TECHNICAL REPORT UCED 2006/07-15 AN ECONOMIC DESCRIPTION OF THE AGRICULTURAL SECTOR IN PERSHING COUNTY UNIVERSITY OF NEVADA, RENO
An Economic Description of the Agricultural Sector in Pershing County Report Prepared by Elizabeth Fadali and Thomas R. Harris Elizabeth Fadali is a Research Associate in the Department of Resource Economics and the University Center for Economic Development 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 March 2007 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, national origin, veteran status, physical or mental disability or sexual orientation in any program or activity it operates. The University of Nevada employs only United States citizens and aliens lawfully authorized to work in the United States.
This publication, An Economic Description of the Agricultural Sector in Pershing 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 Pershing County Commissioners, the United States Department of Commerce, the Economic Development Administration, University of Nevada, 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 University of Nevada, Reno Department of Resource Economics Mail Stop 204 Reno, Nevada 89557-0105 UCED University of Nevada, Reno Nevada Cooperative Extension Department of Resource Economics
SUMMARY The report is an economic description of the Agricultural Sector in Pershing County. Population and Income Trends From the 2000 Census, the total rural population in Pershing County was estimated to be 6,693. Of the 6,693 in rural Pershing County, only 354 persons live on farms. During the period 1994 through 2004, average annual cash receipts and other income for the agriculture sector were $32.3 million. Production expenses for the period averaged $32.8 million. Net income was on average -$0.5 million. Yearly production expenses remained fairly constant over the period. However, cash receipts were variable. Realized net income to the agricultural sector in Pershing County ranged from $3.1 million in 2001 to -$4.2 million in 2002. The coefficient of variation for production expenses was low (0.1265), while realized net returns was high (-4.3412). This indicates the agricultural producers in Pershing County faced in years of low prices well maintained production expenses and linkages with other economic sectors in Pershing 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 Sector will impact the economic activity of the Pershing County economy. A measure of the economic effects of the changes in the Pershing 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 U.S. Forest Service input-output model IMPLAN was used. Sectoral Values of Output, Employment, and Labor Income For this analysis the 2-digit NAICS s sectors were used for this analysis. There were twenty (20) sectors in Pershing County.
In 2004, Pershing County s total value of output was $330.078 million. Value of output for the Agricultural Sector was $30.265 million and ranked the Agricultural Sector 3 rd highest among the twenty economic sectors in Pershing County. Also, the value of output for the Agricultural Sector was 9.2% of total Pershing County value of production. In 2004, Pershing County total employment was 2,455. The Agricultural Sector in Pershing County had 306 employees ranking this sector third highest in employment of Pershing County s twenty economic sectors. Also, employment for the Agricultural sector was 12.5% of total Pershing County employment. Sectoral labor income is the summation of sectoral employee compensation and proprietor income. In 2004, Pershing County total labor income was $108.122 million. The Agricultural Sector in Pershing County generated $6.186 million in labor income ranking this sector third highest in labor income of Pershing County s twenty economic sector. Also, labor income for the Agricultural Sector was 5.7% of total Pershing County 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 2004, Pershing County total exports were $178.691 million. The Agricultural Sector in Pershing County had $24.294 million in exports ranking this sector second highest in exports of Pershing County s twenty economic sectors. Also, exports for the Agricultural Sector were 13.6% of total Pershing County exports. In 2004, Pershing County total industry imports were $87.125 million. The Agricultural Sector in Pershing County had $0.123 million in imports ranking this sector seventeenth highest in imports of Pershing County s twenty economic sectors. Also, imports for the Agricultural Sector were 0.1% of total Pershing County industry imports In 2004, the Pershing County economy realized $91.566 million more in exports than industry imports. The Agricultural Sector in Pershing County had $24.171 million more in exports than imports. The Agricultural Sector in Pershing County is a positive economic sector in its contribution to the balance of trade in Pershing 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 Pershing County economic sectors. A location quotient greater than 1.25 indicates an exporting sector or a sector that is part of Pershing County s economic base. In 2004, the Agricultural Sector in Pershing County had a location quotient value of 7.24 ranking this sector second highest in location quotient value of Pershing County s twenty economic sectors. The Agricultural Sector, with a location quotient value of 7.24, is a major contributor to the economic base of Pershing County. Inter-industry Analysis Inter-industry or input-output analysis shows the economic interactions and linkages between sectors in the Pershing County economy. The IMPLAN (Minnesota IMPLAN Group, Inc. 2004) microcomputer input-output software was used to derive the economic, employment, and labor income impacts of the Pershing County agricultural sector. In 2004, the Agricultural Sector in Pershing County had a value of production level of $30.265 million, hired 306 employees, and paid labor income of $6.186 million. Given the economic inter-linkage and multiplier effect, total output impacts to the Pershing County economy from activities by the Agricultural Sector was $44.791 million. Total employment and labor income impacts in the Pershing County economy from activity of the Agricultural Sector was 471 jobs and $10.546 million in labor income. Given the economic linkages of Pershing County s Agricultural Sector, any changes in production level due to drought, rangeland fires, or adverse output prices will impact the whole economy of Pershing County.
