Upload
others
View
3
Download
0
Embed Size (px)
Citation preview
Rural Economic Outlook 2019 Department Research Update
Dayton M. LambertProfessor & Willard Sparks Chair in Agricultural Sciences and Natural ResourcesDept. of Agricultural Economics, Oklahoma State UniversityOctober, 9, 2019
Outline
IntroductionDept. of Agricultural Economics Research SnapshotGraduate student research Spring flood impacts on Oklahoma McClellan-Kerr
Arkansas River Navigation System (OK-MKARNS) and OK Economy
Oklahoma Rural-Metro Outlook: Jobs and Industry
Department Research Publications (2017/2019)
Mission statement Create practical, empirical knowledge that will increase the efficiency and
productivity of Oklahoma agriculture, rural communities, and the well-being of Oklahomans
Create and increase knowledge in the discipline of agricultural and applied economics
Agribusiness
Food & Consumer Economics
Marketing
Natural Resources & Environmental
Economic
Production & Farm
Management
Rural Development
DepartmentResearch
Areas
Department Sponsored Research
http://www.agecon.okstate.edu/faculty/publications.asp
GRADUATE RESEARCH
Current: 9 graduated, Spring ’19 Total, 39 students (Fall, 2019) 19 MS 20 PhD 7 countries
Recent placement: Mississippi State University (Assistant Prof.) University of Wisconsin–River Falls (Assistant Prof.) Berkeley Research Group LLC (Managing Economist) Indaba Agricultural Policy Research Institute (Zambia) Xtra Factors Inc. (Director, Research Development) Utah State University (Post-doc) Pennsylvania State University (Post-doc)
Thesis & dissertation titles
Tyson
Yejun Choi : “Procompetitive effects of mergers & acquisitions in the food manufacturing sector” ( with Trejo-Pech [U. Tenn.])
Ti
me
(199
0 –
2017
)
Merger & Acquisition Activity (COMPUSTAT Data)
Fresh Pet Hill ShireAdvance Pierre
IBP
Earth Grains
Thorn Apple Co.
Food Brands
Life of a firm
Acquisition of other firms
“2018 Grassland Reserve Incentive Program and Land Use in Oklahoma”Chellie Hogan, Amy Hagerman, Dayton Lambert
GRIP initiated under Conservation Stewardship Program
Eligible Land: crop base that has been grass/pastured from 2009-2017
Rental Rate: $18/crop base acre, max $40,000/year
One-time enrollment (5 year contract length) Ineligible for ARC/PLC payments
Research questions
How, in terms of land use allocation, might Oklahoma producers respond to GRIP?
Which planted crop acres will be most affected by GRIP?
What are the expected impacts of policy on revenue from crops, pasture?
Grassland
Satellite imagery, 2008 – 2018 30 x 30 m pixels Catalogues 60+ land uses Aggregate county level
Focus of this study:
Wheat: Spring, Winter, Durum Other Grains & Oilseed Cotton Grasses: Clover, Switchgrass Hay: Rye, Alfalfa Pasture Developed: Urban
USDA Cropland Data Layer
Cropland Data Layer
Land use, GRIP, Oklahoma Counties
Next year’s land use
Population density
Rainfall
Returns to land use
Pasture rental rate
Cropland rental rate
Revenue
Wheat
Other Grains
Livestock
Cotton
Last year’s land use
2008
All land uses
2018
Grass & pasture
0.00
0.02
0.04
0.06
0.08
2010 2012 2014 2016 2018 2020 2022 2024
Perc
ent Grasses
0.00
0.05
0.10
0.15
2010 2012 2014 2016 2018 2020 2022 2024
Perc
ent
Wheat
0.60
0.65
0.70
0.75
2010 2012 2014 2016 2018 2020 2022 2024
Perc
ent
Pasture
Observed PredictedPredicted Forecast Intervention
Beaver County
Forecast
Forecast
Forecast
Land use, GRIP, Oklahoma Counties
Land use, GRIP
Beaver County – Land Allocation
Percent
-1.5
-1.0
-0.5
0.0
0.5
1.0
1.5
2019 2020 2021 2022 2023
Expected Change in Revenue ($ millions)
Wheat Other Grains Grasses
2019 SPRING FLOOD DISRUPTION EFFECTS ON OK-MKARNS AND OKLAHOMA ECONOMY
2019 Headline News
OK-MKARNS Primary Commodities (normally…)
Value (millions $)Tons (1,000s)
Source: Tulsa Port Authority of Catoosa
0 500 1,000 1,500 2,000 2,500
Sand, Gravel and Rock
Manufacturing…
Petroleum Products
Food/Farm Products
Coal and Coke
Minerals and Building…
Other Chemicals
Grain
Iron and Steel
Soybeans
Chemical Fertilizers
0 200 400 600 800 1,000
Sand, Gravel and Rock
Manufacturing…
Petroleum Products
Food/Farm Products
Coal and Coke
Minerals and Building…
Other Chemicals
Grain
Iron and Steel
Soybeans
Chemical Fertilizers
Two different (but related) questions
What is economic contribution of Oklahoma’s Water Transportation sector?
