Research

New UK Study Shows Agriculture's Impact on Fayette County Economy

Horses in Field
Horses grazing in Fayette County.

LEXINGTON, Ky. (June 28, 2017)  A study by the University of Kentucky’s Community and Economic Development Initiative of Kentucky (CEDIK) shows that agriculture is a valuable asset to Fayette County’s economy. Agriculture and the businesses that support it are responsible for one out of 12 jobs and for $2.3 billion in annual output.

The CEDIK study was unveiled at a recent Lexington-Fayette Urban County Government council work session.

“Fayette County’s economy is diverse with significant employment in manufacturing, professional services and health care sectors. Production agriculture alone is a relatively smaller industry,” said Alison Davis, CEDIK director and agricultural economics professor in the College of Agriculture, Food and Environment. “Fayette County, however, remains the leading producer of horses and ponies in the country. Additionally, Fayette County claims a larger share of agricultural activity than surrounding counties.”

Traditionally, employment associated with agriculture has been confined solely to production. Both CEDIK studies examined the total ag cluster, which is not only production agriculture, but businesses that produce agricultural inputs, wholesale and retail businesses and service-based businesses that are dedicated to agriculture, such as veterinary, finance, recreation and transportation. Study authors Alison Davis and Simona Balazs maintain that including these types of businesses shows the true importance of the agricultural sector in the area.

“The Fayette County farms, which provide for a distinctive and scenic countryside, are also significant contributors to the local economy,” Davis said. “This is seen not only in traditional ag output, but also in the tremendous growth in tourism tied to the ag cluster, such as Keeneland, horse country, breweries, wineries and more.”

When the agricultural cluster is defined to include companies with all of their business related to agriculture in the county, it is estimated that 14,091 jobs are attributed to the cluster with an additional 1,724 jobs directly and indirectly associated with the hospitality sector in Lexington.

“Without an agricultural base in the county, many of the supporting businesses that employ these workers would not exist,” she said.

It is estimated that the ag cluster contributes $8.5 million to the local tax base through payroll taxes.

The horse industry plays a vital role in the local tourism industry, with horse racing, farm tours and the Kentucky Horse Park drawing tourists from across the country to the area. Study authors estimate that Keeneland generates $51 million from out-of-county visitors for accommodations, restaurants, gasoline and other retail establishments. Based on an annual average of 250,000 tourists, the Kentucky Horse Park generates $31.3 million for the same types of businesses.

“The land and people of Central Kentucky have spent over 100 years creating the most valuable horse industry in the world, with Lexington and Fayette County as its heart,” said Chauncey Morris, executive director of Kentucky Thoroughbred Owners and Breeders. “We are grateful the facts show the economic contribution the horse has made to our community.”

In addition to the $2.3 billion in annual output, the researchers found that the county’s agricultural cluster generated more than $1.3 billion in additional income, profits and dividends.

The researchers looked at the effect of a loss in production agriculture due to the increasing pressures on land use. They found that if production agriculture declined by 10 percent or $54.5 million, there would be an overall additional decrease of more than $26.5 million in output. Wholesale trade, production agriculture, real estate and refineries would be most affected. The ripple effect resulting in a reduction in household spending would affect real estate, rental activity, visits to the doctor and hospital, going to restaurants and wireless communications the most. The total reduction in sales from such a decrease would be more than $23 million.

“Our prime soils and Bluegrass farmland are the ‘factory floor’ of our strong, signature agricultural industries,” said Susan Speckert, executive director of Fayette Alliance. “Sustainable growth and innovative land use planning are essential to preserving and promoting our world-class agricultural brand, industries and landscape, which are pillars of our diverse economy and quality of life.”

Carrie McIntosh, executive director of the Fayette County Farm Bureau, said it is important to recognize the centrality of agriculture to the Fayette County economy.

“Our rolling Bluegrass farmland, plank fences and historic barns are what draw companies and professionals here to work and live, experiencing a quality of life that no other city has to offer,” she said. “It is important that we protect our signature agricultural industries to continue to attract businesses and professionals to our community.”

The Fayette Alliance, Fayette County Farm Bureau and Kentucky Thoroughbred Association-Kentucky Thoroughbred Owners and Breeders Inc. commissioned the study. The full study can be found online at http://fayettealliance.com/16090-2/.

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