Economic Contribution of the Ontario Chicken Industry Study prepared October 2013
Farming and food, stronger together. A new era of industry collaboration for profitable growth, competitiveness and sustainability. Ontario Farm Products Marketing Commission
Table of Contents Executive Summary... 1 1.0 Introduction... 2 2.0 Chicken Farming in the Province of Ontario... 4 3.0 Chicken An Integral Part of the Farm Economy... 8 4.0 Economic Contribution of Chicken Farming in Ontario... 10 5.0 Contribution of Primary Processing of Ontario Chicken... 18 6.0 Summary of Findings... 24 Annex I Background on the Study Authors... 28 Annex II An Overview of the Model... 28
Executive Summary Ontario s chicken industry is an important contributor to the economic health and growth of the province. Ontario boasts the largest chicken producer, processor and consumer base in Canada, with more than 200 million chickens grown every year by more than 1,000 independent, successful chicken farms and processed by some 18 primary processors. While most of Ontario s chicken production is concentrated in a band just west of the Greater Toronto Area that stretches from Lake Erie to the Bruce Peninsula, the benefits of chicken farming and processing stretch across the province. Chicken farmers have a marketplace value of $760 million, with a Gross Domestic Product of $819 million that supports 11,409 full-time equivalent jobs. sales by Ontario chicken farmers generates $2.29 of economic activity. When combined with the economic activity of chicken processors, every dollar spent results in $2.34 in broader economic activity. Increases or decreases in chicken output will have a corresponding impact on the economy. For example, if Ontario can increase chicken production by 10%, it will result in $272 million of additional economic activity, and 1,913 new jobs created with an overall increase in wage payments by $84 million. The increase to Ontario s GDP will be $138 million, and governments will collect an additional $39 million in tax revenue. Including the primary processing of chicken, the industry contributes $2.72 billion to the Ontario economy, with a GDP of $1.38 billion and supporting 19,183 full-time equivalent jobs. Tax revenues generated by the chicken industry for the federal, provincial and local governments total $391 million. Ontario chicken farmers spent $342 million on feed in 2012, accounting for nearly a quarter of the sales volume of the province s feed manufacturers. Supplying this feed accounted for 19% of all soybeans crushed in Ontario, and required 14,000 truckloads of corn to be delivered to the feed manufacturers that s 54 trucks on each workday of the year. Chicken farmers and processors also support chick hatcheries, energy suppliers, general equipment suppliers and labour. But the economic impact of chicken farming goes beyond agriculture and processing plants. Every dollar of chicken 1
1.0 Introduction The Ontario chicken industry generated $760 million in farm cash receipts in 2012, representing 6.6% of all farm level cash receipts received from the market by Ontario farmers. The chicken industry is a large and valuable contributor to the Ontario farm economy, as well as to the overall provincial economy. When the value of processed chicken is included, this overall market value of Ontario s chicken industry grows to $1.16 billion; this is valued as primary processed chicken and does not include highly processed chicken such as breaded chicken fingers or stuffed chicken products. This report shows that the overall economic consequence of the When the value of processed chicken is included, this overall market value of Ontario s chicken industry grows to $1.16 billion; this is valued as primary processed chicken and does not include highly processed chicken. Ontario chicken supply chain is rather significant, with it contributing to more than 19,000 full-time jobs throughout the Ontario economy. The overall economic impact of the Ontario chicken industry and its supply chain cannot be ignored. Partners in the chicken industry of Ontario engaged outside economic expertise 1 to provide factual information to stakeholders and policy decision-makers on the economic contribution of the supply managed chicken industry within the province of Ontario and its importance to the overall farm economy across Ontario 2. 1.1 Project Focus and Organization of this Report This report provides a perspective on the overall importance of the chicken industry in Ontario from a few different viewpoints. Section 2.0 illustrates the importance of chicken farming across Ontario, which accounts for 6.6% of market cash receipts across the province. In counties where chicken farming is more predominant, such as Wellington, the chicken industry can be as much as double that value, demonstrating the significant impact of chicken production on the farming economy in rural Ontario. In Section 3.0, we examine the linkages between chicken farming and the agri-food sector, including the chick hatching sector and the corn and soybean sectors that supply the feed for Ontario chickens. The overall contribution of chicken farming to the province of Ontario, such as the amount of GDP (value added) contributed by chicken production throughout the province, is explored in Section 4.0. Across the economy, chicken farming generates more than $800 million in GDP. The approach used to measure the economic contribution of chicken farming is a special application of a generic regional impact model (RIM: Canada) developed by Econometric Research Limited (ERL). It is a unique model that captures the economic impact of different activities at the provincial and national levels. The model is based on a novel technology that integrates input output analysis and location theory. [See Annex II for more background on the model and on Input/Output analysis.] The model utilizes a large set of economic and technical databases for Canada that are regularly published by 1 The JRG Consulting Group in collaboration with Econometric Research Limited (ERL), a firm that specializes in economic impact modelling and analysis. (Annex 1 provides a short background on the study authors.) 2 In the near future, CFO may collaborate with the other supply-managed commodities in Ontario to offer a broader view of the contribution of the supply-managed sector to the Ontario economy. 2
Statistics Canada 3. A short list of Statistics Canada data used in the model includes the inter-provincial input output tables, employment by sector, taxes by type of tax and the level of government collecting it, prices of products, energy used in physical and energy units, etc. Some of the key impact indicators generated by the model include value added, gross output (value of transactions in the economy), employment, wages and salaries, and taxes received by governments. The Ontario chicken economy includes more than chicken farming; processing Ontario-grown chicken is a significant piece that is covered in Section 5.0. This analysis includes all upstream economic activities 4 based on shipments of primary processed chicken. Primary processed chicken includes cut up fresh chicken as shipped by processors to retail establishments. The analysis was conducted in this manner for two reasons. First, data is available on the wholesale value of primary processed chicken, and this is not the case for further processed chicken such as chicken kiev. Second, this measure is a good indication of the overall economic activity that may be at risk if the regulatory features of the supply management are no longer in force 5. 3 Statistics Canada: Inter-provincial Input Output Tables, Catalogue No. 15F0042XDB. 4 These are backward linkages through input suppliers, such as chicken farmers and feed manufacturers. 5 Major pillars of supply management include (1) control of imports to pre-specified access levels, (2) production controls within Canada, and (3) the ability to establish a made in Canada price for the live chicken supplied by Ontario chicken farmers to processors. 3
