Industry-sponsored study touts economic boost from dairies, processing in Southern Idaho

TWIN FALLS — Dairy industry leaders on Wednesday unveiled results of an economic-impact study they hope will promote cooperation with policy makers who regulate the industry.

By Virginia S. Hutchins
Times-News writer

Direct employment on dairies and in milk- and cheese-processing plants in 2001 accounted for 7,943 jobs across southern Idaho, with Magic Valley home to the bulk of those jobs, said a recent study conducted by Boise State University and commissioned by the Milk Producers of Idaho and the United Dairymen of Idaho.

An additional 11,517 jobs throughout all economic sectors are indirectly related to the dairy industry for a total of 19,460 Idaho jobs, the study said.

"That number surprised me. I didn’t think it was that high," said Brent Olmstead, Milk Producers of Idaho’s executive director.

"We did the study for a couple of purposes. First of all, for our own education. … Secondly, to be able to inform the public as to the value of the industry economically," Olmstead said.

The third, and perhaps most important, aim was to provide data to local and state policy makers, he said, adding that the timing of the release wasn’t tied to particular legislation. BSU finished the study in December.

"We took a month and a half to analyze it ourselves," Olmstead said.

Much of the data will be news to many county commissioners, he added.

"They don’t realize the full impact of the industry," he said. Understanding, he hopes, will promote cooperation between the industry and local rule makers "in determining how the industry is regulated."

BSU’s John Church, Don Holley and Michael Joyce used U.S. Department of Agriculture data and interviewed dairymen, environmentalists, dairy processors, heifer operators (who raise heifers for dairies), real estate agents, lobbyists, dairymen’s accountants and representatives of several Idaho state agencies, said Holley, a visiting professor of economics at BSU.

Most striking among the findings, he said, is how important dairies and milk processing have become, especially to Magic Valley.

"It’s a big industry," Holley said.

In the BSU study, Magic Valley or south-central Idaho data represent just six counties — Twin Falls, Gooding, Jerome, Lincoln, Cassia and Minidoka.

The researchers concluded that 1.45 additional jobs are created in related industries for each of the 7,943 southern Idaho jobs directly related to dairies and milk-processing plants. In economic lingo, that’s a "multiplier" of 2.45.

"It’s fairly high, but not as high as I’ve seen," Holley said.

The dairy industry buys an unusually large portion of its goods and services locally, compared with other industries, he said. Examples of purchases are veterinary services, laboratory testing, heifers, hay and feed. And the single largest input for processing plants is milk bought locally.

"The more you buy in state, and the more of what you buy in state is produced in state, the larger the multiplier will be," Holley said. That’s a factor the researchers addressed in interviews.

The BSU study’s count for direct Magic Valley dairy and dairy-processing employment, at 5,030, sounds about right to Greg Rogers, the Idaho Department of Labor’s regional labor economist for Magic Valley.

The Labor Department figures dairy workers in the six counties number at least 2,800, not including processing jobs, he said. Some dairy workers aren’t covered by workers’ compensation, so their numbers are difficult to track with precision.

The BSU study’s multiplier of 2.45 is higher than the about 2 which the Labor Department uses "to make sure we’re conservative," Rogers said. "But it’s certainly not out of the ballpark."

Environmental and social issues aside, Rogers said, "there’s not much arguing with the economic impact of the dairies. They certainly keep our unemployment rate very stable."

The local average wage on dairies is around $20,000 to $22,000 per year, and cheese-plant work pays $18,000 to $30,000, he said. The industry tends to offer good benefits to workers, he said.

The dairy industry’s growth in the past decade, as it boosted per capita incomes in Jerome and Gooding counties, also turned former migrant seasonal farmworkers into settled, full-time workers.

"It’s helped them to become integrated into society a lot better," Rogers said.

The economic effects of southern Idaho dairies are greatest in Magic Valley, where employment in the dairy and cheese industries is comparable to 10 percent of total nonfarm employment, the BSU researchers said.

Percentage-wise, they said, that’s:

* More than the combined employment of Micron Technology and Hewlett-Packard in the Treasure Valley.

* More than total employment in lumber and wood-product manufacturing in the Panhandle.

* More than total employment in paper-products manufacturing in the Lewiston area.

* More than total employment in all manufacturing in southeastern Idaho (Pocatello and south).

* Close to total employment at the Idaho National Engineering and Environmental Laboratory in the larger eastern Idaho area.

That last comparison is a bit grandiose, Rogers said, considering the salary difference between dairies and the INEEL.

What’s in the future for dairy-related job numbers?

In some respects there is potential for much further growth, Holley said. But dairies have environmental and social "side effects," and the more concentrated they become the more reaction they’ll get from the community.

If Magic Valley sees further dairy expansion, it will probably be outside the core of Gooding, Jerome and Twin Falls counties, perhaps toward Burley, Holley said.

"More expansion could lead to the construction of another processing plant someplace else," he said.

Times-News Business Editor Virginia S. Hutchins can be reached at 733-0931, Ext. 242, or at [email protected].

http://www.magicvalley.com/news/business/index.asp?StoryID=1466