ECONOMIC IMPACT OF PRODUCTION AND PROCESSING OF IRRIGATED POTATOES IN CENTRAL NORTH DAKOTA

Randal C. Coon and F. Leistritz

No 23481, Agribusiness & Applied Economics Report from North Dakota State University, Department of Agribusiness and Applied Economics

Abstract: Agricultural areas can be significantly impacted by high-value crops. Irrigated potato production has significantly affected central North Dakota. Interested growers in the Jamestown area recognized the need and the potential for irrigated potato production and processing, and eventually convinced a private company to build a processing plant to make frozen potato products from their irrigated potatoes. Securing a private entity to process their product freed up capital for irrigation development and other potato enterprise purchases. Economic impacts resulting from the addition of irrigated potatoes and associated processing were analyzed in this study. This analysis is divided into two parts, construction/start-up (one-time) and operational (on-going) impacts. Construction/start-up phase includes plant construction, purchases of irrigation equipment, farmer purchases of potato machinery, and grower spending for potato storage facilities. The operational-phase includes processing plant expenditures and grower production expenditures net of the most likely non-irrigated crop. Direct expenditures for the construction/start-up phase were over $50 million for the 1995-96 period. This was comprised of $10.5 million for plant construction, $23.1 million for irrigation equipment, $3.4 million for potato grower machinery, and $13.0 million for grower potato storage facilities. Annual operational-phase direct expenditures were over $55 million, with the processing plant expenditures being $33.4 million and grower production outlays at $22.0 million. These direct expenditures were applied to the North Dakota Input-Output model to determine the economic impact of this project. Construction/start-up phase economic impact was estimated to be nearly $28 million in added personal income, over $44 million in new retail sales, and a total gross business volume of $115 million. Annual impacts from the operational phase included a personal income increase of nearly $48 million, increased retail sales of almost $48 million, and total business activity of $148 million. Increased tax collections to the state were estimated to total $2.7 million during the construction/start-up phase and $3.1 million annually during the operational phase. This economic development activity resulted in a peak of 260 plant construction jobs and a permanent plant work force of 250 full-time equivalents. In addition, operational-phase secondary employment was estimated to be 1,569 full-time equivalent workers.

Keywords: Crop; Production/Industries (search for similar items in EconPapers)
Pages: 17
Date: 2001
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Persistent link: https://EconPapers.repec.org/RePEc:ags:nddaae:23481

DOI: 10.22004/ag.econ.23481

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