2.0 Chicken Farming in the Province of Ontario Ontario is the largest chicken-producing province in the country, accounting for 32.2% of Canadian chicken production 6 in 2012. This share of national production is less than Ontario s share of the Canadian population, which stands at 38.7% with a population of 13.5 million Ontarians. Quebec is the second largest chicken-producing province and accounts for 27.4% of Canada s chicken output. In 2012, Ontario chicken famers shipped 447 million kilograms of chicken to primary processors, which generated $760 million in farm cash receipts, as reported by Statistics Canada. This value is: 14.4% of farm cash receipts generated by Ontario s livestock and poultry sector; and 6.6% of all market based cash receipts received by Ontario farmers in 2012. Within Ontario, the importance of chicken production varies across the province, but it is largely concentrated in a band west of the Greater Toronto Area that stretches from the Bruce Peninsula to the shores of Lake Erie (see Figure 2.1 counties with darker shading have a larger share of the overall Ontario chicken production). Wellington is the provincial leader in chicken production, with $108.9 million in sales value for 2012 accounts and 14.3% of Ontario s chicken production, which is followed by Huron at 12.3% and Niagara Region at 11.7%. The map (Figure 2.1) also indicates the location of the 18 primary chicken processing plants in Ontario that receive live chicken supplied by Ontario farmers. These primary processors are located in the chicken production regions and near the major chicken consuming region (the GTA). The three largest counties, in terms of chicken production, account for 38% of provincial production, with the top five accounting for 55.4% of Ontario s chicken production. The top 10 chicken producing counties are highlighted in light grey in Table 2.1, and account for 79% of Ontario s chicken production. 6 It can be noted that in 1990, Ontario accounted for 34.8% of overall Canadian chicken production. 4
Figure 2.1 Location of Chicken Production and Chicken Processing Plants Sudbury District Lake Nipissing Nipissing District Manitoulin District Georgian Bay Parry Sound District Muskoka District Municipality Haliburton Renfrew Nepean Lanark Ottawa Gloucester Stormont Lake Huron Bruce Grey Simcoe Victoria Peterborough Hastings Frontenac Lambton Huron Middlesex Perth London Elgin Oxford Wellington Dufferin Brampton Kitchener Brant Richmond Hill Oakville Hamilton Toronto Oshawa St. Catharines Lake Ontario Chicken Production Share by 15% 8% Kent Lake Erie Chicken Primary Processing Plants 0% Essex Table 2.1 Value of Ontario Chicken Production, by, 2012 2012 Market Value ($million) Share of Ontario Value (%) 2012 Market Value ($million) Share of Ontario Value Wellington $108.9 14.3% Huron $93.6 12.3% Niagara $88.7 11.7% Oxford $64.7 8.5% Perth $64.7 8.5% Haldimand-Norfolk $59.4 7.8% Waterloo $34.9 4.6% Middlesex $33.3 4.4% Bruce $29.6 3.9% Hamilton-Wentworth $21.3 2.8% Durham $19.0 2.5% Lambton $16.2 2.1% Elgin $15.0 2.0% Prescott & Russell $14.9 2.0% Simcoe $14.8 2.0% Brant $11.7 1.5% Peterborough $8.7 1.1% Gengarry & Stormont $8.0 1.1% Prince Edward $7.9 1.0% Grey $6.9 0.9% Northumberland $5.9 0.8% Dufferin $5.2 0.7% Peel $5.0 0.7% York $4.9 0.6% Ottawa-Carleton $3.7 0.5% Halton $3.6 0.5% Victoria (Kawartha Lakes) $3.0 0.4% Kent $2.8 0.4% Lennox & Addington $1.2 0.2% Essex $1.1 0.1% Renfrew $0.9 0.1% Sudbury $0.1 0.0% All Ontario $759.60 100% Source: Calculations based on distribution of quota units in late 2012 5
The table on the previous page highlights Ontario s top counties and regions in terms of overall chicken production. The importance of chicken production to the overall farm economy within a county is illustrated in Figure 2.2, which shows the importance of chicken production within a county based on the chicken contribution to farm cash receipts in a county 7. Again Wellington is the top county, with 13.3% of county farm output being chicken production; this is followed by Niagara at 10.3% and then Peterborough at 9.6% of its output (See Table 2.2). The data indicates that the chicken industry is an important part of the local agricultural economies in the counties that are in the southeast to northwest band on the west side of the GTA. Counties where the farm value of chicken production in a county exceeds the provincial average of 6.6% of all farm production (based on cash receipts) are highlighted in grey in Table 2.2. There is a high correlation between the counties where chicken has the highest share of farm cash receipts and the largest chicken producing counties 8, as indicated by the last two columns in Table 2.2. In counties with chicken production above the provincial average, we can expect that the amount of valued added (or GDP) in the region due to chicken will be meaningful. GDP captures all of the value added by chicken producers as well as the value added by all of their suppliers (feed mills, hatcheries, labour, etc.). Table 2.2 Counties Ranked by Share of Chicken Value to Overall Farm Cash Receipts 2012 Market Value ($million) Share of Ontario Value (%) Chicken Share of Cash Receipts Wellington $108.9 14.3% 13.3% Niagara $88.7 11.7% 10.3% Peterborough $8.7 1.1% 9.6% Huron $93.6 12.3% 8.9% Hamilton-Wentworth $21.3 2.8% 8.2% Oxford $64.7 8.5% 7.9% Haldimand-Norfolk $59.4 7.8% 7.4% Perth $64.7 8.5% 6.9% Prince Edward $7.9 1.0% 6.3% Durham $19.0 2.5% 6.2% Waterloo $34.9 4.6% 5.9% Bruce $29.6 3.9% 5.8% Brant $11.7 1.5% 5.4% Peel $5.0 0.7% 4.7% Middlesex $33.3 4.4% 4.3% Prescott & Russell $14.9 2.0% 4.1% Elgin $15.0 2.0% 3.4% Northumberland $5.9 0.8% 3.1% Simcoe $14.8 2.0% 3.1% Dufferin $5.2 0.7% 3.1% Lambton $16.2 2.1% 2.9% Grey $6.9 0.9% 2.7% Halton $3.6 0.5% 2.3% Victoria (Kawartha Lakes) $3.0 0.4% 2.2% Gengarry & Stormont $8.0 1.1% 1.7% York $4.9 0.6% 1.6% Lennox & Addington $1.2 0.2% 1.5% Ottawa-Carleton $3.7 0.5% 1.1% Renfrew $0.9 0.1% 0.8% Sudbury $0.1 0.0% 0.7% Kent $2.8 0.4% 0.5% Essex $1.1 0.1% 0.2% All Ontario $759.60 100% 6.6% Source: Calculations based on distribution of quota units in late 2012 for first two columns and 2011 Census of Agriculture data and 2010 chicken production for the third column. 7 This calculation used 2011 Census data, which reports on 2010 cash receipts for a county, and compared that overall county value to the 2010 value of chicken production in that county (which is based on internal CFO data). 8 It can be noted that Middlesex is the 8th largest chicken producing ; however, its share of farm cash receipts is below the provincial average, given the importance of other agricultural production in the county. 6
Figure 2.2 Importance of Chicken Production to Farm Cash Receipts Within a Parry Sound District Renfrew Ottawa Lake Huron Bruce Georgian Bay Grey Simcoe Victoria Haliburton Peterborough Hastings Frontenac Lanark Stormont Huron Perth Mississauga Toronto Lake Ontario Lambton Middlesex London Hamilton St. Catharines Share By 15% Kent 8% 0% The data indicates that the chicken industry is an important part of the local agricultural economies in the counties that are in the southeast to northwest band on the west side of the GTA. 7