What is economic impact of the OK-MKARNS disruption on Oklahoma’s economy?
What is economic contribution of Oklahoma’s Water Transportation sector?
Economic Contribution Analysis(noun: / ek·ә-ʹnam·ɪk / ֽkantrәʹbju∫әn / әʹnæl·әsɪs / )
Definition: A study which estimates the economic contribution (in terms of jobs, output, value added, etc.) of an existing activity in the local economy.
Ask: “What if” the sector did not exist?
Identify sales and purchases as backward or forwardlinkages (I use what’s called an “extraction method")
Oilseed
Grains
FruitVeg
NutTrees
Greenhouse
Cotton
Beef
Dairy
Poultry
Oth Animal
1-Forest
ForestInputs
FishHunt
Gas/oil
Mining
Services
Utilities
Construction
Textiles
Milling
FoodManuf
DairyProc
AnimalProc
BeerSpirits
2-Forest
AgInputs
OtherAg
Wholesale
Retail
Rail transport
Water transport
Truck transport
OthTransport
FIRE
Misc
Govt
Manuf
Oklahoma Economy: 37 Sectors
Oilseed
Grains
FruitVeg
NutTrees
Greenhouse
Cotton
Beef
Dairy
Poultry
Oth Animal
1-Forest
ForestInputs
FishHunt
Gas/oil
MiningServices
Utilities
Construction Textiles
Milling
FoodManuf
DairyProc
AnimalProc
BeerSpirits
2-Forest
AgInputs
OtherAg
Wholesale
Retail
Rail transport
Water transport
Truck transport
OthTransport
FIRE
Misc
Govt
Manuf
Oklahoma Economy, 2017 & Water Transport Sector
Oilseed
Grains
FruitVeg
NutTrees
Greenhouse
Cotton
Beef
Dairy
Poultry
Oth Animal
1-Forest
ForestInputs
FishHunt
Gas/oil
MiningServices
Utilities
ConstructionTextiles
Milling
FoodManuf
DairyProc
AnimalProc
BeerSpirits
2-Forest
AgInputs
OtherAg
Wholesale
Retail
Rail transport
Water transport
Truck transport
OthTransport
FIRE
Misc
Govt
Manuf
Backward Economic Linkages: Sectors Water Transport
$
“Upstream” sectors supporting economic demands of OK-MKARNS
Purchase of services, energy, or physical goods by Water Transport to support its activity
$
Backward Economic Linkages: Sectors Water Transport
$28.17
$15.93
$11.80
$7.76$5.82$3.82$3.46$1.24$0.85$0.82
Loss in payments to supporting
sectors (per $100 increase in output)
Forward Economic Linkages: Water Transport Other Sectors
Supply of OK-MKARNS services to sectors
“Downstream” salesof Water Transport services to other sectors
Oilseed
Grains
FruitVeg
NutTrees
Greenhouse
Cotton
Beef
Dairy
Poultry
Oth Animal
1-Forest
ForestInputs
FishHunt
Gas/oil
MiningServices
Utilities
Construction Textiles
Milling
FoodManuf
DairyProc
AnimalProc
BeerSpirits
2-Forest
AgInputs
OtherAg
Wholesale
Retail
Rail transport
Water transport
Truck transport
OthTransport
FIRE
Misc
Govt
Manuf
$$
Forward Economic Linkages: Water Transport Other Sectors
$6.13
$5.18
$4.14
$3.41$3.44$3.50$2.74$1.51$0.67$0.79
Loss in sales to dependent sectors
(per $100 increase in output)
Summary: OK-MKARNS contribution analysis
Sector Sector Output ($ millions)
Total Contribution to OK Economy ($ millions) Multiplier
Oilseed 194 271 1.40Grains 568 1,073 1.89Nat. Gas/Petroleum 38,378 47,410 1.24Mining 1,108 2,386 2.15Food Manufacturing 4,388 6,623 1.51Ag. Inputs 1,417 2,254 1.59Water Transport 16 32 2.02Manufacturing 48,123 72,210 1.50
“$1-worth of economic activity on the OK-MKARNS leads to an additional $1.02 in other parts of
Oklahoma’s Economy”Source: IMPLAN 2017 Data for Oklahoma, Author’s estimates.