Population and Agricultural Sector Income and Purchase Trends Table 1 provides information on population, numbers of housing units, and numbers of persons employed in Pershing County in 2000. Of the 6,693 persons living in Pershing County in 2000, only 354 persons lived on farms. Farm families occupied 130 of the 2,384 total housing units in the county. Of the 2,268 persons employed in the county 109 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 Pershing County in 2000. Population Housing Units Occupations Pershing County Employed All Persons Occupied Persons Farm 354 Total Rural Population 6,693 Rural Farm 130 Rural 2,389 Total 2,389 Farmer and Farm Managers 45 Farming, fishing, and forestry occupations 64 Total 2,268 Source: U.S. Department of Commerce. Bureau of the Census. Table 2 shows the income received and expenses paid by agricultural producers in Pershing County from 1994 through 2004. 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 2004 were estimated to be $35.758 million, $38.150 million for production expenses, -$2.391 million for net income, and $2.274 million for labor and proprietor's income. Realized net incomes ranged from a high of $3.086 million in 2001 to a low of -$4.239 million in 2002. Table 2 shows the variability in the overall agricultural sector in Pershing 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 (0.1265), while realized net returns had the highest coefficient of variation (-4.3412). This shows the agricultural sector is a vital sector to the Pershing County economy. Agricultural producers will be faced with variability 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. Table 2. Income Received and Expenses Paid by Farmers in Pershing County from 1994 through 2004. Cash Receipts Production Realized Farm Labor Year and Other Expenses Net and Proprietor's Income Income Income $1,000 s $1,000's $1,000's $1,000's 1994 29,570 29,424 146 3,034 1995 26,519 26,835-316 2,750 1996 26,084 27,210-1,126 3,201 1997 31,292 30,182 1,110 4,717 1998 32,260 30,737 1,523 4,994 1999 31,040 32,123-1,083 3,437 2000 36,845 36,068 777 5,119 2001 40,067 36,981 3,086 4,946 2002 31,713 35,952-4,239 2,134 2003 33,820 36,723-2,903 2,476 2004 35,759 38,150-2,391 2,274 Average 32,270 32,762-492 3,553 Standard Deviation 4,216 4,146 3,100 1,170 Coefficient of Variation 0.1306 0.1265-4.3412 0.3293 Source: U.S. Department of Commerce. Bureau of Economic Analysis
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 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 Sector, and its impact on the local economy. The Agricultural Sector s 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 Sector s purchasing goods from the local Service Sector. 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 Sector. The impacting business, such as the Agricultural Sector, 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.