3.0 Chicken An Integral Part of the Farm Economy While the production of chicken is a key economic driver especially in parts of rural Ontario west of the GTA the economic impact of the industry goes well beyond what is produced on the chicken farm. The economic importance of the Ontario chicken industry must also be considered from the perspective of its major linkages in the Ontario farm economy. Through the purchases of various goods and services, chicken production generates a positive economic impact throughout its supply chain. Viewed another way, chicken production is adding value to the corn and soybeans grown in the province of Ontario, as these grain and oilseed products are converted into meat protein on the chicken farm. Figure 3.1 (on the next page) provides an illustration of the product and financial flows associated with chicken production. The 2012 chicken volume of production of 447 million kilograms by Ontario chicken farmers through its forward linkage to primary processing enabled the $1.16 billion in output of primary processed chicken products. This volume of chicken production required $342 million of prepared feed from Ontario feed manufacturers and $140 million of chicks from Ontario s hatcheries. These two inputs account for 63% of the value of the chicken supplied by chicken farmers in 2012. The 2012 volume of chicken production required an estimated 813,000 tonnes of prepared feed, with the feed destined for Ontario chicken production accounting for 23% of the value of shipments from all Ontario feed mills (based on value of sales as measured by Statistics Canada). These feed mills in turn required approximately $141 million of corn (valued at the farm gate of corn farmers) and $112 million of soymeal from Ontario s soybean crushers. This volume of soybean meal accounted for 19% of all soybeans crushed in the province, and the purchase of $141 million of Ontario soybeans to manufacture the soybean meal. The value of purchases by soybean crushers is higher than the meal value since the value of the soy oil is not shown in Figure 3.1. The Ontario chicken industry also used an estimated 549,000 tonnes of corn in 2012, which required 14,000 truckloads of corn delivered to feed manufacturers the equivalent of 54 loads every day of the workweek in 2012. This annual volume of corn is more than the amount of corn used by a typical 200-million-litre ethanol plant 9 located in Ontario. In total, chicken feed manufacturers purchased 10% of the 2011/12 soybean crop and 8% of the 2011/12 corn crop 10. The production of chicken in 2012 generated $282 million in farm gate sales of corn and soybeans 11, which accounts for 9.5% of Ontario corn and soybean cash receipts for 2012. These grain and oilseed farmers in turn purchased an estimated $66 million in seed, fertilizer and crop protection materials. These economic linkages from chicken production back through to input suppliers illustrate the interdependencies between chicken production, the grain production sector and processing (of feed and soymeal). These backward linkages for all purchases made by Ontario chicken farmers are used to calculate the economic activity generated in rural Ontario by the chicken production sector. If Ontario chicken production did not exist, a good portion of the level of economic activity occurring in the Ontario economy linked to chicken production would also not exist. 9 A 200 million litre ethanol plant will use between 480,000 to 500,000 tonnes of corn in a year. 10 The 2011/12 crop is used for comparison since corn and soybeans are harvested in the fall and are the major feedstock for the feed manufacturing sector in 2012. 8
Figure 3.1 Overview of Financial and Product Flows in the Chicken Industry, 2012 Primary Processing of Ontario Chicken $1,160 M. (output) ($150 M. to labour) 3,750 jobs Ontario Chicken Farmers $760 M. (output) 447 M. kgs Feed Manufacturing $342 M. in sales (23% of all sales) 813,000 tonnes 538 jobs ($25 M. to labour) Chick Hatcheries Required $140 M. in sales 201 M. chicks Soymeal $112 M. in sales (19% of all shipments) 224,000 tonnes Ontario Soybeans $141 M. in sales 283,000 tonnes 233,000 acres (10% of 2011 crop) Ontario Corn $141 M. in sales 549,000 tonnes 143,000 acres (8% of 2011 crop) Ontario Corn and Soybeans $282 M. in sales 376,000 acres (9% of acres) 550 farms with 500 acres $35 M. in seed $24 M. in fertilizer $6 M. in crop protection 11 This volume also represents ~ 7% of all corn, wheat and soybean production in the province, and represents the output of 1,155 average grain and oilseed farmers. 9
4.0 Economic Contribution of Chicken Farming in Ontario As noted above, Ontario chicken production generated $760 million in farm gate value in 2012. Chicken production, just like the provincial economy, is a complex of interacting sectors. Focusing only on the direct contributions of chicken farming results in a truncated and limited view of its entire and full economy, multiplying the effects of the original expenditures on overall economic activity. The following is a measurement of the direct, indirect and induced impacts of chicken farming to the economy of Ontario. The most recent year for which data is available (2012) is used to give a recent estimate of these contributions. 4.1 Impact of Chicken Farmer Expenditures on Overall Economic Activity contributions to the provincial economy. Producing $760 million of chicken output requires inputs from several sectors, including feed manufacturers, chick hatcheries, energy suppliers and labour. These input suppliers to chicken production also require supplies purchased in the economy, such as trucks to deliver feed and chicks and energy to operate plants and equipment, etc. The economic contribution of a sector is driven by its purchases from other sectors in the economy and resulting economic activity throughout the economy. Through this economic activity, the overall economic contribution of Ontario chicken production can be assessed. Such assessment is based on using a regional impact model (an input-output model) developed by Econometric Research Limited that estimates the economic impact of economic activities 12. This approach shows how expenditures by chicken farmers to produce a dollar s worth of chicken purchased by a processor, for example, circulates and re-circulates within the The economic driver of the Ontario chicken industry is the expenditures made on inputs and household consumption by the chicken production sector, made possible by the $760 million total value of chicken production in 2012. These expenditures include the purchasing of key inputs to produce the chicken and consumption items by chicken farming households and others impacted directly or indirectly by chicken farming. In an input/output analysis total expenditures equate to the total value of production, since all income is expended in some manner. These expenditure levels and the resulting linkages 13 drive the economic impact and the measurement of economic contribution. Initial expenditures This figure indicates the amount of expenditure directly made by Ontario chicken farmers. It is these expenditures that typically drive the results. Initial expenditures in the Ontario chicken production sector drive associated economic activity through the indirect effects (suppliers purchasing their required supplies) and the induced effect (the impact of expenditures by labour on goods and services). 12 An overview of the model used and the general approach are provided in Annex I. 13 There are two resulting types of linkages upstream (backward) and downstream (forward) based on the expenditures of the farm sector. Downstream linkages of farm production are the impacts on users of farm products such as processors. Impacts on suppliers of fertilizer, machinery, and energy, are examples of upstream linkages. Our analysis only accounts for these upstream linkages. 10
