AN ECONOMIC DESCRIPTION OF THE AGRICULTURAL … · An Economic Description of the Agricultural...

TECHNICAL REPORT

UCED 2009/10-01

AN ECONOMIC DESCRIPTION OF THE

AGRICULTURAL SECTORS IN CHURCHILL COUNTY

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The University of Nevada, Reno is an equal opportunity, affirmative action employer and does not discriminate on the basis of race, color, religion, sex, age, creed,

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An Economic Description of the Agricultural Sectors in Churchill County

Report Prepared by

Thomas R. Harris

and

Ashley Kerna Ashley Kerna is an Undergraduate Research associate at the University Center for Economic Development in the Department of Resource Economics at the University of Nevada, Reno. Thomas R. Harris is a Professor in the Department of Resource Economics and Director of the University Center for Economic Development at the University of Nevada, Reno.

University Center for Economic Development Department of Resource Economics

University of Nevada, Reno Reno, Nevada

(775) 784-1681

June 2009

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This publication, An Economic Description of the Agricultural

Sectors in Churchill County, was published by the University of

Nevada Economic Development Center. Funds for the publication

were provided by the United States Department of Commerce

Economic Development Administration under University Centers

Program contract #07-66-05878. This publication's statements,

findings, conclusions, recommendations, and/or data represent

solely the findings and views of the author and do not necessarily

represent the views of the United States Department of Commerce,

the Economic Development Administration, University of Nevada,

Reno, or any reference sources used or quoted by this study.

Reference to research projects, programs, books, magazines, or

newspaper articles does not imply an endorsement or

recommendation by the author unless otherwise stated.

Correspondence regarding this document should be sent to:

Thomas R. Harris, Director

University Center for Economic Development

Department of Resource Economics

Mail Stop 204

University of Nevada, Reno

Reno, Nevada 89557-0204

UCED

University of Nevada, Reno

College of Agriculture, Biotechnology, & Natural Resources

Department of Resource Economics

College of Cooperative Extension

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Summary This report is an economic description of the agriculture sectors in Churchill County. Population and Income Trends

From the 2000 Census, the total rural population in Churchill County was estimated to be 8,403. Of the 8,403 in rural Churchill County, only 810 persons live on farms.

During the period 1997 through 2007, average annual cash receipts and other income for the agriculture sector were $45.8 million. Production expenses for the period averaged $42.5 million. Net income was on average $3.3 million. Yearly production expenses remained fairly constant over the period. However, cash receipts were variable. Realized net income to the agricultural sectors in Churchill County ranged from $16.7 million in 2007 to $2.3 million in 2002.

The coefficient of variation for production expenses was low (0.2160), while realized net returns was high (1.3519). This indicates the agricultural producers in Churchill County faced in years of low prices well maintained production expenses and linkages with other economic sectors in Churchill County while realizing lower net returns.

Concepts of Economic Multipliers: Income and Economic Multipliers

Export sales bring dollars to the county economy which provides for future economic growth.

Import sales act as leakages from the county economy.

Changes in economic activity by the agricultural sectors will impact the economic activity of the Churchill County economy.

A measure of the economic effects of the changes in the Churchill County economy from changes in economic activity by the agricultural sectors is called the multiplier effect.

To derive these multiplier effects and county level sectoral output, employment, and labor income levels, the Minnesota IMPLAN Group, Inc. input-output model IMPLAN was used.

Sectoral Values of Output, Employment, and Labor Income

In 2007, there were 140 economic sectors in the Churchill County economy.

In 2007, three Churchill County agricultural sectors were in the top 25 Churchill County economic sectors in value of output. These sectors were the All Other Crop Farming Sector ($52.66 million), the Dairy Cattle and Milk Production Sector ($46.05 million), and the Cattle Ranching and Farming Sector ($21.76 million). These sectors ranked 6th, 11th, and 23rd among Churchill County’s 140 economic sectors in value of output, respectively.

In 2007, the agricultural sectors in Churchill County had two sectors that were in the top 25 economic sectors in Churchill County in employment. These sectors were the Dairy Cattle and Milk Production Sector and the All Other Crop Farming Sector with 226 and 176 employees, respectively.

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Sectoral labor income is the summation of sectoral employee compensation and proprietor income.

In 2007, the agricultural sectors in Churchill County had no sectors that were in the top 25 economic sectors in Churchill County in labor income.

Sectoral Value of Exports and Imports

Export sales bring dollars into the county economy for future economic growth. Economic development activities to assist exporting sectors are called export enhancement economic development activities.

Imports are leakages outside the county economy and as such, reduce future economic development growth. Economic development activities to reduce imports are called import substitution economic development activities.

In 2007, three of Churchill County’s agricultural sectors were ranked in the top 25 sectors in value of exports in Churchill County. These sectors were the Dairy Cattle and Milk Production Sector ($45.15 millions), the All Other Crop Farming Sector ($39.48 million), and the Cattle Ranching and Farming Sector ($15.35 million).

In 2007, the agricultural sectors in Churchill County had three sectors that were in the top 25 economic sectors in value of imports. These sectors were the All Other Crop Farming Sector ($25.9 million), the Dairy Cattle and Milk Production Sector ($17.2 million) and the Cattle Ranching and Farming Sector ($6.0 million).