Analysis of Pershing County Economic Data Using the IMPLAN input-output model database (Minnesota IMPLAN Group, Inc., 2004), industry sectors are ranked in value of output, employment, and labor income and are shown in Tables 4 through 6. Tables 7 and 8 rank sectoral values of exports and imports which provide an indication of their contribution to the Pershing County economic base. Sectoral location quotient values show which sectors are importers, self-sufficient, and exporters. Table 9 shows these sector location quotient values. Sectoral Value of Output, Employment, and Labor Income Table 3 shows economic sectors by rank for value of output for Pershing County. Total industry output was approximately $330 million. The Pershing County Agricultural Sector ranked third in value of output at $30.3 million or 9.2 percent of total county value of output. Table 4 shows the ranking of economic sectors by levels of 2004 employment. Total Pershing County employment in 2004 was 2,455. The Agricultural Sector in Pershing County in 2004 had 306 employees which was 12.5 percent of total Pershing County employment. Table 3. Economic Sectors Ranked by Value of Output for Pershing County, 2004. SECTOR Output Percentage of ($1,000,000) Total Output Mining 164.252 49.8% Government & non NAICs 61.594 18.7% Agriculture 30.265 9.2% Manufacturing 24.577 7.4% Retail Trade 10.23 3.1% Accommodation & Food Services 6.906 2.1% Arts, Entertainment & Recreation 4.952 1.5% Transportation & Warehousing 4.176 1.3% Wholesale Trade 3.941 1.2% Utilities 3.357 1.0% Health & Social Services 3.3 1.0% Professional- Scientific & Tech Services 2.517 0.8% Construction 2.485 0.8% Forestry Fish and Hunting 1.844 0.6% Other Services 1.792 0.5% Finance & Insurance 1.565 0.5% Information 1.159 0.4% Educational Services 0.716 0.2% Real Estate & Rental 0.392 0.1% Management of Companies 0.058 0.0% Totals 330.078 100.0%
Table 4. Economic Sectors Ranked by Employment for Pershing County, 2004. SECTOR Percentage of Employment Total Employment Government & non NAICs 789 32.1% Mining 565 23.0% Agriculture 306 12.5% Accommodation & Food Services 148 6.0% Retail trade 133 5.4% Manufacturing 91 3.7% Arts, Entertainment & Recreation 83 3.4% Health & Social Services 61 2.5% Other Services 52 2.1% Transportation & Warehousing 45 1.8% Forestry Fish and Hunting 41 1.7% Professional, Scientific & Tech Services 29 1.2% Wholesale Trade 27 1.1% Construction 27 1.1% Finance & Insurance 18 0.7% Educational Services 16 0.7% Real Estate & Rental 8 0.3% Utilities 7 0.3% Information 7 0.3% Management of Companies 1 0.0% Totals 2,455 100.0% Table 5 shows Pershing County economic sectors by levels of labor income. Sectoral labor incomes are the sum of sectoral employee compensation and proprietor income. Total labor income in Pershing County in 2004 was $108 million. From Table 5, the Agricultural Sector ranks third in value of labor income for Pershing County and accounted for approximately 5.7 percent of total Pershing County labor income or $6.2 million. As Tables 3 through 5 show, the Agricultural Sector plays an important role in the entire Pershing County economy. 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.
Table 5. Economic Sectors Ranked by Labor Income for Pershing County, 2004. Percentage of SECTOR Total Employee Compensation Proprietor Income Labor Income Labor Income Government & non NAICs 39.921 0 39.921 36.9% Mining 34.704 4.663 39.367 36.4% Agriculture 3.997 2.189 6.186 5.7% Manufacturing 4.299 0.204 4.503 4.2% Retail Trade 2.606 0.742 3.348 3.1% Accommodation & Food Services 2.021 0.105 2.126 2.0% Health & social services 1.553 0.26 1.813 1.7% Arts, Entertainment & Recreation 1.274 0.528 1.802 1.7% Transportation & Warehousing 1.065 0.656 1.721 1.6% Wholesale Trade 1.394 0.087 1.481 1.4% Other services 1.311 0.032 1.343 1.2% Professional, Scientific & Tech Services 0.775 0.471 1.246 1.2% Construction 0.664 0.161 0.825 0.8% Utilities 0.642 0.028 0.67 0.6% Forestry Fish and Hunting 0.117 0.461 0.578 0.5% Finance & Insurance 0.463 0.104 0.567 0.5% Educational Services 0.265 0.027 0.292 0.3% Information 0.203 0.022 0.225 0.2% Real Estate & Rental 0.077 0.011 0.088 0.1% Management of Companies 0.019 0 0.019 0.0% Total 97.37 10.752 108.122 100.0%
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. Total exports for Pershing County in 2004 were valued at $178.7 million. Pershing County s Agricultural Sector ranked second in value of exports at $24.3 million or 13.6% of total exports. Table 6. Economic Sectors Ranked by Value of Export For Pershing County, 2004. SECTOR Total Exports Percentage $1,000,000 of Total Mining 132.032 73.9% Agriculture 24.294 13.6% Manufacturing 12.068 6.8% Government & non NAICs 6.638 3.7% Arts, Entertainment & Recreation 2.473 1.4% Accommodation & Food Services 0.563 0.3% Wholesale Trade 0.241 0.1% Transportation & Warehousing 0.181 0.1% Administrative & Waste Services 0.083 0.0% Forestry Fish and Hunting 0.047 0.0% Professional, Scientific & Tech Services 0.024 0.0% Finance & Insurance 0.023 0.0% Information 0.010 0.0% Utilities 0.010 0.0% Management of Companies 0.004 0.0% Other services 0.001 0.0% Real Estate & Rental 0.000 0.0% Construction 0.000 0.0% Retail Trade 0.000 0.0% Educational Services 0.000 0.0% Health & Social Services 0.000 0.0% Total 178.691 100.0% Most Pershing County industries purchase inputs from outside the county. Table 7 shows the economic sectors in Pershing County ranked by value of industry imports. From Table 7, the Agricultural Sector in Pershing County accounts for approximately 0.1 percent of total Pershing County s value of industry imports or $123,000.