A dollar spent on producing these primary agricultural products such as chicken circulates and re-circulates within the economy, multiplying the effect of the original expenditures on overall economic activity. This process is referred to as the economic multiplier effect and it operates at several levels: Table 4.1 Impact of Ontario Chicken Farming on Ontario Economic Activity, 2012 Initial Expenditure $760 Million The initial expenditures on equipment, materials and labour, which are generally referred to as the direct costs of operation the initial (direct) effects; Subsequent purchases by suppliers of materials and services to sustain the original and derivative expenditures the indirect effects; and Gross Output $1,740 Million The induced effects that emerge when farm operators and workers in the sectors stimulated by initial and indirect expenditures spend their additional incomes on consumer goods and services. The impact of these initial expenditures 14 on output of the economy is shown in Table 4.1. The $760 million of direct A dollar spent on producing these primary agricultural products such as chicken circulates and re-circulates within the economy, multiplying the effect of the original expenditures on overall economic activity. Direct $760 Million Indirect & Induced $980 Million Multiplier 2.29 The output multiplier is 2.29, which means that for each million dollars in chicken output (sales) by the farm sector, there are total sales (or transactions) of $2.29 million throughout the Ontario economy. Source: JRG Consulting Group and Econometric Research Limited calculations economic output of chicken farmers generates $980 million in indirect and induced expenditures, resulting in total economic activity of $1.7 billion in transactions throughout the economy. This figure is solely the result of chicken production, and accounts for the supply chain linkages for chicken farmers (e.g., feed companies, professional services, energy, labour, etc.). Multipliers These are summary measures that represent the division of the total impacts (direct, indirect and induced) by the initial expenditures. For example, the gross output multiplier associated with the Ontario chicken farming business is calculated by dividing the total gross impact by initial expenditures. The only exception is that of the employment multiplier where total employment is divided by direct employment in order to preserve the common units. 14 The distribution of these initial expenditures across inputs and household income made by Ontario chicken farmers are calculations made which include a variety of sources, such as expenditure data supplied by Statistics Canada, proprietary engineering costing data associated with chicken production, and other confidential sources. 11
4.2 Value Added Due to Ontario Chicken Farming Production Activities The total impact of chicken farming on economic activity in Ontario is distinct from the value added due to Ontario chicken production. Value added 15, which is the same as Gross Domestic Product (GDP), is a preferred indicator of impact and is defined to include the sum of wages, rent, interest, Table 4.2 Value Added by Ontario Chicken Farming, 2012 Initial Expenditure $760 Million Based on Input/Output analysis, an estimated $430 million in value added was generated by the non-farm sector due to the economic activity created within the chicken production sector. Value Added $839 Million Direct $389 Million depreciation on capital items and profits and is a measure of the net contribution of an industry or sector to the economy. Table 4.2 shows that the direct value added economic impact of Ontario chicken production in 2012 was $389 million, with a total direct and indirect impact of $839 million throughout the Ontario economy after considering the indirect and induced effects. The direct GDP includes the economic impact of chicken farmers and production and captures the value added by the input suppliers to the chicken production sector, which sustains the direct expenditures. Based on input output analysis, an estimated $430 million in value added was generated by the non-farm sector due to the economic activity created within the chicken production sector. Indirect & Induced $430 Million Multiplier 1.08 Source: JRG Consulting Group and Econometric Research Limited calculations Value Added This figure represents net output generated by the initial expenditures of Ontario chicken farmers in the province. It is typically the sum of wages, rent, interest, depreciation, and profits. When all of the indirect and induced economic activity is considered, the value added (or GDP) due to chicken production is $839 million. The multiplier is 1.08 implying that for each $10 million in farm level sales, another $10.8 million in GDP is created throughout the Ontario economy. 15 This is different from gross output, which represents the sales of the sector and includes the value of the output of its suppliers. 12
The national average for this income multiplier is just over 1.0 across all industries. This value added (GDP) measure captures the net contributions added to the economy due to an activity. The gross economic impact explained in Section 4.1 reflects the value of transactions in the economy and not the retained value added. As with all of these measures of economic impact, the economic contribution reported only measures economic impact (e.g., value added due to farm production) based on upstream purchases (purchase from input suppliers). The economic contribution of further downstream economic activity, such as chicken processing, is not captured in the above analysis, but is examined in Section 5.0 including the GDP associated with primary processing of Ontario-raised chicken, including the economic impacts associated with chicken production (as chicken production is a supplier to chicken processors). 13
4.3 Employment and Labour Income Impact of Ontario Chicken Farming The chicken farming industry creates and sustains jobs across the province and especially in rural areas with the economic activity associated with chicken production supporting 11,409 full-time equivalent (FTE) jobs across Ontario. As seen in Table 4.3, chicken production resulted in $451 million paid in wages and salaries throughout Ontario in 2012, with $193 million associated with direct employment and $258 million based on the indirect and induced economic activity associated with chicken farming. Wages and salaries are a part of value added, with this $451 million equal to 55% of the total $819 million in value added due to chicken farming and the upstream economic activity associated with chicken production. The direct wages and salaries of $193 million are more than those paid by chicken farmers to employees and family members. This labour income includes the wages and salaries Chicken production resulted in $451 million paid in wages and salaries throughout Ontario in 2012. paid to workers that supply inputs to chicken producers, such as feed suppliers, hatcheries, suppliers of contract services, suppliers of energy, providers of professional services (e.g., lawyers, bankers, and accountants), etc. Employment This refers to the total person years (full-time equivalent jobs) generated by farm output. Ontario chicken farmers directly support 5,834 FTE jobs, which includes employment in direct input suppliers such as in feed companies associated with supplying feed to chicken farmers (refer back to Figure 3.1), hatcheries, energy