In 2007, the Churchill County economy realized $240.5 million more in exports than imports. All agricultural sectors in Churchill County had $52.3 million more in exports than imports. The agricultural sectors in Churchill County are a positive economic sector in its contribution to the balance of trade in Churchill County.

Sectoral Location Quotients

Location quotients are an analytical tool used by regional economists to estimate the economic base of an economy.

Location quotients measure the degree of concentration of Churchill County economic sectors.

A location quotient greater than 1.25 indicates an exporting sector or a sector that is part of Churchill County’s economic base.

In 2007, the agricultural sectors in Churchill County had three sectors that were in the top 25 economic sectors in location quotient values as compared to the United States. These sectors were the All Other Crop Farming Sector (13.05), the Dairy Cattle and Milk Production Sector (9.37), and the Cattle Ranching and Farming Sector (3.28).

In 2007, the agricultural sectors in Churchill County had four sectors that were in the top 25 economic sectors in location quotient values as compared to the Nevada. These sectors were the Dairy Cattle and Milk Production Sector (39.50), the All Other Crop Farming Sector (8.94), the Cattle Ranching and Farming Sector (8.83), and the Grain Farming Sector (8.45).

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The agricultural sectors of the Dairy Cattle and Milk Production Sector, the All Other Crop Farming Sector, and the Cattle Ranching and Farming Sector are major contributors to the economic base of Churchill County.

Inter-industry Analysis

Inter-industry or input-output analysis shows the economic interactions and linkages between sectors in the Churchill County economy.

The IMPLAN (Minnesota IMPLAN Group, Inc. 2007) microcomputer input-output software was used to derive the economic, employment, and labor income impacts of the Churchill County agricultural sectors.

In 2007, the agricultural sectors in Churchill County had a value of production level of $122.6 million, hired 531 employees, and paid labor income of $700,000.

Given the economic inter-linkage and multiplier effect, total output impacts to the Churchill County economy from activities by the agricultural sectors was $175.4 million. Total employment and labor income impacts in the Churchill County economy from activity of the agricultural sectors was 977 jobs and $1.43 million in labor income.

Given the economic linkages of Churchill County’s agricultural sectors, any changes in production level due to drought, rangeland fires, or adverse output prices will impact the whole economy of Churchill County.

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Population and Agricultural Sectors Income and Purchase Trends

Table 1 provides information on population, numbers of housing units, and numbers of

persons employed in Churchill County in 2000. Of the 23,982 persons living in Churchill County in

2000, only 810 persons lived on farms. Farm families occupied 273 of the 9,732 total housing units

in the county. Of the 10,288 persons employed in the county 336 were employed either as farm

operators and managers or as farm workers and related occupations.

Table 1. Population, Number of Housing Units and Number of Persons Employed by Occupation in Churchill County in 2000.

Churchill County Population Housing Units Occupations

Employed All Persons Occupied Persons

Farm 810

Total Rural Population 8,403

Rural Farm 273

Rural 3,368

Total 9,732

Farmer and Farm Managers 107

Farming, fishing, and forestry occupations 229

Total 23,982 10,288 Source: U.S. Department of Commerce. Bureau of the Census.

Table 2 shows the income received and expenses paid by agricultural producers in Churchill

County from 1997 through 2007. Eleven year averages are calculated for cash receipts and other

income, production expenses, realized net income, and farm labor and proprietor's income. From

Table 2, cash receipts for 2007 was estimated to be $69.665 million, $57.131 million for production

expenses, $16.666 million for net income, and $16.476 million for labor and proprietor's income.

Realized net incomes ranged from a high of $16.666 million in 2007 to a low of $2.348 million in

2002. Table 2 shows the variability in the overall agricultural sector in Churchill County.

Also from Table 2, estimates of standard deviation and coefficient of variation are derived.

Standard deviation and coefficient of variation provide information of variability of economic

variables. Coefficient of variation is the standard deviation divided by the average value of the

economic variable. From Table 2, coefficient of variation measures variability. Of interest is that

the category of the lowest coefficient of variation is production expenses (0.1727). While realized

net returns had the highest coefficient of variation (1.3519). This shows the agricultural sector is a

vital sector to the Churchill County economy. Agricultural producers will be faced with variability

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Table 2. Income Received and Expenses Paid by Farmers in Churchill County from 1997 through 2007.

Year Cash Receipts and

Other Income ($1,000's)

Production Expenses ($1,000's)

Realized Net Income ($1,000's)

Farm Labor and Proprietor's Income

($1,000's)

1997 36,812 35,882 3,076 8,001

1998 42,067 35,971 8,942 13,836

1999 38,048 35,255 5,723 10,573

2000 37,479 37,350 3,317 9,295

2001 44,472 37,758 9,517 12,553

2002 38,843 41,488 2,348 8,739

2003 40,951 41,957 3,011 8,610

2004 51,539 43,713 10,706 13,773

2005 53,275 48,702 7,866 14,016

2006 50,504 52,273 3,542 9,646

2007 69,665 57,131 16,666 16,476

Average 45,787 42,498 3,289 11,411

Standard Deviation 9,890 7,340 4,446 2,830

Coefficient of Variation 0.2160 0.1727 1.3519 0.2480

Source: U.S. Department of Commerce. Bureau of Economic Analysis.

of output prices but their production expenses or purchase linkages with other sectors of the local

economy are rather constant. Therefore, agricultural producers faced with variable output prices

will maintain their local input purchase linkages while realizing lower net returns to their

operation. Also, any public land or surface water management policy that causes changes in

agricultural sector input purchases as to lower net returns to the producer will have impacts

throughout the Churchill County economy.

