Economic impact assessments consider the injection of income as a result of a specific event, policy choice or economic activity from a specific industry.

The agriculture sector buys inputs that are produced in different sectors within the economy. The purchase of agricultural inputs creates a flow of expenditure and a multiplier impact within the economy.

The geographic/spatial viewpoint assumed in an economic impact analysis will influence the extent of leakage of expenditure. For example, on a county or city level, more value chain inputs will be sourced from “outside” the focus area, resulting in leakage of expenditure out of the focus area. Similarly, on a national level, imported components will create a leakage of expenditure that lowers the overall economic impact.

Our economic impact analysis for each town incorporates the economic impacts of the agri-food value chain (including the primary and processing sector) at the national level, pro forma values and specific assumptions to derive each town’s contribution to the national level economic impact of the agri-food value chain. Pro forma values consider each town’s relative share in the hectares of tillage planted, including herd and flock numbers for animal production within a 30km radius of each town.

Economic impact analysis

An increase in demand for agricultural output requires producers (the sector) to increase their purchases of goods and services from their suppliers to produce the product in question.

In turn, suppliers of agricultural inputs increase their purchases of the goods and services they need to produce the products they supply to the agricultural sector.

This creates additional rounds of expenditure in the value chain, also referred to as the multiplier impact, that leads to increased output and employment.

The overall economic impact can be categorised in terms of the following components:

1. Direct: impacts directly accruing from expenditure by farmers in the sector (eg purchase of farming inputs).

2. Indirect: impacts generated by expenditure by businesses within the sector’s supply chain.

3.Induced: impacts generated by the spend of individuals and businesses outside the sector as a result of increased incomes (eg additional household expenditure as a result of increased incomes).

Measuring economic impact

Our impact assessment estimates the national level economic impact of the agri-food value chain in terms of gross economic output and employment for each sub-sector (beef, dairy, sheep, poultry, pig, tillage). Based on pro-forma values and specific assumptions, we derive and report on each town’s contribution to this national level economic impact.