suppliers, suppliers of other services, etc. Another 5,575 FTE jobs are supported through the indirect and induced impacts. This impact results in an employment multiplier of 1.96, which means that for every direct job created by chicken production, another 0.96 jobs are created through the induced and indirect activities, resulting in a total of 1.96 FTE jobs 16. Total employment because of Ontario s chicken farms is 11,409 FTE jobs. By way of comparison, a large Canadian food manufacturing company such as Saputo had a reported 10,200 employees in 2012 17. These measures indicate that for every million dollars in farm level chicken output, this output generates 7.7 direct FTE jobs and a total of 15.0 FTE jobs (after considering indirect and induced effects) 18. It should also be noted that there are more jobs generated off the chicken farm than on the chicken farm. For example, a chicken farm with $1 million in output could employ two to three individuals. The distribution of employment resulting from the output of Ontario chicken farmers is shown in Table 4.4 (p.16), with these employment estimates based on the input-output impact model. 16 The Canada wide average employment multiplier is somewhat higher, at 2.5 across all industries. 17 Source: Globe and Mail, Report on Business, Ranking Canada s Top 1,000 Public Companies by Profit, June 28, 2012. 14
The agriculture sector has an associated 5,939 FTE jobs due to chicken production, which is 52% of the overall employment impact. These agricultural jobs include those on chicken farms, as well as those on corn and soybean farm operations, hatching egg producers, as well as others that support chicken production. The second largest sector that benefits via employment from chicken production is the retail trade sector, which supports 985 FTE jobs. This is followed by services, such as business services, education and health services, and finance, insurance & real estate. The transportation sector accounts for 258 FTE jobs, and travel and marketing employment is just under 200 FTE jobs. The food and beverage manufacturing sector jobs reported in Table 4.4 are primarily in the feed manufacturing sector, with the input model suggesting 174 FTE jobs due to chicken farming. Prior estimates based on principal statistics as reported by Statistics Canada suggest potentially 538 FTE jobs in feed manufacturing 19. Table 4.3 Employment Impact due to Ontario Chicken Production, 2012 Initial Expenditure $760 Million Employment 11,409 Wages & Salaries $451 Million Direct 5,834 Indirect & Induced 5,575 Direct $193 Million Indirect & Induced $258 Million Multiplier 1.96 Source: JRG Consulting Group and Econometric Research Limited calculations 18 The Canadian average (all industries) is 6.7 direct jobs and 18.0 total jobs per million dollars of output. 19 Some of these jobs can be categorized as transportation and marketing jobs within the input-output model. 15
Table 4.4 Employment Generated by Ontario Chicken Production, 2012 Industry FTE Employment Due to Chicken Production Distribution Agriculture 5,939 52.1% Retail Trade 985 8.6% Business and Computer Services 800 7.0% Education and Health Services 716 6.3% Finance, Insurance, & Real Estate 511 4.5% Accomodation Services 395 3.5% Other Services 305 2.7% Transportation & Storage 258 2.3% Construction 224 2.0% Travel & Marketing 194 1.7% Food, Feed & Beverage Manufacturing 174 1.5% Administration & General Office 156 1.4% Communiaction and Utilities 148 1.3% Machinery and Equipment 95 0.8% Chemicals and Chemical Products 85 0.7% Petroleum Products 68 0.6% Transportation Margins 62 0.5% Transportation Equipment 50 0.4% Primary Metals 44 0.4% Electrical Products 40 0.4% Metal Fabricating 38 0.3% Mining 25 0.2% Paper and Allied Products 19 0.2% Rubber and Plastics 17 0.1% Printing and Publishing 14 0.1% Non-Metal, Minerals 11 0.1% Wood Industries 8 0.1% Other Manufacturing 8 0.1% Logging 7 0.1% Furniture 6 0.1% Clothing Industries 3 0.0% Primary Textiles 3 0.0% Total 11,409 100% 4.4 Tax Revenues Resulting from Ontario Chicken Farming Besides its direct and indirect impacts on the Ontario economy, Ontario chicken production also generates tax revenues for governments. Table 4.5 shows the total contribution to tax revenues generated by the economic activity (direct, indirect, and induced) generated due to Ontario farmers supplying $760 million in chicken to primary processors. The federal government receives $122 million in tax revenues, the Ontario government $77 million and local governments $23 million, mostly through property taxes. Taxes The impact model generates a large number of taxes (income taxes, HST, property taxes, etc.) each of which is linked with the level of government receiving it. Total taxes collected by government as a result of the economic activity due to chicken production are 29% of the value of chicken shipped by Ontario chicken famers to primary chicken processors. As reported in Table 4.6, personal income tax accounts for 56% of the taxes generated [$125/$222] based on all of the direct, indirect and induced impacts of chicken production. Total taxes of $222 million were generated due to Ontario chicken production in 2012. A summary of the overall impact of chicken farming in the province of Ontario is shown in Figure 4.1, where the initial expenditures by Ontario chicken farmers of $760 million generate $1.74 billion in mostly upstream transactions throughout the province, which results in economy wide 16
GDP of $819 million, of which $451 million are payments to labour. All levels of government receive $222 million in tax revenue due to this economic activity. At the county level, with Wellington accounting for 14.3% of Ontario s chicken output, the associated $108.9 million of output has the following contributions to the overall Ontario economy: Provides for 1,631 jobs throughout Ontario, with associated labour income of $64.5 million; Table 4.5 Government Revenues Generated by Ontario Chicken Production, 2012 Government Revenue $222 Million Adds another $249 million in overall economic activity throughout the province; Increases provincial GDP by $120 million; and Generates $31.5 million in tax revenues to all levels of government. Figure 4.1 Economic Impact of Ontario Chicken Farming $ Million 2,000 1,800 1,600 1,400 1,200 1,000 800 600 400 200 0 Initial Expenditure Gross Output Value Added Wages and Salaries Taxes Federal Taxes Provincial Taxes Local Taxes Source: JRG Consulting Group and Econometric Research Limited calculations Table 4.6 Taxes by Level of Government and Type of Tax, 2012 Federal Provincial Local Total Personal Income Tax $80 $45 $125 Corporate Profit Taxes $34 $19 $53 Property & Bus. Tax $23 $23 Harmonized Sales Tax $8 $13 $21 Total $122 $77 $23 $222 17