Some Basic Concepts of County Economics and

Income and Employment Multipliers

Figure 1 illustrates the major dollar flows of goods and services in any economy. The

foundation of a county’s economy is those businesses which sell some or all of their goods and

services to buyers outside of the county. Such a business is a basic industry. The flow of products

out of, and dollars into, a county is represented by the two arrows in the upper right portion of

Figure 1. To produce these goods and services for “export” outside the county, the basic industry

purchases inputs from outside of the county (upper left portion of Figure 1), labor from the

residents or “households” of the county (left side of Figure 1), and inputs from service industries

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located within the county (right side of Figure 1), and inputs from service industries located within

the county (right side of Figure 1). The flow of labor, goods and services in the county is completed

by households using their earnings to purchased goods and services from the county’s service

industries (bottom of Figure 1). It is evident from the interrelationships illustrated in Figure 1 that

a change in any one segment of a county’s economy will have reverberations throughout the entire

economic system of the county.

Consider, for instance, the agricultural sectors, and their impacts on the local economy. The

agricultural sectors’ activities can be considered a basic industry as it draws dollars from outside

the area. These dollars may hire a few people from the household sector such as laborers to herd

the livestock or irrigate the crops. However, most of the local economic linkages are from the

agricultural sectors’ purchasing goods from the local Service Sectors. These include businesses

such as restaurants, gas stations, hotels and other retail businesses. As earnings increase in these

businesses, they will hire additional people and buy more inputs from other businesses. Thus the

change in the economic base works its way throughout the entire local economy.

The total impact of a change in the economy consists of direct, indirect and induced impacts.

Direct impacts are the changes in the activities of the impacting industry, such as the reduction of

operations by the agricultural sectors. The impacting business, such as the agricultural sectors,

changes their purchases of inputs as a result of the direct impact. This produces an indirect impact

in the business sectors. Both the

direct and indirect impacts change

the flow of dollars to the

community’s households. The local

households alter their consumption

accordingly. The effect of this

change in local household

consumption upon businesses in a

county is referred to as an induced

impact.

A measure is needed that

yield the effects created by an

increase or decrease in economic

activity. In economics, this measure

is called the multiplier effect.

Figure 1. Overview of County Economic System.

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Analysis of Churchill County Economic Data

From the IMPLAN input-output model database (Minnesota IMPAN Group, Inc., 2007); there

were 140 economic sectors in Churchill County. Of these 140 sectors, seven economic sectors were

in the overall agricultural sector for Churchill County. Table 3 lists the seven economic sectors in

the overall agricultural sector for Churchill County.

Table 3. The Seven Economic Sectors in the Overall Agricultural Sector for Churchill County, 2007.

Sector

Grain Farming

Vegetable and Melon Farming

Greenhouse, Nursery, and Floriculture Products

All Other Crop Farming

Cattle Ranching and Farming

Dairy Cattle and Milk Production

Animal Production-Except Cattle

Using the IMPLAN input-output model database (Minnesota IMPLAN Group, Inc., 2007), the

top 25 sectors in value of output, employment, and labor income are shown in Tables 4 through 6.

Table 7 demonstrates how a different aggregation can affect the results of the model. Tables 8 and

9 show the top 25 sectoral values of exports and imports which provide an indication of sectoral

contribution to the Churchill County economic base. Sectoral location quotient values show which

sectors are importers, self-sufficient, and exporters. Tables 10 and 11 show these sector location

quotient values as compared to the nation and the state.

Sectoral Value of Output, Employment, and Labor Income

In 2007, there were 140 economic sectors in Churchill County. Table 4 shows the top 25

economic sectors by value of output for Churchill County. These 25 sectors made up approximately

$1.2 billion in output, or 71 percent of total Churchill County output in 2007. Three Churchill

County agricultural sectors were in the top 25 economic sectors in value of output. These sectors

were the All Other Crop Farming Sector which consists mainly of alfalfa hay with an output value of

$52.7 million or is 3.04 percent of total Churchill County value of output; the Dairy Cattle and Milk

Production Sector whose output in 2007 was $46.1 million and was 2.66 percent of total Churchill

County output; and the Cattle Ranching and Farming Sector estimated value of output in 2007 of

$21.8 million and was 1.26 percent of total 2007 Churchill County value of output. The output rank

level of the agricultural sectors are the All Other Crop Farming Sector 6th, the Dairy Cattle and Milk

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Table 4. Top 25 Economic Sectors by Values of Output for Churchill County, 2007.