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 2004, the Pershing County economy realized $9.7 million more in imports than exports. Considering industrial imports only, Pershing County exported $91.6 million more than the value of industrial imports. The Agricultural Sector in Pershing County had $24.2 million more in exports than imports. The Agricultural Sector in Pershing County is a positive economic sector in its contribution to the favorable balance of trade in Pershing County. This shows the importance of the Agricultural Sector in Pershing 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. Table 7. Economic Sectors Ranked by Value of Industry Imports for Pershing County, 2004. SECTOR Industry Imports Percent of Total $1,000,000 Manufacturing 33.024 37.9% Real estate & Rental 11.492 13.2% Mining 8.381 9.6% Professional, Scientific & Tech Services 7.777 8.9% Management of Companies 7.007 8.0% Finance & Insurance 4.956 5.7% Wholesale Trade 3.530 4.1% Transportation & Warehousing 2.430 2.8% Administrative & Waste Services 2.382 2.7% Information 1.652 1.9% Other Services 1.147 1.3% Construction 0.814 0.9% Utilities 0.762 0.9% Forestry, Fish and Hunting 0.619 0.7% Arts, Entertainment & Recreation 0.486 0.6% Retail Trade 0.366 0.4% Agriculture 0.123 0.1% Educational Services 0.082 0.1% Accommodation & Food Services 0.069 0.1% Health & Social Services 0.027 0.0% Government & non NAICs 0.000 0.0% TOTAL 87.125 100.0%
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 Pershing 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: LQ i = Where: e n i i E N 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 nationally. 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, the county is an exporting sector. 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 8 ranks the economics sectors in Pershing County by their location quotient values. The Agricultural Sector ranked 2 nd highest among Pershing County s 20 sectors. The location quotient value of 7.24 for the Agricultural Sector indicates that this sector is a major economic base sector for Pershing County and brings dollars into the county for future economic growth and development. Table 8. Economic Sectors Ranked by Location Quotient Value for Pershing County, 2004. SECTOR Location Quotients Mining 46.99 Agriculture 7.24 Forestry, Fish and Hunting 2.96 Government & non NAICs 2.41 Arts, Entertainment & Recreation 1.66 Utilities 0.89 Accommodation & Food Services 0.84 Retail Trade 0.54 Transportation & Warehousing 0.49 Manufacturing 0.43 Educational Services 0.35 Other Services 0.33 Wholesale Trade 0.31 Health & Social Services 0.25 Professional, Scientific & Tech Services 0.18 Construction 0.17 Finance & Insurance 0.16 Information 0.14 Real Estate & Rental 0.09 Management of Companies 0.04
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 interventions between economic sectors, a county-wide 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., 2004), was used to derive economic linkages for Pershing County. The economic, employment, and labor income impacts of the Agricultural Sector on the Pershing County economy were estimated. Table 9 shows the impacts of the activities by the Agricultural Sector on the Pershing County economy. From Table 9, the Agricultural Sector for Pershing County in 2004 had a production level of $30.265 million, hired 306 employees, and paid labor income of $6.186 million. Given the multiplier impacts, the Agricultural Sector in Pershing County had total economic impacts of $44.791 million in 2004. This means that beyond the direct economic benefits of $30.265 million, the indirect and induced impacts of the Agricultural Sector on the Pershing County economy was $14.526 million. Indirect impacts are the additional expenditures between economic sectors after the initial direct expenditure is made. Induced impacts are the additional expenditures and economic activity attributable to household sector interactions. Also from Table 9, the Agricultural Sector had total employment and labor income impacts of 471 jobs and $10.546 million, respectively. This means that due to the economic linkages of the Agricultural Sector an additional 165 jobs and $4.360 million in labor income were created in Pershing County from indirect and induced linkages.