5.0 Contribution of Primary Processing of Ontario Chicken The prior section highlighted the economic contribution of Ontario chicken farming; with the result of this farm level output, the economy-wide GDP increases by $819 million of GDP (value added), 11,409 FTE jobs are generated, and $222 billion in tax revenues is contributed to all levels of government. Table 5.1 Impact of Primary Processing of Ontario Chicken on Economic Activity, 2012 Initial Expenditure $1,161 Million But chicken production is only one pillar of the industry. In this section, the economic contribution of the major downstream partner of chicken farming primary processing of chicken is highlighted using the same economic contribution model as used for chicken farming 20. 5.1 Impact of Expenditures by Primary Processors on Overall Economic Activity Gross Output $2,722 Million Overall expenditures in the chicken supply chain (which ends with primary processed chicken products) are more than $1.1 billion, which is also the estimated output of primary chicken processing in Ontario for 2012. This level of output is approximately 3% of the $40 billion in shipments of Ontario s food and beverage manufacturers for 2012. The top expenditure areas in the supply chain are feed at 30% of this expenditure profile, labour and management at 19% of overall expenditures, hatchery supplied chicks at 12% of expenditures, which is followed by freight (both inbound to processors with live chicken and outbound with primary processed products) accounting for 7% of overall expenditures. Direct $1,161 Million Indirect & Induced $1,561 Million Multiplier 2.34 The output multiplier is 2.34, which means that for each million dollars in the output by primary processors of chicken, there are total sales (or transactions) of $2.34 million throughout the Ontario economy 21. Overall economic activity due to this level of output is $2.7 billion in expenditures, or transactions in the economy, with $1.6 billion of this associated with indirect and induced expenditures throughout the economy. Source: JRG Consulting Group and Econometric Research Limited calculations 20 T he expenditure profile used for this analysis assumes an integrated supply chain, where input expenditures by primary processors and chicken farmers are combined. Double counting is avoided by replacing processor expenditures on Ontario chicken by the actual expenditure profile attributed to Ontario chicken farming. 18
Multipliers These are summary measures that represent the division of the total impacts (direct, indirect and induced) by the initial expenditures. For example, the gross output multiplier associated with the Ontario chicken farming business is calculated by dividing the total gross impact by initial expenditures. The only exception is that of the employment multiplier, where total employment is divided by direct employment in order to preserve the common units. 5.2 Value Added Due to Primary Processing of Ontario Chicken As noted above, the total output contribution of Ontario chicken production is distinct from the value added due to Ontario chicken production. Value added (or GDP) includes the sum of wages, rent, interest, depreciation on capital items and profits and is a measure of the net contribution of an industry or sector to the economy. Table 5.2 shows that the direct value added associated with primary processing of Ontario-grown chicken was $677 million in 2012, including the economic impact of chicken production outlined in Section 4.2. Direct GDP includes the value added of primary processing, chicken farming, and the direct suppliers to primary chicken processing and chicken farming. Overall GDP associated with this economic activity was $706 million greater throughout the Ontario economy after considering the indirect and induced effects. $10 million in output of primary processors, another $11.9 million in GDP is created throughout the Ontario economy. This measure captures the net contributions added due to an activity. Gross output, while larger, reflects the value of transactions in the economy and not the retained value added. As with all of these measures of economic impact, the economic contribution reported only measures economic impact of upstream activity (e.g., value added due to purchases from input suppliers). The economic contribution of further downstream economic activity (further processed chicken, such as breaded and stuffed chicken products), or retail sales of chicken is not captured in the above analysis. Only the economic activity associated with upstream activities (suppliers to the supply chain) is accounted for. Table 5.2 Value Added by Primary Processing of Ontario Chicken, 2012 Initial Expenditure $1,161 Million Value Added $1,383 Million Value Added This figure represents net output generated by the initial expenditures of Ontario chicken farmers and primary processors of chicken in the province. It is typically the sum of wages, rent, interest, depreciation, and profits. When all of the indirect and induced economic activity is considered, the value added (or GDP) due to the output of $1.16 billion in primary processed chicken is $1.38 billion in value added. The multiplier is 1.19 implying that for each Direct $677 Million Indirect & Induced $706 Million Multiplier 1.19 Source: JRG Consulting Group and Econometric Research Limited calculations 21 The Canadian average sales multiplier is 2.57 across all industries. 19
5.3 Employment and Labour Income Impact of Primary Processing of Chicken Chicken farming generated an estimated employment of 11,400 FTE positions across the province. When primary processing of chicken is included, the overall employment level associated with chicken industry economic activity increases to 19,183 FTEs (see Table 5.3). By way of comparison, Canada s largest food manufacturing company in 2011, Maple Leaf Foods, employed 19,800 employees 22. Based on expenditures associated with businesses in the chicken supply chain, a total of $843 million in wages and salaries was paid to workers throughout the province, (after accounting for the indirect and induced effects). These wages and salaries are 61% of total value added of nearly $1.4 billion. Employment This refers to the total person years (full-time equivalent jobs) generated by the value of primary processed chicken output. The direct employment impact of this economic activity is 10,269 FTE jobs, and another 8,914 FTE jobs are created through the indirect and induced impacts. This impact results in an employment multiplier of 1.87, which means that for Table 5.3 Employment and Labour Income Impact of Primary Processing of Chicken Initial Expenditure $1,161 Million Employment 19,183 Wages & Salaries $843 Million Direct 10,269 Indirect & Induced 8,914 Direct $416 Million Indirect & Induced $427 Million Multiplier 1.87 Source: JRG Consulting Group and Econometric Research Limited calculations 22 Source: Globe and Mail, Report on Business, Ranking Canada s Top 1,000 Public Companies by Profit, June 28, 2012, 20
every direct job created by chicken production and processing, another 0.87 jobs are created through the induced and indirect activities, resulting in a total of 1.87 FTE jobs 23. These measures indicate that for every million dollars in processed chicken output, this output supports a total of 16.5 FTE jobs (after considering indirect and induced effects) 24. Slightly more than 50% of the jobs generated are outside of the agriculture and the primary processing of chicken sectors (See Table 5.4). The distribution of employment resulting from the output of Ontario chicken farmers is provided in Table 5.4, with these employment estimates based on the input-output impact model. The agriculture sector and primary processing of chicken sector has an associated 9,278 FTE jobs due to chicken, which is 48% of the overall employment impact. The last column in Table 5.4 shows the incremental employment impact by including the primary processing of Ontario grown chicken. An additional 3,339 FTE jobs are generated in the agriculture and primary processing sector due to inclusion of processing, with the vast majority of these jobs occurring at the primary processing plant. In Figure 3.1, we estimated that employment at primary chicken processing operations was 3,750 jobs. Areas where the addition of primary processing to the analysis created considerably more employment include: retail trade with an incremental 825 FTE jobs, which is a result of consumption expenditures on consumer goods (based on