Economic Importance of Minnesota's Dairy Industry
III. Introduction to Impact Analysis
This paper uses a Minnesota input-output model to trace the linkages between the dairy production sector, the dairy processing sectors, and the other industries in Minnesota.13
Input-output analysis has several limitations that are outlined at the end of this paper. However, regional input-output has been used widely to examine the importance of agricultural sectors and their linkages to other parts of the economy.14
Earlier studies at the University of Minnesota have examined the overall impacts of the food and agricultural system in Minnesota, the impacts of the poultry industry, and the effects of the soybean industry in Minnesota.15
An input-output study of changes in dairy output was done by Ag-Nomics Research in 1992. This earlier study differs from the current one in the following ways. It projected output levels for 2000 and then estimated the economic changes due to this projection. However, a comparison between this paper and the results from Ag-Nomics is difficult. The Ag-Nomics report does not specify the type of input-output multiplier used nor does it list the regional purchase coefficient assumptions. Therefore, we will not compare the two studies.
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