What is economic impact of the OK-MKARNS disruption on Oklahoma’s economy?
Economic Impact Analysis(noun: / ek·ә-ʹnam·ɪk / ɪmʹpækt / әʹnæl·әsɪs / )
Definition: A study which estimates the economic impact (in terms of jobs, output, value added, etc.) of an external shock on the local economy’s sectors.
Identify changes in output, value added, and jobs
State-level analysis IMPLAN (MIG Group, 2019) Isolate water transport sector Subtract OK-MKARNS
commodity values from total industry sales
Dollar value impacts on: Total Industry Output Total Value Added Jobs
Oklahoma Economy
What is economic impact of the OK-MKARNS disruption on Oklahoma’s economy?
Total Industry Output Total Value Added
Intermediate Expenditures
Value Added = Output – Intermediate Expenditures
Delay Costs per Ton of Commodity Shipped for Disruption Periods Item 2 months 4 months 6 months
Chemical Fertilizers $11.25 $24.82 $38.39
Coal and Coke $5.23 $16.67 $28.10
Food/Farm Products $6.84 $18.49 $30.13
Iron and Steel $13.06 $28.18 $43.29
Manufacturing Equipment and Machinery $34.40 $72.02 $109.63
Minerals and Building Materials $10.07 $22.89 $35.71
Miscellaneous Products $0.00 $0.00 $0.00
Other Chemicals $10.01 $22.74 $35.47
Petroleum Products $10.31 $23.21 $36.11
Sand, Gravel and Rock $0.55 $3.03 $5.50
Grain $7.41 $19.17 $30.92
Sources: Robinson et al. (2015), OK-DOT 2018 Water Way Fact Sheet
Disruption shocks (millions $’s)Port Definition 2 months 4 months 6 months
Chemical Fertilizers $21.99 $48.53 $75.06Coal and Coke $2.02 $6.42 $10.83Food/Farm Products $1.65 $4.45 $7.25Iron and Steel $7.78 $16.78 $25.79Manuf. Equip./Mach. $0.09 $0.19 $0.29Minerals & Bldg. Mat. $1.32 $3.01 $4.69Petroleum Products $2.18 $4.96 $7.74Sand, Gravel and Rock $1.02 $2.30 $3.57Grain $0.08 $0.44 $0.81Soybean $6.24 $16.13 $26.03
Source: Author’s calculations.
Shock Economy
Sector DisruptionSoybeans (-)Wheat (-)Fruit/Vegetable 0Tree nut farming 0Greenhouse 0Cotton farming 0Beef cattle ranching 0Dairy cattle/milk production 0Poultry/egg production 0Other Animal production 0Forestry 0Forestry Inputs 0Nat. Gas/Petroleum (-)Mining (-)Services 0Utilities 0Construction 0Textiles 0Milling 0Food Manufacturing (-)Animal Process. 0Brewery/Spirits 0Second Forest Activities 0Ag. Inputs (-)Wholesale 0RetailTrade 0Rail transportation 0Water transportation (-)Truck transportation 0FIRE 0Manufacturing (-)
Data
Jobs
Output
Value Added
Changes in…
GRA’s preparing Computer for AnalysisAg Hall Room 411
Results: Expected economic loss from disruption
Impact Type Jobs Output Value Added
-------------------------2 months-------------------------
Total : 135 to 456 $24 to 86 million $10 to 38 million
-------------------------4 months-------------------------
Total : 314 to 1,080 $57 to 205 million $25 to 92 million
-------------------------6 months-------------------------
Total : 509 to 1,761 $90 to 326 million $42 to 150 million
Source: author’s estimates.
Value Added Components ($ millions)
1946
7611
25
39
9
21
35
2 MONTHS 4 MONTHS 6 MONTHS
Direct effect Indirect effect Induced effect
Direct loss from inactivity
Direct loss from inactivity
Direct loss from inactivity
Loss from dependent sectors
Loss from dependent sectors
Loss from dependent sectors
Source: IMPLAN 2017, author’s estimates.
0 5 10 15 20 25 30 35
Chemical FertilizersIron and Steel
SoybeanCoal and Coke
Petroleum ProductsOther Chemicals
Minerals and Building…Food/Farm Products
Sand, Gravel and RockManufacturing Equipment…
Wheat
Estimated Loss, TVA (millions)
OK-MKARNS Disruption & Loss of Total Value Added (TVA) to OK Economy
2-mo 4-mo 6-mo
Source: IMPLAN 2017, author’s estimates.