direct, indirect, and induced expenditures), and transportation and storage by another 634 FTEs, which is expected based on the inbound live chicken deliveries and outbound shipments of chicken parts associated with primary processing. Table 5.4 Employment Generated by Primary Processing of Ontario Chicken, 2012 Industry FTE Employment Due to Chicken Production Distribution Additional Jobs Due to Processing Agriculture and Primary Processing 9,278 48.4% 3,339 Retail Trade 1,810 9.4% 825 Business and Computer Services 1,241 6.5% 441 Education and Health Services 1,324 6.9% 608 Finance, Insurance, & Real Estate 891 4.6% 380 Accomodation Services 709 3.7% 314 Other Services 523 2.7% 218 Transportation & Storage 892 4.6% 634 Construction 331 1.7% 107 Travel & Marketing 334 1.7% 140 Food, Feed & Beverage Manufacturing 244 1.3% 70 Administration & General Office 433 2.3% 277 Communiaction and Utilities 217 1.1% 69 Machinery and Equipment 134 0.7% 39 Chemicals and Chemical Products 115 0.6% 30 Petroleum Products 110 0.6% 42 Transportation Margins 92 0.5% 30 Transportation Equipment 98 0.5% 48 Primary Metals 71 0.4% 27 Electrical Products 66 0.3% 26 Metal Fabricating 63 0.3% 25 Mining 39 0.2% 14 Paper and Allied Products 32 0.2% 13 Rubber and Plastics 34 0.2% 17 Printing and Publishing 29 0.2% 15 Non-Metal, Minerals 17 0.1% 6 Wood Industries 11 0.1% 3 Other Manufacturing 15 0.1% 7 Logging 9 0.0% 2 Furniture 11 0.1% 5 Clothing Industries 6 0.0% 3 Primary Textiles 4 0.0% 1 Total 19,183 100% 7,774 23 The Canada wide average employment multiplier is somewhat higher, at 2.5 across all industries. 24 The Canadian average (all industries) is 6.7 direct jobs and 18.0 total jobs per million dollars of output. 21
5.4 Tax Revenues Resulting from Primary Processing of Ontario Chicken Inclusion of primary processing in the chicken supply chain increases overall government revenues from $222 million (See Table 4.5, p.17) to $391 million, as reported in Table 5.5. The federal government receives $214 million, with the majority through personal income taxes (See Table 5.6). The provincial government receives $136 million, and the local governments obtain $41 million through property taxes. Taxes The impact model generates a large number of taxes (income taxes, HST, property taxes, etc.) each of which is linked with the level of government receiving it. Total taxes collected by government as a result of the economic activity due to chicken production and primary processing are 34% of the value of processed chicken output. Total taxes of $391 million were generated due to Ontario chicken production in 2012. Accounting for the $1.16 billion of purchases by primary processors of Ontario chicken and Ontario chicken farmers generates $2.7 billion of economic activity throughout the province. This level of economic activity generates $1.4 billion of GDP across Ontario, of which $843 million is paid as wages and salaries. Total tax revenues received by all levels of government due to this economic activity are $391 million. One can postulate that if chicken farming did not continue in its present form, then a portion of the economic contribution generated by chicken farmers and primary processors would no longer be relevant. As an example, if chicken output were to decrease by 10% in Ontario, or if policies prohibited Ontario chicken production to expand by 10% or by 45 million kilograms, and have production move closer to its share of the Canadian population 25, then the economic impact can be measured as follows: Foregone employment in the Ontario economy of 1,918 full time jobs; Foregone payments to labour of $84 million; Foregone provincial GDP of $138 million; Foregone tax revenues to provincial and local governments of $18 million. 25 Production would need to increase by 20% to have production comparable to Ontario s share of national population. 22
At the local level, Niagara accounts for 11.7% of Ontario s chicken output, which results in $135.5 million of primary processed chicken products and has the following contributions to the overall Ontario economy: Table 5.5 Government Revenues due to Primary Processing of Ontario Chicken, 2012 Provides for 2,240 jobs throughout Ontario, with associated labour income of $99 million; Adds another $318 million in overall economic activity throughout the province; Increases provincial GDP by $162 million; and Government Revenue $391 Million Generates $46 million in tax revenues to all levels of government Figure 5.1 Economic Impact of Primary Processing of Ontario Grown Chicken $ Million 2,500 2,000 1,500 Federal Taxes $214 Million Provincial Taxes $136 Million Local Taxes $41 Million Source: JRG Consulting Group and Econometric Research Limited calculations Table 5.6 Taxes by Level of Government and Type of Tax, 2012 1000 Federal Provincial Local Total Personal Income Tax $147 $83 $230 500 Corporate Profit Taxes $50 $28 $71 Property & Bus. Tax $41 $41 0 Initial Expenditure Gross Output Value Added Wages and Salaries Taxes Harmonized Sales Tax $16 $125 $141 Total $214 $136 $41 $391 Source: JRG Consulting Group and Econometric Research Limited calculations 23
6.0 Summary of Findings Chicken farming is important within the Ontario farm sector and also an important contributor to the overall economic well-being of the Ontario economy. A few high-level noteworthy statistics (for 2012) for Ontario chicken production include: A marketplace value of $760 million; Accounts for 6.6% of Ontario s farm cash receipts; Accounts for 14.4% of Ontario s farm cash receipts for livestock and poultry; Five counties of Wellington, Huron, Niagara, Oxford, and Perth account for 55% of output; Through feed purchases of $342 million, accounts for 23% of the sales value of Ontario s feed manufacturers Through the use of corn and soymeal in manufacturing prepared feed, accounts for 9.5% of the market cash receipts obtained by Ontario corn and soybean farmers; Accounts for $140 million of purchases in day-old chicks from hatcheries; The resulting economic activity of $1.74 million across Ontario due to overall farm level expenditures associated with chicken production generates within Ontario: Employment of 11,409 full time jobs; Wages and salaries of $451 million; GDP of $819 million; and Tax revenues to all levels of government of $222 million. Ontario s chicken production is processed within the province at primary processing plants, where the chicken is supplied to users as primary cuts, whether for retail use or for further processing into more value added chicken products. Valuing chicken at the primary processing level results in $1.16 billion of output and produces the following economic contributions across Ontario: $2.72 billion in overall economic activity; Employment of 19,183 full-time equivalent jobs; Payments of $843 million in wages and salaries; Provincial GPD of $1.38 billion; and Taxes to all levels of government of $391 million. Increases or decreases in chicken output have an impact on the result of the economy. For example, if Ontario can increase chicken production by 10%, the following economic contributions can be noted: $272 million of additional economic activity; 1,913 jobs created; Payments to employees increase by $84 million; Ontario s GDP increases by $138 million; Tax revenues collected by the provincial government and by local governments increase by $18 million. As well, if past polices have prohibited growth of the Ontario chicken industry, these above impacts are indicative of the foregone economic contribution of the Ontario chicken industry. 24