Sector Output

($1,000,000) Percentage of Total Output

Employment and payroll for Federal Military 168.702 9.74

Real estate 130.838 7.56

Imputed rental value for owner-occupied dwellings 81.97 4.73

Nonferrous metal 76.518 4.42

Facilities support services 59.695 3.45

All other crop farming 52.656 3.04

Plate work and fabricated structural product manufacturing 51.577 2.98

Employment and payroll for SL Government Education 50.722 2.93

Private hospitals 47.769 2.76

Wholesale trade 47.461 2.74

Dairy cattle and milk production 46.051 2.66

Electric power generation, transmission, and distribution 42.016 2.43

Scenic and sightseeing transportation and support activities 41.21 2.38

Offices of physicians, dentists, and other health practitioners 37.112 2.14

Food services and drinking places 33.384 1.93

Construction of new residential permanent site structures 33.38 1.93

Construction of new nonresidential commercial and health care structures 30.989 1.79

Retail Nonstores 28.452 1.64

Employment and payroll for SL Government Non-Education 27.337 1.58%

Amusement parks, arcades, and gambling industries 24.639 1.42

Retail - General merchandise 23.27 1.34

Automotive repair and maintenance, except car washes 23.225 1.34

Cattle ranching and farming 21.757 1.26

Other Federal Government enterprises 21.25 1.23

Other state and local government enterprises 20.975 1.21

TOTAL FOR TOP 25 SECTORS 1222.955 70.63

Production Sector 11th, and the Cattle Ranching and Farming Sector as 23rd largest of Churchill

County’s 140 economic sectors in sectoral value of production.

Table 5 shows the top 25 Churchill County economic sectors by levels of employment for

2007. These top 25 employment sectors made up approximately 69 percent of total Churchill

County employment in 2007. The Dairy Cattle and Milk Production Sector in Churchill County in

2007 had 226 employees which was 1.47 percent of total Churchill County employment. In

addition, the All Other Crop Farming Sector in 2007 in Churchill County employed 176 persons and

was 1.15 percent of total Churchill County employment. The Dairy Cattle and Milk Production

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Table 5. Top 25 Economic Sectors by Employment for Churchill County, 2007.

Sector Employment Percentage of

Total Employment

Real estate 1,682 10.96

Employment and payroll for Federal Military 1,024 6.67

Employment and payroll for SL Government Education 889 5.79

Facilities support services 731 4.76

Food services and drinking places 687 4.48

Employment and payroll for SL Government Non-Education 421 2.74

Retail - General merchandise 416 2.71

Wholesale trade 413 2.69

Private hospitals 400 2.61

Amusement parks, arcades, and gambling industries 374 2.44

Scenic and sightseeing transportation and support activities 359 2.34

Automotive repair and maintenance, except car washes 356 2.32

Offices of physicians, dentists, and other health practitioners 328 2.14

Other Federal Government enterprises 277 1.80

Retail Nonstores 267 1.74

Construction of new nonresidential commercial and health care structures 247 1.61

Dairy cattle and milk production 226 1.47

Private household 214 1.39

Employment and payroll for Federal Non-Military 207 1.35

Retail - Building material and garden supply 192 1.25

Civic, social, professional, and similar organizations 190 1.24

Retail - Motor vehicle and parts 185 1.21

Plate work and fabricated structural product manufacturing 180 1.17

All other crop farming 176 1.15

Construction of new residential permanent structures 173 1.13

TOTAL FOR TOP 25 SECTORS 10,614 69.14

Sector and All Other Crop Farming ranked as the 17th and 24th largest sectors in regard to sectoral

employment.

Table 6 shows the top 25 economic sectors in Churchill County by levels of labor income.

Sectoral labor incomes are the sum of sectoral employee compensation and proprietor income.

From Table 6, the top 25 of 140 economic sectors in Churchill County accounted for approximately

75 percent of total Churchill County labor income. In 2007, none of the Agricultural Sectors were

high enough to rank in the top 25 sectors by labor income. However, the All Other Crops Farming

Sector was ranked 34th and the Dairy Cattle and Milk Production Sector was ranked 51st. It is the

purchase patterns of the agricultural sectors that is important and will be shown later.

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Table 6. Top 25 Economic Sectors by Labor Income for Churchill County, 2007.

Sector

Employer Compensation

Proprietor Income

Labor Income

Percentage of Total Labor

Income

Employment and payroll for Federal Military 105.521 0 105.521 16.28

Employment and payroll for SL Government Education 45.278 0 45.278 6.98

Facilities support services 34.737 0.166 34.903 5.38

Private hospitals 26.146 0.016 26.162 4.04

Scenic and sightseeing transportation and support activities 24.42 0.659 25.079 3.87

Employment and payroll for SL Government Non-Education 24.403 0 24.403 3.76

Offices of physicians, dentists, and other health practitioners 8.425 14.056 22.481 3.47

Real estate 1.764 18.978 20.742 3.20

Wholesale trade 5.883 11.816 17.699 2.73

Employment and payroll for Federal Non-Military 16.725 0 16.725 2.58

Other Federal Government enterprises 16.419 0 16.419 2.53

Construction of new nonresidential commercial and health care 10.545 1.939 12.484 1.93

Monetary authorities and depository credit intermediation 3.842 8.065 11.907 1.84

Food services and drinking places 10.88 0.497 11.377 1.76

Nonferrous metal 10.799 0.341 11.14 1.72

Retail - General merchandise 10.265 0.43 10.695 1.65

Plate work and fabricated structural product manufacturing 10.007 0.025 10.032 1.55

Amusement parks, arcades, and gambling industries 9.29 0.392 9.682 1.49

Retail - Motor vehicle and parts 8.209 0.93 9.139 1.41

Construction of new residential permanent site structures 7.394 1.355 8.749 1.35

Electric power generation, transmission, and distribution 8.454 0 8.454 1.30

Construction of other new nonresidential structures 6.583 1.194 7.777 1.20

Automotive repair and maintenance, except car washes 2.238 5.14 7.378 1.14

Retail Nonstores 6.05 0.926 6.976 1.08

US Postal Service 6.959 0 6.959 1.07

TOTAL FOR TOP 25 SECTORS 421.236 66.925 488.161 75.30

The next step is to estimate sectoral importance to the county’s economic base. Sectoral

value of exports and imports, and location quotient values will be used to estimate individual

sectoral contributions to county economic base.

