A new and well-publicized analysis from the North American Meat Institute stated the U.S. meat and poultry industries now account for $1.02 trillion in total economic output. That’s equal to an 5.6% of the gross domestic product.
The report noted that the two industries are responsible overall for 5.4 million jobs and $257 billion in wages. Direct taxes provide more than $110 billion in federal and state revenue.
According to NAMI, the meat and poultry industries employ an estimated 527,019 people in livestock production and meatpacking, along with import operations, sales, packaging and distribution of meat and poultry products.
Wholesaling directly employs 232,418 people in the 50 states. In addition, 1.11 million employees’ retail jobs are dependent on sales of meat and poultry products. All totaled, meat and poultry packers, processors, wholesalers and retailers employ 1.9 million people, paying $71.63 billion in wages and benefits annually.
All that is significant, very impressive data. Unquestionably, the industries have a major impact on the national economy.
But we’re nowhere near one trillion dollars. Where’s the rest of that 5.6% of the GDP?
Well, the NAMI report stated that two million full-time equivalent jobs are created in firms that supply goods and services to the meat and poultry industries. This includes people working in such industries as real estate services, trucking and container manufacturing. An additional 1.57 million people have jobs that depend on the people spending wages earned by meat and poultry workers, as well as supplier industry employees.
As the report noted, “These are real people with real jobs, ranging from restaurant workers to automobile mechanics, to bakers and refrigerator manufacturers.”
Bakers? Refrigerators manufacturers? Isn’t that a bit of a stretch?
The trillion-dollar question
It’s tempting to add up all the economic impact generated by supplier industries and ancillary businesses in any sector, and then calculate the impact of dollars spent by all wage earners associated with that sector, as they circulate through local and national economies.
It makes for a seriously impressive total.
But isn’t that the same tactic that activists use when they come up with ridiculous calculations, such as claiming that it takes 4,000 gallons of water to produce a single hamburger? They add up all the water used in manufacturing all the equipment needed to produce and distribute ground beef; all the irrigation required to grow the forage and grain eaten by cattle; all the water required to build and maintain the vehicles, the stores, the restaurants, the refrigeration equipment involved in putting a beef patty in front of a consumer.
That’s how they get to 4,000 gallons of water: by using a number that accounts for everything involved in anything related to the product under discussion.
It sure feels as if some of that same arithmetic is involved in NAMI’s trillion-dollar bottom line for the meat and poultry industries.
Is that an unfair criticism? Let me ask you a question: In terms of the economic impact of meat and poultry industries, where would you rank the states of Kansas, Nebraska and Iowa?
After all, Nebraska and Kansas are Nos. 2 and 3, respectively, among all 50 states in the number of cattle they raise, numbering some 13 million head combined. Those two states are also Nos. 2 and 3 in terms of feedlot capacity and numbers of cattle on feed. And Iowa not only raises about 3.7 million cattle, the state is No. 1 by a mile in pork, with more than 20 million pigs being raised in the state.
So where would those three heavily agricultural states that are heavily invested in the meat industry rank nationally? Top five? Top ten?
According to the data compiled by the economists who created the NAMI report, Iowa and Nebraska barely make the top 20, with Kansas ranking No. 21.
Here’s just a few of the states ranked ahead of Kansas, Nebraska and Iowa in terms of the (alleged) impact of their meat and poultry industries: Virginia, Tennessee, Florida, Washington, Indiana, New York and New Jersey.
New Jersey? Yeah, New Jersey.
Notice any commonality in the list above? The one factor that ranks those states ahead of such livestock- and meatpacking-intensive states as Kansas, Nebraska and Iowa is something that has nothing to do with meat and poultry. It’s called population.
When you begin adding up wholesale, retail, and foodservice sales, what really matter is the number of people who need to purchase food. That’s why that although Iowa checks in with a total of $16.80 billion in meat and poultry-related economic impact, California accounts for $100 billion.
Granted, California is the country’s top agricultural state, but it’s not the biggest producer, packer or processor of meat and poultry products. Not even close.
But the Golden State is home to 40 million residents, and they’ve all got to eat, which means they shop at supermarkets and they eat in restaurants, all of which have to be supplied via an incredibly robust distribution chain that involves massive investments in infrastructure, equipment, vehicles, personnel, etc.
That’s how one state that’s nowhere near the top of the list in livestock production, meatpacking and poultry processing accounts for some 10% of the entire national economic impact NAMI attributed to those industries.
A trillion dollars sounds awfully impressive when you can type into a headline or include it in a sound bite.
But those 12 zeroes need to come with an equally significant caveat.
The opinions expressed in this commentary are solely those of Dan Murphy, a veteran food-industry journalist and commentator.