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Economic Impact of Milk Production in the State of New Mexico¹

V. E. Cabrera^*,2,3, R. Hagevoort^*, D. Solís, R. Kirksey and J. A. Diemer

^* Department of Extension Animal Sciences and Natural Resources, New Mexico State University, Clovis 88101
Division of Marine Affairs and Policy, Rosenstiel School of Marine and Atmospheric Science, University of Miami, Coral Gables, FL 33149
Department of Agricultural Economics and Agricultural Business, New Mexico State University, Clovis 88101
Department of Agricultural Economics and Agricultural Business, New Mexico State University, Las Cruces 88003

² Corresponding author: vcabrera{at}wisc.edu

The goal of this study was to quantify the economic role of dairy farming in New Mexico and to identify its linkages with allied industries in terms of income, value added, and employment impacts. An input-output model was used to estimate the direct, indirect, and induced impacts of the dairy farm industry on the economy of New Mexico. The results showed that in 2005, New Mexico’s dairy farm industry had a total economic impact of $1.98 billion and accounted for 14,313 jobs. Therefore, dairy farming in New Mexico had an output multiplier (income) of 1.92, a labor income multiplier of $248 thousand/$ million of gross sales, and an employment multiplier of 13.91 jobs/$ million of gross sales. Furthermore, the New Mexico dairy farms accounted for 13.1% of the total agricultural outputs, 20.5% of the agricultural jobs, 1.5% of total state economic activity, and $80 million in tax revenue. With the exception of Lea, Eddy, and Bernalillo counties, which are diversified, the dairy farms accounted for more than two-thirds of the agricultural outputs and for more than two-fifths of the agricultural employment in counties where dairy farms are concentrated.

Key Words: impact analysis for planning model • regional economic analysis • input-output analysis • economic impact