Economic Importance of Minnesota's Dairy Industry
II. Sales from Minnesota's Dairy Industry
When studying an industry, it is important to examine where the output of the industry is being sold. Export sales are a significant part of sales because exports bring outside income into the economy. It is also of interest to note what portion of sales goes to consumers. In the case of dairy production, the amount of milk being processed in the state is also worth examining.
Figure 5. Dairy Production Sales by Sector,
Minnesota 1995 |
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| Source: IMPLAN data for 19959 |
Figure 5 shows the division of dairy production sales in the Minnesota economy. In this analysis, dairy production includes more than just milk production. Dairy farm production is defined to include milk production, dairy farm output, and dairy heifer replacement farm products.10 The majority of sales from dairy production in Minnesota are directed to processing sectors in the state (66%). The other major portion of dairy sales is in domestic exports (33%). This is the sale of dairy farm products to other states for processing, consumption, and so forth. The other category forms only 1% of dairy farm sales. This category includes sales to consumers, foreign exports, and other industries in Minnesota.
Dairy processing also creates sales within the state of Minnesota. Figure 6 shows the breakdown of sales from the five processing sectors (creamery butter; cheese, natural and processed; condensed and evaporated milk; ice cream and frozen desserts; and fluid milk).
As illustrated in the figure, dairy processors sell a major portion of their output as exports to both other states (domestic exports) and other countries (foreign trade). Half of all processed dairy product sales are to other states and another 3% are foreign sales. Consumers in Minnesota purchase 17% of the processing sector's output. Another 20% of the processing output is reincorporated into further processing. This includes sales between processing sectors. For example, the ice cream and frozen dessert sector purchases output from the fluid milk processing sector.11
While the above sections give a general description of the dairy industry, the industry actually affects more employees and income than this would suggest. The following sections discuss these linkages to the rest of Minnesota's economy.
Figure 6. Processed Dairy Product Sales by Sector,
Minnesota 1995 |
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| Source: IMPLAN data for 199512 |
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