Sectoral Value of Exports and Imports

As shown in Figure 1, export sales bring dollars into a county economy which provides

growth for future economic expansions. Imports, however, are seen as leakages from county

economies and as such reduce future economic growth. Economic development activities which

expand exports are called export enhancement while reduction of imports are referred to as import

substitution activities.

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Three Churchill County agricultural sectors were in the top 25 of sector exporters in

Churchill County in 2007 (Table 7). The Dairy Cattle and Milk Production Sector had value of

exports of $45.149 million in 2007, which was 6.68 percent of total Churchill County exports; the

All Other Crop Farming Sector had export sales of $39.483 million in 2007 or was 5.84 percent of

total Churchill County exports; and the Cattle Ranching and Farming Sector had exports of $15.352

million in 2007, which was 2.27 percent of total county exports. These export levels rank the Dairy

Cattle and Milk Production Sector, All Other Crop Farming Sector and the Cattle Ranching and

Farming Sector as 5th, 6th, and 12th among Churchill County’s 140 economic sectors in value of

exports.

Table 7. Top 25 Economic Sectors by Value of Export for Churchill County, 2007.

Sector

Total Exports ($1,000,000)

Percentage of Total


Facilities support services 58.629 8.67

Nonferrous metal (except copper and aluminum) rolling, drawing, extruding and alloying 54.103 8.00




Scenic and sightseeing transportation and support activities for transportation 30.594 4.52


Retail - Nonstore 19.384 2.87

Primary smelting and refining of nonferrous metal (except copper and aluminum) 16.051 2.37



Insurance agencies, brokerages, and related activities 14.165 2.09


Commercial and industrial machinery and equipment rental and leasing 12.821 1.90

Ground or treated mineral and earth manufacturing 12.505 1.85

Retail - Gasoline stations 12.328 1.82

Retail - General merchandise 10.717 1.59

Ornamental and architectural metal products manufacturing 10.091 1.49

Forest nurseries, forest products, and timber tracts 8.434 1.25

Data processing, hosting, and related services 8.294 1.23

Sand, gravel, clay, and ceramic and refractory minerals mining and quarrying 7.530 1.11

Hospitals 5.827 0.86

Other Federal Government enterprises 5.502 0.81

Natural gas distribution 5.313 0.79


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Most Churchill County industries purchase inputs from outside the county. Table 8 shows

the top 25 economic sectors in Churchill County by value of industry imports. From Table 8, these

top 25 economic sectors in Churchill County account for approximately 72 percent of total Churchill

County value of industry imports. The Nonferrous Metal and Plate Work Sector was the largest

importer accounting for approximately 17 percent of total county industry imports. The All Other

Crop Farming Sector had $25.908 million in imports, which was 5.95 percent of total industry

imports to Churchill County and the Dairy Cattle and Milk Production Sector had imports of

$17.186 million, which was 3.95 percent of the total Churchill County industry imports. Lastly, the

Table 8. Top 25 Economic Sectors by Value of Imports for Churchill County, 2007.

Industry

Total Imports ($1,000,000)

Percent of Total

Nonferrous metal (except copper and aluminum) rolling, drawing, extruding and alloying 45.470 10.44




Facilities support service 15.957 3.66

Construction of new residential permanent site single- and multi-family structures 14.070 3.23

Imputed rental value for owner-occupied dwellings 13.524 3.10

Construction of new nonresidential commercial and health care structures 12.826 2.94

Food services and drinking places 12.647 2.90

Hospitals 12.416 2.85

Wholesale trade 11.197 2.57




Offices of physicians, dentists, and other health practitioners 8.077 1.85

Securities, commodity contracts, investments, and related activities 7.410 1.70

Insurance agencies, brokerages, and related activities 7.248 1.66

Construction of other new nonresidential structures 7.142 1.64

Data processing, hosting, and related services 6.851 1.57

Other state and local government enterprises 6.778 1.56

Natural gas distribution 6.436 1.48



Scenic and sightseeing transportation and support activities for transportation 5.919 1.36

Commercial and industrial machinery and equipment rental and leasing 5.122 1.18


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Cattle Ranching and Farming Sector had imports of $6.043 million, which was 1.39 percent of the

total Churchill County industry imports. This import level ranks the All Other Crop Farming Sector,

the Dairy Cattle and Milk Production Sector and the Cattle Ranching and Farming Sector at 3rd, 4th

and 22nd, respectively, among Churchill County’s 140 economic sectors.

Another economic development strategy attempts to reduce levels of imports. Import

substitution attempts to strengthen economic linkages in a county economy and therefore enhance

the sector’s multiplier effect. By identifying input-output sector commodities that are imported the

county can target these sectors for import substitution efforts.

In 2007, the Churchill County economy realized $240.5 million more in exports than

imports. All agricultural sectors in Churchill County had $52.3 million more in exports than

imports. The agricultural sectors in Churchill County are a positive economic sector in its

contribution to the favorable balance of trade in Churchill County. This shows the importance of

the agricultural sectors in Churchill County that is often overlooked if only value of output,

employment, and labor income are used to value the importance of an economic sector to a

county’s economy.

