Hogs Bring Money to North-Central Missouri

by 5m Editor
3 May 2011, at 10:20am

MISSOURI, US - Raising pigs and processing pork bring incomes and economic stimulus to counties in north-central Missouri. The total for Missouri adds up to $1.1 billion dollars a year, according to a University of Missouri study.

That's just from Premium Standard Farms, headquartered at Princeton, Mo., and Farmland Foods, with a processing plant in Milan, Missouri. A Farmland ham processing plant at Martin City, in Jackson County, adds to the cash flow.

PSF provides 1,022 jobs. Farmland Foods at Milan and Martin City provides 1,700 jobs. Supporting jobs bring 5,200 full-time jobs to the state, said Ray Massey, MU Extension economist.

"The dollars affect every aspect of a community where hogs are raised or processed," Dr Massey said. Dollars flow through a community with impacts ranging from lower electrical rates to improved schools affecting all citizens, not just employees.

Two counties most affected are Mercer, where most PSF hogs are raised, and Sullivan, the main processing site.

"An economic model developed in the 1980s helps track the dollar flow and avoid double counting," Dr Massey said. "The input-output model tracks direct, indirect and induced dollars. Each dollar brought to town affects many people."

The study, which looked at business for 2009, was funded by the MU Commercial Agriculture Program, said Rex Ricketts, director.

PSF had a $313 million impact in its primary counties. That multiplied to a state impact of $382 million. Farmland Foods at Milan provided a $469 million impact in Sullivan County and $602 million for the state. The Martin City plant had a $135 million impact in Jackson County with $142 million total for the state.

The firms paid $3.6 million in property and sales taxes in 2009.

The swine firms benefit crop farmers, utilities and agricultural suppliers, as well as government services. "One of the most interesting to study is the impact on schools," Dr Massey said.

The biggest boost to schools went to counties with major property holdings. Mercer County received $830 per student. Sullivan County received $603 in property taxes per student.

In eight primary counties there are 22 school districts with 124,750 K-12 students. The counties of Daviess, Gentry and Putnam received more than $100 per student from PSF property taxes.

For comparison, Dr Massey said, an owner of a $150,000 house in Gentry County would pay about 51 cents per student. PSF pays some 200 times more per student there.

Crop farmers see an immediate impact, Dr Massey said. The local PSF feed mills added from a nickel to 30 cents per bushel for corn. Every nickel increase in corn price provides an added $800,000 for area farmers.

The PSF swine ration used 16 million bushels of corn and 130,000 tons of soybean meal in 2009. That equaled 73 per cent of corn and 49 percent of beans grown in the area.

Utility companies benefit as well. PSF spent $11 million for natural gas, propane, electricity and water.

The study looked at three levels of impact. Direct impact results from sale of hogs or hams, for example. Indirect impacts include purchases of feedstuffs. Induced impacts occur when employees spend their pay at grocery stores, service stations, banks, doctors and other professionals.

Once money is spent, it travels beyond the immediate area. The input-output model now has multiregional impact analysis. This can show impact on the state.

The arrival of swine farms slowed a sharp population decline in the region. In 1900 some 150,000 people lived in the primary study area. By 1990, population dropped to 50,000, where it has stabilized.

Census data shows a drop in poverty level, which now stands at 16 per cent. Median household income increased from $30,000 to $35,000 in the last 20 years.

The primary study counties include Daviess, Gentry, Grundy, Harrison, Mercer, Putnam and Sullivan. The adjacent counties in the extended impact area include Worth, DeKalb, Clinton, Caldwell, Livingston, Linn, Adair and Schuyler counties.

The primary study area for Farmland Foods includes Sullivan and Jackson counties. The secondary study area includes counties adjoining Sullivan.

Prior to its purchase by Smithfield Foods in 2007, PSF was the second-largest pork producer in the United States. The company owns 63 sow farms and nine grow-finish farms on 44,000 acres, according to the report.

The report does not include economic impact in Iowa. Five of the counties studied are on the Iowa state line. Many employees live and spend money in Iowa.

Authors of the study are Massey, Seanicaa Edwards and Ryan Milhollin, all of the MU Commercial Agriculture Programme.