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Economic Contribution of Ontario Chicken at the level of chicken farming Gross Output $1,740 Million Value Added $839 Million Wages &Salaries $451 Million Employment 11,409 Government Revenue $222 Million 26
Economic Contribution of Ontario Chicken at the level of primary processing Gross Output $2,722 Million Value Added $1,383 Million Wages & Salaries $843 Million Government Revenue $391 Million Employment 19,183 27
Annex I Background on the Study Authors This report was prepared for Chicken Farmers of Ontario by the following authors JRG Consulting Group provides management consulting services to the agri-food sector across Canada, to private sector companies, trade and industry associations, commodity organizations, legal counsel, investors and government agencies. JRG Consulting Group has provided economic contribution studies in other sectors including the horticulture sector, the Canadian supply management sector, and Ontario agriculture and food. JRG Consulting Group is led by Dr. John Groenewegen, who has provided consulting services to the agri-food sector in the areas of economic analysis, industry competitiveness, market feasibility, business strategy and planning and policy analysis for 28 years. John has a Ph.D. in agricultural and applied economics from the University of Minnesota and is a Certified Management Consultant (CMC). Econometric Research Limited (ERL) is a leading consulting firm in the area of economic impact analysis and in the design of computer models for community economic development and sectorial impact assessment. ERL is led by Dr. Atif Kubursi, who is also a professor at McMaster University. ERL has carried out a large number of studies in the area of economic impact of agriculture and various food industries that are located in Ontario and across Canada. Some of these projects have been in association with other leading Canadian consulting firms. In collaboration with JRG Consulting Group, ERL has also completed some very specific studies of special relevance to agriculture and agri-food sector in Ontario in the area of the impact of agriculture, food processing and the impact of the Canadian horticulture sector on the Canadian economy. Annex II An Overview of the Model Inter-industry tables (or process schedules) are widely used accounting frameworks for the analysis of sectorial linkages 26. In this framework, sectorial relationships appear in a web of interconnectedness since each sector is considered to buy its input requirements from many sectors and sell its outputs to several other sectors and compete for some scarce factors with other sectors. Input-output analysis quantifies the linkages that an industry has with other industries in the economy. Specifically, an industry may buy or sell directly from only a few industries, but its customers and suppliers may be intricately connected to other unrelated industries. As a result, this industry may have a profound influence on the economy through its indirect relations with other industries. Using live chicken as an example, this production requires replacement birds (chicks) that come from within agriculture, feed from the feed manufacturing sector, machinery from industry, energy from the mines and refineries, and labour. These define the direct requirements (or expenditures) to sustain the production of chicken. The supply of feed requires grain from within agriculture, energy, labour, transportation equipment, and machinery; and the production of machinery requires steel, plastics, energy 26 Wassily Leontief. 1966. Input-Output Economics. Oxford: Oxford University Press, A. Smyshlyaev (Ed.). 1985. Input-Output Modeling. New York. IIASA., William H. Miernyk. 1965. Input-Output Analysis, New York. Random House. 28
and skilled labour. The sum total of these outputs and their successive requirements define the indirect requirements. At every stage of production, incomes are paid to workers and other factors of production. These incomes after taxes are spent on consumption bundles that require deliveries of output. The sum total of these deliveries is referred to as the induced effects. When the direct, indirect and induced effects are summed we derive the total effects of a given change in the output of a given sector. The impact model used is a special application of a generic regional impact model (RIM: Canada) developed by Econometric Research Limited. It is a unique model that captures the economic impact of different activities at the local level, the provincial level and the national level. The model is based on a novel technology that integrates inputoutput analysis and location theory 27. The model utilizes a large set of economic and technical databases for Canada that are regularly published by Statistics Canada to reflect the structure of the Canadian economy 28. A short list includes the inter-provincial inputoutput tables, employment by sector, taxes by type of tax and the level of government collecting it, prices of products, etc. depreciation. It is the provincial counterpart of Gross Domestic Product (GDP) at the national level. Employment This refers to the total person years (full-time equivalent jobs) generated by the activity. Taxes Our impact system generates a large number of taxes (income taxes, property taxes, HST, liquor and tobacco taxes, etc.), each of which is linked with the level of government receiving it. For example, the Federal government receives the proceeds from the GST tax, the Provincial government receives the PST, tobacco and liquor tax and the Local government receives the property and business tax. Imports These represent the goods and services acquired from outside the province to sustain the activities of the facilities. They essentially represent leakages from the province. Multipliers These are summary measures that represent the division of the total impacts (direct, indirect and induced) by the initial expenditures. For example, the income multiplier associated with the total construction expenditures on a plant or a warehouse is calculated by dividing the total income (value added) impact by the initial construction expenditures. The only exception is that of the employment multiplier where total employment is divided by direct employment in order to preserve the common units. Some of the key impact indicators generated by these models are defined below to assist the reader in interpreting the results of the economic impact analysis: Initial expenditures This figure indicates the amount of expenditure directly made by the sector under consideration. It is these expenditures that typically drive the results. Value Added (Gross Provincial Income) represents net output generated by the initial expenditures in the country. It is typically the sum of wages, rent, interest and profits in addition to indirect business taxes minus subsidies plus 27 The system has already been applied to the study of the economic impact of Tobacco Agriculture in Southwestern Ontario, The Economic Impact of the Canadian Wheat Board on the Prairie Region, Great Whale Project in Quebec and several large investment projects in New York, the economic Impact of Casino Windsor, Casino Niagara and RAMA, the economic impact of large real estate developments in Ottawa and Windsor, the economic impact of Hamilton Harbour, horseracing and breeding in Ontario, and several proposed manufacturing and tourism projects in Alberta, British Columbia and Ontario. 28 Statistics Canada: Inter-provincial Input Output Tables, Catalogue No. 15F0042XDB. 29
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This report was prepared in October 2013 for Chicken Farmers of Ontario, for more information please visit www.ontariochicken.ca