Location Quotient Analysis

The economic base of a county refers to the relative size of its economic sectors. A county is

said to have a diversified economic base if several economic sectors are relatively large.

Conversely, if one or a few economic sectors dominate a local economy, the economy is said to have

a concentrated economic base. One analytical regional economics technique to measure economic

base is location quotients.

The degree of concentration of Churchill County economic sectors are determined by

calculating location quotients for individual economic sectors. Location quotients indicate the

economic importance of each county economic sector relative to the same economic sector at the

national level. Location quotients usually use employment as an indicator of an industry’s size and

importance. The primary focus of location quotients is to identify the economic sectors that are

either more important or less important statewide or locally than nationally. The broader the

economic base, that is, the higher the location quotients, the more stable the economy of a county.

On the other hand, very low location quotients represent economic sectors that are largely

underdeveloped and may offer an opportunity for future development.

An economic sector’s location quotient is the ratio of the sector’s share of employment in

the county to the sector’s share of employment in the nation. It is calculated as follows:

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Nn

Ee

LQi

i

i

Where:

i Economic Sector

LQ i = Location quotient for economic sector i

e i = County employment in economic sector i

E = Total county employment

n i = National employment in economic sector i

N = Total national employment

The interpretation of location quotients are as follows:

1. Every sector’s output can be divided into two uses: export and local consumption (use). 2. The amount consumed (used) by a community is proportionate to the amount

consumed locally. 3. If the location quotient for an economic sector is less than one, goods and services must

be imported to satisfy local demands. 4. If the location quotient for an economic sector is equal to one, then the economy is

approximately fulfilling the requirements of the local household and firms.

5. Finally, if the location quotient is greater than 1.25 for a particular sector, it is an exporting sector for the county. A self-sufficient economic sector is designated by a location quotient value between 0.75 and 1.25 for a selected county. Finally an importing economic sector is designated by a location quotient less than 0.75 for a selected state or county.

Table 9 lists the top 25 economic sectors in Churchill County by their location quotient

values as compared to the nation. The All Other Crop Farming Sector, the Dairy Cattle and Milk

Production Sector and the Cattle Ranching and Farming Sector ranked 5th, 8th and 19th among

Churchill County’s 140 sectors. The location quotient values of 13.05 for the All Other Crop

Farming Sector, 9.37 for the Dairy Cattle and Milk Production Sector, and 3.28 for the Cattle

Ranching and Farming Sector indicates that these sectors are major economic base sectors for

Churchill County and bring dollars into the county for future economic growth and development.

Table 10 also lists the top 25 economic sectors in Churchill County by their location

quotient values, but instead of being compared with the nation it is compared with the State of

Nevada. In this table, four of the Agricultural Sectors are above 1.25, indicating that they are

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Table 9. Top 25 Economic Sectors by Location Quotient Value for Churchill County as Compared to the U.S., 2007.

Sector Location Quotients

Ground or treated mineral and earth manufacturing 77.53

Nonferrous metal (except copper and aluminum) rolling, drawing, extruding and alloying 64.41

Facilities support services 50.36

Forest nurseries, forest products, and timber tracts 16.61

All other crop farming 13.05

Plate work and fabricated structural product manufacturing 11.12

Other Federal Government enterprises 9.41

Dairy cattle and milk production 9.37

Sand, gravel, clay, and ceramic and refractory minerals mining and quarrying 8.17

Hunting and trapping 6.47

Scenic and sightseeing transportation and support activities for transportation 6.25

Optical instrument and lens manufacturing 5.71

Employment and payroll for Federal Military 5.25

Amusement parks, arcades, and gambling industries 5.24

Other leather and allied product manufacturing 4.66

Other nonmetallic mineral mining and quarrying 4.07

Video tape and disc rental 3.49

Data processing, hosting, and related services 3.48

Cattle ranching and farming 3.28

Automotive repair and maintenance, except car washes 2.97

Veterinary services 2.92

Real estate 2.89

Personal and household goods repair and maintenance 2.73

Commercial and industrial machinery and equipment rental and leasing 2.53

General and consumer goods rental except video tapes and discs 2.33

exporting sectors. The sectors with high location quotient values are the Dairy Cattle and Milk

Production Sector (39.5), the All Other Crop Farming Sector (8.94), the Cattle Ranching and

Farming Sector (8.83), and the Grain Farming Sector (8.45).

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Table 10. Top 25 Economic Sectors by Location Quotient Value for Churchill County as Compared to Nevada, 2007.

Sector Location

Quotients

Ground or treated mineral and earth manufacturing 103.47

Optical instrument and lens manufacturing 66.95

Facilities support services 45.70

Dairy cattle and milk production 39.50

Forest nurseries, forest products, and timber tracts 33.43

Nonferrous metal (except copper and aluminum) rolling, drawing, extruding and alloying 25.43

Hunting and trapping 23.17

Other Federal Government enterprises 22.24

Other leather and allied product manufacturing 20.69

Plate work and fabricated structural product manufacturing 20.42

Steel product manufacturing from purchased steel 10.35

All other crop farming 8.94

Cattle ranching and farming 8.83

Grain farming 8.45

Data processing, hosting, and related services 8.19

Employment and payroll for Federal Military 6.83

State and local government electric utilities 6.09

Scenic and sightseeing transportation and support activities for transportation 5.26

Petroleum lubricating oil and grease manufacturing 5.17

Sand, gravel, clay, and ceramic and refractory minerals mining and quarrying 4.07

Community food, housing, and other relief services, including rehabilitation services 4.05

Personal and household goods repair and maintenance 3.76

Drilling oil and gas wells 3.63

Automotive repair and maintenance, except car washes 3.58

Video tape and disc rental 3.54

Inter-Industry Analyses Within a county economy, there are numerous economic sectors performing different tasks.