A more comprehensive analysis…
Expert opinion, Summer/Fall 2019Cooperatives Prices paid, inventory…FertilizerRail, truckBackhaulChanges in basis…
Kansas + other regions using OK-MKARNS
RURAL-METRO OKLAHOMA OUTLOOK: JOBS AND INDUSTRY
Rural/Urban Definition from Office of Rural Health Policy
Defines counties eligible for certain grant programs
Use Rural Urban Commuting Area codes (RUCAs), other criteria
Employment trends US, Oklahoma met/rural
0
20
40
60
80
100
120
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
2014
Q3
2014
Q4
2015
Q1
2015
Q2
2015
Q3
2015
Q4
2016
Q1
2016
Q2
2016
Q3
2016
Q4
2017
Q1
2017
Q2
2017
Q3
2017
Q4
2018
Q1
2018
Q2
2018
Q3
2018
Q4
2019
Q1
2019
Q2
Cus
hing
OK
Spo
t Pric
e
Jobs
Non-metro Metro Cushing OK WTI Spot Price FOB Daily
Oklahoma met/rural employment trends
0
20
40
60
80
100
120
020,00040,00060,00080,000
100,000120,000140,000160,000
2014
Q3
2014
Q4
2015
Q1
2015
Q2
2015
Q3
2015
Q4
2016
Q1
2016
Q2
2016
Q3
2016
Q4
2017
Q1
2017
Q2
2017
Q3
2017
Q4
2018
Q1
2018
Q2
2018
Q3
2018
Q4
2019
Q1
2019
Q2
Cus
hing
OK
Spo
t Pric
e
Jobs
Manufacturing
Mining, Nat. Gas, Petroleum
Average Annual Oklahoma Wage by Losing and Prospering Industries (2018)
Expansion of Economic Sectors, OK met/rural: 2029
ManufacturingServicesAgriculture
Coal and oil
Construction
Metro
Rural
Outlook for expected occupational demand for education & training, 2029
Metro counties:All job growth 0.8% (by 2029)
Occupations requiring:• Post-graduate degree: 1.4% / year• 2-year degree: 1.1%• Bachelor’s degree: 1.0% / year
Rural counties:All job growth 0.2% (by 2029)
Occupations requiring:• Post-graduate degree: 0.7% / year• 2-year degree: 0.5%• Bachelor’s degree: 0.4% / year
Source: JobsEQ, 2019
Gross Domestic Product (GDP): Total Value of Goods and Services
Metro counties:Total GDP (2017, nominal): $138 billion USD
• 3.2% growth• Rebound from 2016 contraction
Rural counties:Total GDP (2017, nominal): $47 billion USD
• 8% growth• Rebound from a 2016 contraction
Source: JobsEQ, 2019
Sectors driving Oklahoma’s GDP
Metro counties:
Top four contributors:
• Real Estate: $16.1 billion• Health Care: $12.3 billion• Mining, oil, & gas: $12.1 billion• Manufacturing: $11.9 billion
Rural counties:
Top four contributors:
• Mining, oil, & gas: $6.8 billion• Manufacturing: $5.8 billion• Health Care: $3.8 billion• Education: $3.1 billion Source: JobsEQ, 2019
Signs of impending recession?
Inverted yield curveGlobal slowdownCorporate “Debt Bundling”TariffsBrexitSoftening manufacturing sector
The case of manufacturing
Institute for Supply Management index (ISMI) Measures US manufacturing expansion/contraction ISMI>50 expansion; <50, contraction
Surprise contraction ISMI = 47.8 (10/01/2019) lowest in 10 years downturnOther sectors follow, layoffs
The case of manufacturing
Low ISMI causes Lack of new export orders Trade friction, tariffs $300 billion dollar tariff on China by US (total by December ‘19)
Global slowdown WTO reported drop in trade growth 6 months ago 6 months ago: E(trade growth)= 2.6% Now: E(trade growth) =1.2%
Manufacturers reevaluating supply chains Lags in normal daily operations Uncertainty; suppliers, inventory, upstream purchases
References
Robinson, D.P., G.J. Joseph, M. Muldrow, V. Wingfield. 2015. Regional Economic Impact Study for the McClellan-Kerr Arkansas River Navigation System. FINAL REPORT ~ FHWA-OK-14-16 ODOT SP&R ITEM NUMBER 2255.
Oklahoma Department of Transportation. 2018 Water Way Fact Sheet, https://www.ok.gov/odot/documents/2018%20WW%20FACT%20SHEET.pdf
IMPLAN. (2019) IMPLAN Professional®: Users Guide, Analysis Guide, Data Guide. MIG.