Lexington, KY - Linkages, direct and indirect, to agriculture can be found throughout the economy of Lexington and Fayette county, according to a preliminary effort to more clearly define the sector.
The Influence of the Agricultural Cluster on the Fayette County Economy,
A new study, conducted by the University of Kentucky College of Agriculture and funded by a grant from the Fayette Co. Farm Bureau documents connections between agriculture and the Lexington business community that had not been explicitly measured until now.
The study finds the benefits of agricultural growth spread over many industries and estimates farms and related “agricultural cluster” industries support one in nine jobs in the county, with a $2.4 billion impact on the local economy.
“There was a sense that conventional measures didn’t always give you a full scope of what the significance of agriculture was,” said UK College of Agriculture Dean Scott Smith in discussing the motivation for the research. “Typically, any statistical database will use on-farm employment - those employees whose primary source of employment is on the farm itself. In almost any community those are under two percent and they’re not high-paying jobs, on average. So the impact of on-farm employment is a very different thing from what we consider to be the agricultural sector here, which would be Bluegrass Stockyards, Keeneland Sales, the Horse Park, all of the suppliers and processors for the ag and food sector. It’s a different definition.”
Dr. Smith said an important goal of this initial study was to clarify what kinds of businesses comprise the agriculture industry of Fayette County - those related to agricultural production and entirely dependent upon or fully serving agriculture.
“So for example, a (large animal) veterinary clinic would be inside this circle because 100 percent of its business was related to agriculture. Now, a cat and dog clinic would be outside the circle, because it wasn’t entirely dependent upon it. It would also include a supplier who sold tack or feed. If it was a clothing supplier that sold to a lot of different people, it wasn’t on the list. So, the circle was defined as food and agricultural enterprises that are entirely or overwhelmingly focused on agricultural production, processing or services,” he said.
When the agriculture cluster is defined to include not only production agriculture, but also business services and retail and wholesale trade solely dedicated to agriculture, an estimated 16,676 jobs are attributed to this cluster, said Alison Davis, UK agricultural economist, Community and Economic Development Initiative of Kentucky executive director and a co-author of the study. The estimate includes supporting business and household spending as a result of the agriculture cluster.
In addition, there are approximately 1,520 jobs associated with the hospitality sector—assuming that 25 percent of employment in lodging and 5 percent in restaurants is dedicated to agriculture-related tourism—that can be attributed to the cluster. Given the total workforce in the county of approximately 147,000, these results suggest that roughly one out of every nine jobs is directly or indirectly associated with the agriculture cluster.
And the study offered a nod to Fayette County's budding local food production movement. "The addition of downtown businesses such as West Sixth Brewing, Shorty's Grocery, FoodChain Urban Farm, Country Boy Brewing, Town Branch Distillery and several new restaurants and bars in the area near Cheapside Park are all linked by a distinctive local character that blurs the lines of the agricultural, hospitality and recreation industries,"the researchers found.
Although the Thoroughbred industry provides Lexington with a globally recognized distinction, the racehorse business traditionally has been regarded separately from agriculture. That, said Smith, has changed. “You’re absolutely right, but you were more right 20-years ago than you are now,” he noted. “For a lot of different reasons, cultural, financial and political, many more of those people involved in equine enterprises today believe that they’re a part of the agricultural economy of Kentucky.”
The study makes a statistical case for this new perspective, pointing out that Fayette County leads the nation in equine sales, with the neighboring counties of Woodford (2nd), Bourbon (4th) and Jessamine (5th) also among the top five.
Fayette County is especially strong in the professional services industry, with the retail and hospitality industries also well above the national average for similar-sized counties, according to the study’s findings. That observation was connected with the economic implications of continued growth in the horse industry: “Equine sales have strong links to the professional services and real estate industries. A 10 percent increase in Fayette County equine sales would equal $40 million — which would lead to an additional $26 million in professional services sales, $14 million of additional retail sales and $5 million in additional real-estate sales.”
Agriculture, in general, accounts for more than 11 percent of the Fayette County workforce. Manufacturing accounts for 5.7 percent, and government is 19 percent, according to the study.
The agriculture sector annually contributes through local payroll taxes approximately $7 million to the costs of operating local government and its services.
“In terms of employment, a 10 percent increase in equine sales would lead to an additional $6 million in payroll from professional services and seven additional professional service establishments. The number of recreational, financial and real-estate establishments would also grow slightly,” the study projects.
“Ignoring these businesses underestimates the value of the agricultural sector,” Davis said “This is particularly important in Fayette County because of its competitive advantage in the equine industry. After an extensive search, and the creation of a new agriculture business directory, we now have recent data about employment in many industries that are part of the ag cluster.”
The entire study is available online at www.ca.uky.edu/CEDIK.