Mar 20, 2009
Study Pegs Value of Produce Industry at $554 Billion

The United States fruit and vegetable (including the mass-market portion of the floral industry) contributes $554 billion annually to the nation’s economy.

That’s the finding of a study commissioned by the Produce Marketing Association (PMA) and carried out by Battelle Technology Partnership Practice. The study was the subject of an industry “virtual press conference” Feb. 17.

“This is the first study to reach across the value chain to define the full impact of the (fresh produce) industry on the U.S. economy, from the farm all the way through retail and foodservice,” said PMA president and CEO Bryan Silbermann. “Our industry has substantial economic and employment impact in the United States, contributing significantly to the economies of every state and congressional district in the country.”

The study, titled “Economic Reach and Impact of the Fresh Produce and Floral Industry,” used economic modeling specially developed to analyze and measure the industry’s field-to-fork reach.

Overall, the study determined the U.S. fresh produce and mass-market floral industry accounts for more than $275 billion in direct economic output, and a total economic impact of more than $554 billion when its “ripple” effects are included. Every dollar of production value ultimately generates $16.75 of total economic value, according to the study.

The study puts a value on all levels of participation in the produce and mass-market floral industry (including growers, distributors and retailers of flowers but not florists). It includes farmers, farm and farmers’ markets, all types of retail grocery stores and restaurants and the distributors and marketers in between. It also accounts for the ripple impact of suppliers’ businesses and worker spending.

“The results show our industry’s total impact is 4.23 percent of U.S. gross domestic product and one-third of total U.S. animal and crop production,” said Kathy Means, PMA vice president for government relations and public affairs. “We account for 1.9 percent of all U.S. employment, providing the equivalent of 2.7 million full-time positions and nearly $72 billion in wages.”

The study uses data from 2006, when the country’s gross domestic product was $13.1 trillion.

The study, more than 500 pages long, details the industry’s reach and impact by state and for each congressional district, outlining wages, employment and economic output. Every congressional district is affected.

The produce and mass-market floral industry contributed $1 billion or more in more than half of all 435 congressional districts, with significant employment in many states – 100,000 or more full-time equivalent jobs in five states and more than 50,000 jobs in 15 states, Means said.

“The results have significant application to federal, state and local government efforts including lobbying, policymaking and program funding,” Means said. “The statistics can be used by groups and individual companies in zoning, tax incentives, loan and grant requests and business development proposals. Additionally, the employment information can help show the loss or creation of jobs resulting from industry influence.”

“The information from this study can help every company in this industry achieve its business goals,” Silbermann said. “And PMA is already planning to use it to advance the industry’s policy interests at the federal and regional levels across the United States.”

“We vetted the model structure and data sources with produce industry and economic modeling experts alike,” said Marty Grueber, research leader with Battelle’s Technology Partnership Practice in Columbus, Ohio. “Using the best data available, this model captures a high quality picture of the economic reach and impact of the fresh produce and mass-market floral industry in the United States. The magnitude and extent of the industry are incredible.”

PMA developed a Webcast to summarize the study and its implications for industry members, available via PMA’s Web site. The executive summary is available free of charge; the full report, with or without the state and congressional district information, can be purchased. For more information, visit www.pma.com/economic-impact/.

Recognizing that the produce industry hires many people on a seasonal basis and that work hours per week are highly variable, the study reduced employment to 40-hour-week, full-time equivalents. Simple math allowed job values per hour to be computed.

In production, the study found 234,000 people held jobs earning wages of $5.3 billion, or $10.93 per hour. At the grower level, 59 percent of the output was fresh produce for fresh market, 38 percent was for processing (which was only counted at the grower level) and 3 percent was floral. Of those workers, 60 percent were involved in the harvest and delivery of fresh produce.

When the production level was expanded to include all activities, employment nearly doubled (220,000 ripple-effect jobs) and the total sales value was $73 billion.

Marketing and distribution was the best place to be, wage-wise. Some 154,000 are employed, earning $6.1 billion, or $19.01 per hour. The total value of this sector, measured by sales, was $227.1 billion.

Retail employment directly involved in fresh produce totaled 433,000 jobs, earning an average of $9.28 an hour. Fresh produce and floral workers account for 10.9 percent of total grocery-related retail employment (including supermarkets, convenience stores, fruit and vegetable markets, warehouse clubs and supercenters). This employment level captures in-store associates working with fresh produce and flowers (e.g., case and shelf stockers, food handlers, in-store floral designers and staff). When totaled, the value added by the retail sector came to $173.9 billion.

The largest employer of fresh produce and floral industry workers is the foodservice segment. Foodservice contributed 868,000 jobs worth $9.01 per hour. Workers within the fresh produce foodservice segment include any employees working with fresh produce, such as chefs and cooking staff working with fresh produce ingredients or fresh applications (e.g., salad bars).

The share of fresh produce employment within each foodservice sub-segment varies and accounts for 9 percent of total U.S. restaurant employment; 1.4 percent of U.S. hotel employment; 0.61 percent of education employment; 0.36 percent of hospitals, nursing and residential care employment; and 0.1 percent of arts, sports, museums and other recreational activities employment. Total value added by the foodservice sector was $80.5 billion.

Direct employment totaled 1,689,235 jobs worth $36 billion, and ripple-effect employment added 1,018,287 jobs worth another $35.8 billion.

The total output value, according to the study, was more than $554 billion.

It should be emphasized that the study measured fresh produce only. The total value of produce when canning, freezing and other processing is added is believed to be only slightly lower than fresh. The study does not measure any non-produce food items. The dairy sector alone is estimated to employ 317,363 in production alone, compared to 233,939 in fresh produce and flower production.

The top 15 states in the fresh produce and floral industry were ranked by their total employment and wage impact.

California, not surprisingly, is No. 1, with total employment (both direct and ripple effects) of 518,000 earning $15.1 billion in wages and generating $113.3 billion in sales. California alone encompassed 20 percent of the produce and floral industry.

The next 14 states, in order by employment, were Florida, Texas, New York, Pennsylvania, Illinois, Ohio, Washington, Georgia, Michigan, North Carolina, Arizona, New Jersey, Massachusetts and Virginia.





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