CA Ag Production function same across state

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    IMPLAN Forum
    Hi Libby! Thank you for your post. You are right in that each Ag industry's (1-11) production function will be the same in each of the 58 counties. That is to say, their commodity, ingredient, input list will be the same. The Gross Absorption will change based on local Value Added for each county, so while the items purchased will not vary, the coefficients of purchase will. Likewise then too, they will have different ratios of Employment Compensation: Proprietor Income:Taxes on Production & Imports:Other Property Type Income. Thanks!
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    Shermain Hardesty
    The reply from IMPLAN indicated that Value Added Coefficient differs by county for a specific ag sector. My experience indicates otherwise. I checked the Value Added Coefficient for Vegetables in Yolo, Monterey, Fresno, Imperial and Ventura counties for 2013; they were identical--.817036, although the major vegetable crops grown vary across the counties. I also checked the Value-Added Coefficient for Fruit in Yolo, Fresno, Sonoma and Ventura counties for 2013; they were identical--.792265. I checked the Value-Added Coefficient for Tree Nuts in Yolo, Butte, Stanislaus and Fresno counties for 2013: they were identical--.815546. Can the IMPLAN database for the California ag vector in 2013 be checked? Not only are the Value Added Coefficients the same across counties for an ag sector, the coefficient values are very high.
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    IMPLAN Forum
    Hi Shermain, Thank you for your follow up post. For each of the 14 crop and livestock production sectors, IE/Output is a constant value. This is largely a result of our raw data. Unlike the many non-agriculture sectors, we have detailed output values by commodity and by county, which is an advantage in estimating agricultural output. Our raw sources for agriculture sector-specific value added, however, are more limited than they are for other sectors. Proprietor income, for example, is reported by the BEA only at the “farm” level (no detail for grains versus fruits, for example) and wage and salary income as reported by QCEW is also incomplete. Accordingly, we base the value added estimates and intermediate expenditures estimates on the output values. Our data on the relative share of value added to output for any specific agriculture sector is from the BEA benchmark and available only at the national level. So, we use a constant value added/output ratio for each agriculture sector. If you have more detailed information, we recommend customizing your model. Thanks!
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    Shermain Hardesty
    When you state that "we use a constant value added/output ratio for each agriculture sector", does this mean that it is the same across all of the states, or does it vary by state? Attached are the BEA's farm proprietors' personal income by state. The values for California between 2008-2014 have been much less volatile than those for the overall US. When you had previously replied to Libby Christensen regarding this topic, you wrote "The Gross Absorption will change based on local Value Added for each county, so while the items purchased will not vary, the coefficients of purchase will. Likewise then too, they will have different ratios of Employment Compensation: Proprietor Income:Taxes on Production & Imports:Other Property Type Income." Am I correct in interpreting that your reply to my message negates your previous reply to Libby Christensen; therefore, Gross Absorption does not vary by county? If I am incorrect, please indicate what I am misinterpreting. Thank you.
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    IMPLAN Forum
    Hello Shermain, We appreciate your follow-up and apologize for the misstatement in our earlier post, we hope this information will serve to clarify and correct the earlier statement, as well as address your concern. We have reached out to Libby about this as well. The separation of Value Added to Intermediate Expenditures is true and has historically been true for non-farm data but because of data limitations is not consistent with the remainder of the data set as described below. Additionally a change in our 2014 data methodology creates new Value Added to Intermediate Expenditures relationships in the 2014 data, where ratios of Value Added to Intermediate Expenditures do change by region. For each of the 14 crop and livestock production sectors, IE/Output is a constant value. This is largely a result of our raw data. Unlike the many non-agriculture sectors, we have detailed Output values by commodity and by county, which is an advantage in estimating agricultural Output. Our raw sources for agriculture Sector-specific Value Added, however, are more limited than they are for other Sectors. Proprietor Income, for example, is reported by the BEA only at the “farm” level (no detail for grains versus fruits, for example) and wage and salary income, as reported by QCEW, is also incomplete. Accordingly, we base the Value Added estimates and Intermediate Expenditures estimates on the Output values. Our data on the relative share of total Value Added to Output for any specific agriculture Sector is from the BEA benchmark and available only at the national level. So, we use a constant total Value Added/Output ratio for each agriculture Sector. We do use state-level total farm Employment Compensation and Proprietor Income controls, and county-level total Employment Compensation controls, though, so the relationship between certain Value Added components and Output can vary. Regarding the 2014 data, those relationships still hold true at the state level, but… We updated our balancing routines to try to eliminate contradictory situations where we had zero Employment Compensation but nonzero OPI. The balancing is a little more complex, since maintaining that requirement makes it a little more difficult to maintain total Value Added < Output requirements, but has fewer contradictions. Agriculture Sectors previously got special treatment to enforce those geography-wide Value Added to Output relationships. Adding these changes to the balancing process, though, allowed other components-of-Value Added relative to Output, and Total Value Added/Output (hence also IE/Output), to move around for agriculture at the county level. We’ve since updated the routine so that ag will continue to have its special treatment (and have constant-across-state ratios). We think it’s better to enforce the constant IE/Output ratios than to have variation that’s a result of the balancing process. Another reason that we base off Output for these Sectors rather than Value Added is that farm Sectors are Proprietor Income heavy and Proprietor Income can often be negative. So can TOPI for farm Sectors (often subsidized) so we don't want to squish or expand IE based on Value Added as we do for most Sectors, where the principle that geography alters the ratio of Value Added to Intermediate Expenditures holds true. Please note however, that while the Value Added to Intermediate Expenditures ratios remain constant between all geographies for each Industry, they are still distinct for each Sector, and each geography still has unique ratios within Value Added (Value Added = Employment Compensation + Proprietor Income + Other Property Type Income + Taxes on Production). So for example in comparing the 2013 and 2014 data for Sector 4 in Sonoma and Mendocino For 2013 R3 Sonoma, CA the ratios are: Employee Compensation 12.431 % Proprietor Income 41.227 % Other Property Type Income 23.939 % Tax on Production and Imports 1.629 % Total Value Added 79.227 % and for Mendocino County, CA, 2013 R3 the ratios are: Employee Compensation 11.193 % Proprietor Income 41.227% Other Property Type Income 25.176 % Tax on Production and Imports 1.629 % Total Value Added 79.227 % So you can see that the ratios within the Value Added changed somewhat although Total Value Added is the same in all regions. For 2014 Sonoma, CA the ratios are: Employee Compensation 26.272 % Proprietor Income 31.810 % Other Property Type Income 19.062 % Tax on Production and Imports 1.517 % Total Value Added 78.660 % and for Mendocino County, CA, 2014 the ratios are: Employee Compensation 17.723 % Proprietor Income 31.810 % Other Property Type Income 43.975 % Tax on Production and Imports 1.517 % $ Total Value Added 95.025 % Whereas here we can see that ratios and the Total Value Added are modified regionally. You will also see that because of the limitations of the REA data we only have one ratio per state for the Proprietor Income figure, but it is state based. Thus while in 2013 the Proprietor Income ratio for CA was 41.227% in CO Proprietor Income was 27.992 %. Similarly for 2014 data the Proprietor Income ratio in CA is 31.810% and the 2014 CO ratio is 21.215 % This will of course, revert back to the fixed ratios in 2015. Again we apologize for our earlier misstatement, and we hope this clarifies and resolves your concerns about the ratios within Value Added. Please let us know if you have any additional questions. IMPLAN Support Team
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