All sectors are dependent upon each other to some degree. A change in economic activity by one

sector will impact either directly or indirectly the activity and viability of other sectors in the

economy. In order to show these interdependencies and interactions between economic sectors, a

countywide input–output model can be used.

Input-output models derive the linkages and multipliers for economic sectors in an

economy. For this analysis, the microcomputer input-output model, IMPLAN (Minnesota IMPLAN

Group, Inc., 2007), was used to derive economic linkages for Churchill County. The economic,

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employment, and household income impacts of Churchill County’s agricultural sectors on the

Churchill County economy was estimated.

Output Impacts of Churchill County’s Agricultural Sectors

Table 11 shows the economic impacts of Churchill County’s agricultural sectors. Economic

impacts will be the impact of agricultural sectors output activities on total Churchill County

economic activity. In 2007, total value of output generated by Churchill County’s agricultural sector

was $122.60 million. Applying IMPLAN multipliers, the total economic activity generated by the

Churchill County agricultural sectors was $175.43 million. In other words, the agricultural sectors

in Churchill County generate through their economic linkages an additional $52.83 in economic

activity.

Table 11. Churchill County’s Agricultural Sectors Impact on County Economic Activity, 2007.

Output Impacts

Agricultural Sector Direct

($1,000,000) Indirect

($1,000,000) Induced

($1,000,000) Output

Multiplier

Total Output Impacts

($1,000,000)

Grain farming 0.806 0.191 0.042 1.289 1.039

Vegetable and melon farming 0.541 0.082 0.045 1.235 0.668

Greenhouse- nursery- and floriculture product 0.173 0.013 0.019 1.189 0.206

All other crop farming 52.656 12.684 4.474 1.326 69.815

Cattle ranching and farming 21.757 17.495 2.277 1.909 41.529

Dairy cattle and milk production 46.051 12.662 2.597 1.331 61.311

Animal production- except cattle and poultry 0.618 0.183 0.066 1.404 0.867

TOTAL 122.602 43.311 9.521 1.431 175.434

As for individual agricultural sectors in Churchill County, the All Other Crop Farming Sector

had the largest impact on Churchill County creating $69.815 million in economic activity. The

Churchill County agricultural sector of the All Other Crop Farming Sector, Dairy Cattle and Milk

Production Sector, and the Cattle Ranching and Farming Sector made up approximately 98 percent

of total direct agricultural sector’s output and close to 99 percent of total Churchill County

agricultural sector economic impacts. These three agricultural sectors play a major part not only in

Churchill County’s overall agricultural industry but the overall economy of Churchill County.

Employment Impacts of Churchill County’s Agricultural Sectors

Table 12 shows the employment impacts of Churchill County’s agricultural sectors.

Employment impacts are the impacts of agricultural sector employment on total Churchill County

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Table 12. Churchill County’s Agricultural Sectors Impact on County Employment, 2007.

Employment Impacts

Agricultural Sector Direct (Jobs)

Indirect (Jobs)

Induced (Jobs)

Employment Multiplier

Total Employment

Impacts (Jobs)

Grain farming 8.000 2.178 0.430 1.326 10.608







TOTAL 531.0 350.94 95.523 1.841 977.466

employment. In 2007, total employment generated by Churchill County’s agricultural sector was

531 employees. Applying IMPLAN multipliers, the total employment activity generated by the

Churchill County agricultural sectors was 977 employees. In other words, the agricultural sectors

in Churchill County generated through economic and employment linkages an additional

employment of 446.5 employees.

As for individual agricultural sectors in Churchill County, the Dairy Cattle and Milk

Production Sector had the largest employment impact in Churchill County creating 352 jobs. The

Churchill County agricultural sectors of the Dairy Cattle and Milk Production Sector, the All Other

Crop Farming Sector, and the Cattle Ranching and Farming Sector made up approximately 97

percent of total direct agricultural sector’s employment and total Churchill County agricultural

sector employment impacts. These three agricultural sectors play an important part not only in

Churchill County’s overall agricultural industry but the overall employment in the Churchill County

economy.

Household Income Impacts of Churchill County’s Agricultural Sectors

Table 13 shows the household income impacts of Churchill County’s agricultural sectors.

Household income is comprised of sectoral employee compensation and proprietor income. In

2007, total household income generated by Churchill County’s agricultural sector was $700,000.

Applying IMPLAN multipliers, the total household income activity generated by the Churchill

County’s agricultural sectors was $1.43 million. In other words, the agricultural sectors in Churchill

County generated through economic and income linkages an additional $730,000 in household

income activity.

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Table 13. Churchill County’s Agricultural Sector’s Impact on County Household Income Activity, 2007.