Table 9. Economic, Employment, and Labor income Impacts of the Agricultural Sector on the Pershing County Economy, 2004. Category of Impacts Direct Effects Indirect and Induced Effects Total Effects Economic $30,265,000 $14,526,000 $44,791,000 Employment 306 165 471 Labor Income $6,186,000 $4,360,000 $10,546,000 Conclusions The primary objective of this paper was to analyze trends in the Pershing County Agricultural Sector and investigate the economic impacts of the Agricultural Sector on the Pershing 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 Sector in Pershing County is important. From the 2000 Census, total rural population in Pershing County was 6,693. Of the total rural population, only 354 persons in Pershing County lived on farms. From 1994 to 2004, average annual cash receipts and other income for the agricultural sector in Pershing County were $33.3 million with average annual production expenses of $32.8 million which yielded an average net income for the agricultural sector in Pershing County of -$0.5 million. The Agricultural Sector s net income for Pershing County ranged from a high of $3.1 million in 2001 to a low of -$4.2 million in 2002. Of interest is the calculated coefficient of variation. Coefficient of variation estimates the variability of an economic time series. The 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 Pershing County maintains its input purchase patterns among economic sectors in Pershing County regardless of output prices. This somewhat constant input purchase pattern increases economic linkages of the Pershing County Agricultural Sector to other economic sectors in Pershing
County. Therefore any changes in input patterns by the Agricultural Sector in Pershing County will yield more profound impacts to the Pershing 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 Pershing County Agricultural Sector ranked 2 nd in sectoral value of exports of Pershing County s 20 economic sectors. This export value is an indication of the importance of Pershing County s Agricultural Sector to future economic development in Pershing 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 2004, the location quotient for the Agricultural Sector in Pershing County was 7.24. This location quotient value indicates that the Agricultural Sector is important to the economic base of the Pershing County economy. Lastly, a county-wide Pershing County input-output model was used to derive the economic, employment and labor income impacts of the Agricultural Sector on the Pershing County economy. In 2004, the direct output, employment, and labor income impacts on Pershing County were $30.265 million, 306 jobs, and $6.186 million, respectively. Including the multiplier effects and economic linkages of the Agricultural Sector on the Pershing County economy, total output, employment, and labor income effects of the Agricultural Sector on the Pershing County economy are estimated to be $44.791 million, 471 jobs, and $10.546 million, respectively. Results of this study have shown the variability that exists within the Pershing County s Agricultural Sector and the importance of the Agricultural Sector on the Pershing County economy. Not only is sectoral output, employment, and labor income important but the degree that the Agricultural Sector participates in the economic base of Pershing County is of equal or greater importance. Also, the degree of economic linkages the Agricultural Sector has on the Pershing County economy is critical. The county input-output model analysis showed that the economic, employment, and labor income linkages and impacts of the Agricultural Sector go
beyond the Agricultural Sector. The changes in economic activity by the Agricultural Sector in Pershing County from weather, agricultural prices, or public land management policies will greatly impact the economy and other sectors in the Pershing County economy.
References Minnesota IMPLAN Group. IMPLAN PRO: User s Guide. Minnesota IMPLAN Group, Inc.: Stillwater, Minnesota, 2004. U.S. Department of Commerce. Farm Income and Expenses. Bureau of Economic Analysis, Washington, D.C., Regional Economic Information System. 2006. U.S. Department of Commerce. Nevada Summary Population and Housing Characteristics. 2000 Census of Population and Housing. Bureau of the Census. Economics and Statistics Administration, Washington D.C. 2001.