up of $473 million in crop production, $348 million in processed foods, and $87 million for animal production.
Crop and Animal Production
Crop and animal production includes oilseed (such as soybeans) and grain farming (for example, corn), vegetable and melon farming, fruit and tree nut farming, other crop farming, cattle ranching and farming, hog and pig farming, poultry and egg production, and aquaculture or fish farming, primarily of catfish. The farming sector, including both crop production and livestock production and processing, is relatively labor intensive, requiring large numbers of workers particularly during harvest seasons and for slaughtering and processing animals.
Crop and animal production contributes significantly to Alabama's economy. For instance, for every $1 earned by these industries, related businesses earn an additional $2.1 Further, each job in crop and animal production in Alabama supports 1.4 jobs in related industries, and for every $1 million investment made by these farms, 18.1 direct and indirect jobs are created across the state. Forestry, fishing, and related activities create $2.4 in earnings for every $1 of industry pay, 2.4 total jobs statewide for each industry job, and almost 24 new Alabama jobs are created for every $1 million investment.
According to the 2002 Census of Agriculture, Alabama had 45,126 farms totaling more than 8.9 million acres and approximately $3.3 billion in sales. Following a national trend, the number of farms had declined by almost 10 percent from 1997, when the state had 49,872 farms on more than 9.5 million acres. About 75 percent of Alabama farms (34,073) produced various crops on more than 3.7 million acres. In terms of sales, poultry and egg farms accounted for $2.1 billion, or 65.5 percent, ranking first on merely 3,839 poultry and egg farms, roughly 8.5 percent of all farms in the state. Cattle and calves ranked first in terms of total farm acreage but accounted for only 10.7 percent of total sales. The 23,088 cattle farms in the state had sales of about $348 million. Milk and other dairy products ranked eighth in sales, with $46 million from a total of 223 dairy farms. There were 1,374 farms producing vegetables, melons, potatoes, and sweet potatoes; vegetable production ranked ninth with slightly more than $40 million in sales.
In 2002, the average farm was on 197 acres and had sales revenue of $72,352. Government payments to farms were almost $78 million; the average government payment per farm was about $6,000 in 2002. Alabama ranked 23rd in the nation in total agricultural sales and 15th for the value of livestock, poultry, and related products sold. The state ranked 3rd in peanut production and 26th in soybean production.
Alabama ranked 17th in the nation among all states in the number of farms with beef cattle in 2006. Alabama cattle producers are primarily cow-calf producers, with 23,000 farms in the state with one or more head of beef cows that have had calves. Cash receipts from the sale of cattle totaled $402 million in 2006. As of 2006, Cullman County was the largest cattle county in the state, with 68,500 head of cattle, followed by DeKalb with 60,000, Montgomery (52,000), Marshall (41,100), and Lowndes (38,000). As of January 2009, Alabama producers had 1,250,000 head of cattle. Similar to the nationwide trend, most hog farms in the state are owned by large corporations.
Crop exports from Alabama have more than doubled from 2000 to 2008, rising from $200 million to approximately $473 million, an increase of 137 percent. Animal production exports jumped from $10 million in 2000 to almost $87 million in 2008, rising by 770 percent. Alabama is the nation's 4th largest poultry and peanuts exporter, and also one of the largest beef exporters. As free trade agreements, such as the North American Free Trade Agreement and the Central American Free Trade Agreement, are implemented completely during the next 5 to 20 years, Alabama farmers and manufacturers should see the amount of exports rise as trade barriers such as high import tariffs are phased out.
Food Products Manufacturing
Alabama food-products manufacturing industries transform livestock and agricultural products into products for final consumption (for example, commercial products found in stores) as well as for intermediate consumption (products that are used in the manufacture of final consumption products). These industries employed 34,500 workers in 2007, accounting for about 1.7 percent of total state nonagricultural employment, or 11.5 percent of manufacturing jobs. Animal slaughtering and processing—especially of poultry, hogs, beef, and other meats—employs about 25,500, nearly three-quarters of the workers in the food-processing industry. Food-products manufacturing industries also include: bakeries and snack foods manufacturing; grain and oilseed milling; sugar and confectionary product manufacturing; food and vegetable preserving; dairy products manufacturing; seafood product preparation and packaging; coffee and tea manufacturing; mayonnaise, dressing and other prepared sauce manufacturing; soft drinks and ice manufacturing; bottled water manufacturing; and breweries, wineries, and distilleries. The largest concentration of food manufacturing firms is in the Birmingham-Hoover metro area, employing about 4,500 workers. Some of largest of these firms include Tyson Foods, Zeigler, Southeastern Meats, Pepsi Cola Bottling, Mayfield Dairy Farms, Coca Cola Bottling, and Buffalo Rock Vending. Some of these companies are headquartered in Birmingham or have a large presence in the area, and most have branches across the state. Processed food exports from Alabama increased from about $116 million in 2000 to $124 million in 2008, rising by 7.0 percent.
Every dollar of output produced by these firms adds an additional $1.24 in indirect output for a total output economic impact of $2.24. Output, like GDP, is defined as the total value of goods and services produced in the state. One dollar of output generates $0.48 in earnings across the state, with roughly 16 cents going to food manufacturing industry workers. Each $1 paid to the industry's workers creates $1.96 in earnings in the state's other industries for a total earnings impact of $2.96. In general, $1 million of investment in the industry creates 18 direct jobs in the state. Every 100 jobs created within the industry results in 191 more jobs through related industries in the state.
The food products sector in Alabama comprises industries involved in crop and animal production and those that transform livestock and agricultural products into products for intermediate or final consumption (food products processing). The output of Alabama crop and animal production was $1.5 billion in 2006; food products manufacturers also produced $1.5 billion in goods and services. The sector employed 34,300 workers in 2008. Alabama is one of the largest exporters of poultry products and is ranked 17th in the nation in beef cattle farms. Exports of the sector totaled $908 million in 2008.
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