Income Impacts

Agricultural Sector

Direct ($1,000,000)

Indirect ($1,000,000)

Induced ($1,000,000)

Income Multiplier

Total Income Impacts

($1,000,000)

Grain farming 0.0334 0.0716 0.0177 3.6728 0.1226







TOTAL 0.7000 0.5254 0.2037 2.0416 1.4290

As for individual agricultural sectors in Churchill County, the Greenhouse-Nursery-and

Floriculture Product Sector had the largest impact on Churchill County creating $270,000 in

household income. The Churchill County agricultural sectors of the Greenhouse-Nursery-and

Floriculture Product Sector, the Animal Production-except Cattle and Milk Production, and the

Cattle Ranching and Farming Sector made up approximately 41 percent of total direct agricultural

sector’s household impacts and approximately 54 percent of total Churchill County agricultural

sector household impacts.

Conclusions

The primary objective of this paper was to analyze trends in the Churchill County

agricultural sector and investigate the economic impacts of the agricultural sectors on the Churchill

County economy. Results of this analysis showed the trends and variability in total agricultural

sector net incomes and that by value of output and value of employment the agricultural sectors in

Churchill County are important.

From the 2000 Census, total rural population in Churchill County was 8,403. Of the total

rural population, only 810 persons in Churchill County lived on farms. From 1997 to 2007, average

annual cash receipts and other income for the agricultural sector in Churchill County were $45.787

million with average annual production expenses of $42.498 million, which yielded an average net

income for the agricultural sector in Churchill County of $3.289 million. Agricultural sector net

income for Churchill County ranged from a high of $16.666 million in 2007 to $2.348 million in

2002. Of interest is the calculated coefficient of variation. Coefficient of variation estimates the

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variability of an economic time series. Agricultural sector production expenses had the lowest

coefficient of variation of all time series of agricultural sector prices received and paid. This shows

that the agricultural sector in Churchill County maintains its input purchase patterns among

economic sectors in Churchill County regardless of output prices. This somewhat constant input

purchase pattern increases economic linkages of the Churchill County agricultural sector to other

economic sectors in Churchill County. Therefore any changes in input patterns by the agricultural

sector in Churchill County will yield more profound impacts to the Churchill County economy at

large.

However, the value and ranking of sectoral output and employment does not by itself reveal

the importance of an economic sector. Another way to view the importance of an economic sector

to a county economy is to investigate the sector’s contribution to the economic base. Economic

base or basic sectors are those economic sectors that export to economies outside the county

boundary. These sectors bring dollars into the local economy for further and future economic

development. The Churchill County agricultural sectors of the Dairy Cattle and Milk Production

Sector, the All Other Crop Farming Sector, and the Cattle Ranching and Farming Sector ranked 5th,

6th and 12th, respectively, in sectoral value of exports of Churchill County’s 140 economic sectors.

This export value is an indication of the importance of Churchill County’s agricultural sectors to

future economic development in Churchill County.

Another statistic to estimate sectoral economic base in a county’s economy is location

quotients. Location quotients indicate exporting sectors. If a sector’s location quotient value is

1.25, the sector is designated as an exporting sector. In 2007, the All Other Crop Farming Sector,

the Dairy Cattle and Milk Production Sector and the Cattle Ranching and Farming Sector had

location quotient values of 13.05, 9.37 and 3.28 as compared to the nation, respectively. When

compared to Nevada, the Dairy Cattle and Milk Production Sector, the All Other Crop Farming

Sector, the Cattle Ranching and Farming Sector, and the Grain Farming had location quotient values

of 39.50, 8.94, 8.83, and 8.45, respectively. These location quotients indicate that the Dairy Cattle

and Milk Production Sector, the All Other Crop Farming Sector, and the Cattle Ranching and

Farming Sector are important economic base sectors to the Churchill County economy.

Lastly, a county-wide Churchill County input-output model was used to derive the

economic, employment and labor income impacts of the agricultural sectors on the Churchill

County economy. In 2007, the direct output, employment, and labor income impacts on Churchill

County were $122.6 million, 531 jobs, and $700,000, respectively. Including the multiplier effects

and economic linkages of the agricultural sectors on the Churchill County economy, total output,

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employment, and labor income effects of the agricultural sectors on the Churchill County economy

are estimated to be $175.43 million, 977 jobs, and $1.43 million, respectively.

Results of this study have shown the variability that exists within the Churchill County

agricultural sector and the importance of the agricultural sectors on the Churchill County economy.

Not only is sectoral output, employment, and labor income important but the degree that the

agricultural sectors participate in the economic base of Churchill County is of equal or greater

importance. Also, the degree of economic linkages the agricultural sectors has on the Churchill

County economy is critical. The county input-output model analysis showed that the economic,

employment, and labor income linkages and impacts of the agricultural sectors go beyond their

own sectors. The changes in economic activity by the agricultural sectors in Churchill County from

weather, cattle prices, or public land/surface water policies management will greatly impact the

economy and other sectors in the Churchill County economy.

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References

Minnesota IMPLAN Group. IMPLAN PRO: User’s Guide. Minnesota IMPLAN Group, Inc.: Stillwater,

Minnesota, 2007. U.S. Department of Commerce. Nevada Summary Population and Housing Characteristics 2000.

Census of Population and Housing. Bureau of Census. Economic and Statistics Administration, Washington, D.C., 2001.

U.S. Department of Commerce. Farm Income and Expenses. Bureau of Economic Analysis.

Washington, D.C., 2009.

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