Agriculture: very big water user but a very small part of economy (II)

A previous post showed data from the U.S. Bureau of Economic Analysis on the surprisingly small agricultural sector in Florida’s economy. This is in contrast to a statement sometimes made that agriculture is the state’s “second-largest industry, generating $100 billion a year”in Florida. How can these two reports be reconciled?

The $100 billion number appears to be a widespread misunderstanding of a report with a very long title from the UF Institute of Food and Agricultural Sciences: “Economic Contributions of Florida’s Agricultural, Natural Resource, and Food and Kindred Product Manufacturing, Distribution, and Service Industries in 2007.” Please read that long title again. The IFAS report (with details in the PDF version) makes it very clear that it addresses much more than agriculture. We can look at some major agricultural and non-agricultural sectors of Florida’s economy in the report:

“Agricultural Inputs and Services.” This category in the report includes quite a few activities that are not really agriculture.  For example, “Landscape Services” are included.  So is is $748  million for pest control services outside of  crop or forestry production.  So is $881 million for “veterinary services” but less than 15% of that industry is devoted to livestock work.

Agriculture?

“Food and Kindred Products Manufacturing.” The report includes large economic contributions  from Florida’s “soft drink and ice manufacturing” businesses.  However, few would think of bottling water or making a cola as “agricultural” activities. The report also attributes $1.472 billion of economic impact to “tobacco products manufacturing” but only $2 million to “tobacco farming” in Florida.  For our purposes, the manufacture of cigarettes from imported tobacco is not Florida “agriculture” any more than is “coffee and tea manufacturing” (which also is in the report).

“Forest Products Manufacturing.” Definitely agricultural, except perhaps in part for the relatively small amount of “Wood windows and doors and millwork manufacturing.”

“Mining”: $1.54 billion.  Not agricultural at all.  This includes oil wells(!), phosphate mining, and sand mining.

Agriculture?

“Nature-based recreation”: This too is not agriculture.  This category includes recreational fishing(!), golf courses(!), etc.

“Food and Kindred Products Distribution.” This category in the report is for restaurants, bars, “retail lawn and garden centers”, etc.  This overall sector is not agricultural.

The comprehensive IFAS report and the previous more-focused BEA analysis can be reconciled by putting them on a common basis.  We should focus on the “value-added” measure of economic activity because, as IFAS notes, it is the most common measure of regional economies and avoids double counting.  For estimating agriculture’s economic impact using the IFAS report,  we have to subtract non-agricultural activities and unrelated “kindred” activities.  The result, calculated on a more comparable basis with BEA, is that agriculture is about 1.5% of the state’s total domestic product. That is a bit above the estimate by the U.S. Bureau of Economic Affairs but still only a very small fraction of Florida’s modern mega-economy.

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