Report highlights agriculture’s impact on Fayette County economy
Fayette County’s agricultural business cluster accounts for one in nine jobs and $2.4 billion in annual revenue, according to a report by University of Kentucky College of Agriculture researchers.
The study is one of the first to include businesses that are totally dedicated to agriculture, such as veterinary clinics, farm associations, agriculture-specific media and recreation. It further details the impact equine sales and horse racing facilities have on non-agricultural industries. Within the report, local business leaders identified important factors that make the county a good place in which to live, work and operate a business.
Historically, employment associated with agriculture in Fayette County was limited to only on-farm numbers, said Alison Davis, UK agricultural economist, Community and Economic Development Initiative of Kentucky executive director and a co-author of the study. The agriculture cluster is much broader and includes agricultural inputs and food processing. Likewise, there are hundreds of service-based businesses in the county totally dedicated to agriculture, which had never been included in a study exploring the impact of agriculture in Fayette County.
“Ignoring these businesses underestimates the value of the agricultural sector,” she said “This is particularly important in Fayette County because of its competitive advantage in the equine industry. After an extensive search, and the creation of a new agriculture business directory, we now have recent data about employment in many industries that are part of the ag cluster.”
When the agriculture cluster is defined to include not only production agriculture, but also business services and retail and wholesale trade solely dedicated to agriculture, an estimated 16,676 jobs are attributed to this cluster, Davis said. This estimate includes supporting business and household spending as a result of the agriculture cluster. In addition, there are approximately 1,520 jobs associated with the hospitality sector—assuming that 25 percent of employment in lodging and 5 percent in restaurants is dedicated to agriculture-related tourism—that can be attributed to the cluster. Given the total workforce in the county of approximately 147,000, these results suggest that roughly one out of every nine jobs is directly or indirectly associated with the agriculture cluster.
Of the roughly $2.4 billion this cluster generates in revenue annually, income, profits and dividends account for $1.3 billion. Finally, an estimated $66 million is collected from state income tax and sales tax, as well as approximately $7 million in occupational license taxes for Fayette County.
Davis noted the numbers are likely conservative, as the analysis does not fully account for businesses that partially support agriculture. For example, an equine bloodstock agency would be included in the agriculture cluster, but an accounting firm whose clientele includes some farms would not be directly recognized and understated in the multiplier effect given the unique nature of the agriculture cluster in the county. Great care was taken to avoid double counting or overstating the scope of the agriculture cluster. These numbers do not include the full tourism impacts of two large, agriculture-related destinations: the Kentucky Horse Park and Keeneland.
The study was done at the behest of the Fayette County Farm Bureau.
“Fayette County has a diversified economy, and we wanted to get a better understanding of agriculture’s role in it,” said Todd Clark, past president Fayette County Farm Bureau. “As part of a land-grant university known for its high-quality research, we felt the College of Agriculture was the appropriate place for this research to be undertaken. This project contains some important data that can be used to raise awareness and promote discussion of the agriculture cluster’s importance to the county.”
Fayette County’s agricultural sales are dominated by the equine industry. To better understand this impact, one part of the study measured the influence of equine sales and the presence of horse racing on six industries: hospitality, recreation, finance, real estate, professional services and retail trade. Only the impacts that passed a stringent threshold of statistical significance were included, said Leigh Maynard, Department of Agricultural Economics chair and one of the study’s authors.
The study shows an increase of 10 percent in equine sales would result in 10 additional business establishments in the professional services, real estate, recreational and financial industries; $6 million of additional annual payroll in the professional services industry and $45 million of additional annual sales in the professional services, real estate and retail industries.
The presence of a horse racetrack in a county strongly impacts hospitality, recreation and retail industries. In Fayette County’s case, 15 additional recreational establishments, $88 million in additional annual payroll in the three industries and $74 million in additional recreational sales are attributed to the racetrack’s presence.
“The analysis quantifies how important Fayette County’s distinctive brand is to major components of the local economy,” Maynard said. “Agriculture imports wealth into Fayette County that is spent locally by industry participants and visitors. The area’s nationally recognized character is a framework on which businesses can build their own image. The quantitative results of this study mirror the statements of business leaders.”
College of Agriculture Professor Lori Garkovich, a sociologist and study co-author, talked with representatives from Lexington businesses in the design, health, financial, hospitality/tourism, marketing, advanced manufacturing, construction, food service and nonprofit sectors. Their comments consistently indicated that quality of life and benefits to business would be diminished with a loss in the agricultural landscape as illustrated by the following statements:
“The landscape is fundamental to what we do. If the landscape and the horse farms disappeared, we would have no brand.”
"The attractiveness of the green space, the farms, so easily accessible to the heart of the city, does make a difference for our employees—it is a part of what attracts them and keeps them here."
Maynard said there are many important clusters in Fayette County that complement each other. These include health care, public education and research, manufacturing, management and professional services. These results suggest that agriculture is one of the important components in this diverse, growing economy.
“Fayette County has a unique collection of horse-related and other agricultural business entities that are foundational to the land-based agriculture business cluster, but that are not duplicated enough nationally to be part of an existing academic study,” said Nancy Cox, associate dean for research in the UK College of Agriculture. “The Horse Park, the Blue Grass Stockyards, the race tracks and world-renowned veterinary practices are all a vital part of the fabric of our agricultural business community. We also have a unique equine research center and a diagnostic lab at our land-grant university, making us worthy of a Horse Health Capital of the World designation. This study, like many research projects we are asked to do as a part of our land-grant mission to help communities, can be used to create an ongoing dialogue and raise awareness of the vital importance of agriculture to our overall economy.”
A copy of the complete report can be found at http://www2.ca.uky.edu/CEDIK-files/Impact_of_Ag_Fayette_full_report_030413.pdf.
Author: Laura Skillman
Contact: Alison Davis, 859-257-7260; Leigh Maynard, 859-257-5762; Lori Garkovich, 859-257-7581