A Healthy Impact: Fruits and Vegetables Boost Alabama’s Economy

While fruits and vegetables are undeniably good for the body, they’re also a major boost for Alabama’s economy, Auburn University and Alabama Agricultural Experiment Station economists found in a recently completed analysis of the industry.

“Specialty crops is definitely a potential growth area for Alabama,” said Deacue Fields, chair of the College of Agriculture’s Department of Agricultural Economics and Rural Sociology and study leader.

“We grow a lot of corn, cotton, soybeans and peanuts, but in terms of profitability per acre, specialty crops rank highest,” Fields said.

The study was funded by the Specialty Crop Block Grant Program of the Alabama Department of Agriculture and Industries. Fields’ co-investigator was post-doctoral fellow Zhimei Guo.

Six years ago, Fields and Guo completed an analysis of the impact agriculture and forestry in general have on Alabama’s statewide economy, but that focused on agriculture in general.

“The earlier study masked the specialty crop component, so we wanted to drill down and take a closer look at this important sector of the agricultural economy,” Fields said.

The latest analysis showed that the fruit, vegetable and tree nut industry has a significant impact on Alabama’s economy, with a total output of $161.5 million, value-added production of $103.6 million, creation of 1,121 jobs and indirect business taxes of $2 million.

Production and processing of fruits, vegetables and tree nuts are important to both state and national agricultural and manufacturing industries, said Fields, who has studied the produce industry throughout his career.

Alabama ranks seventh in the U.S. in sweet potato sales, eighth in pecan sales and 12th in watermelon sales. While a portion of these fruits, vegetables and tree nuts enter fresh markets, other sales go to processors for freezing, canning, drying and pickling. Each sector, Fields said, creates economic activity and jobs within its own industry.

Small farms equal big returns

“This is by no means a small impact on the economy, but it is coming from a lot of our smaller farms in Alabama,” he said. “We have about 43,000 farms in the state, and 80 to 90 percent of those are categorized as small.”

Many fruit and vegetable producers have truck-crop operations and are extremely savvy with their marketing plans and are entrepreneurs by necessity, Fields said.

“Although small in scale, these producers have tractors and other equipment, and some of them have more capital per acre than larger row-crop farms,” he said. “A lot of capital is invested in these small farms, but there’s a higher return in terms of the market value of what they sell. They have a lot of infrastructure, such as cooling facilities and sheds.

“All farmers are entrepreneurs to an extent, but these producers have to know how to market,” he said. “The overall specialty crop industry is where you find the majority of agricultural entrepreneurs, because they have to know what the consumer wants, how the customer thinks, and they have to be able to provide a product that’s desired.”

Agritourism is another important aspect of specialty crop production.

“Specialty crop producers have you-pick operations and other things, like pumpkin patches and corn mazes, going on around the farm,” Fields said. “Fruit and vegetable growers are the largest participant in the agritourism sector, and many of these are located near large population centers like Birmingham and Huntsville.

Value-added products also play a role in specialty crop production, such as growers selling jellies or jams made from their own strawberry harvest.

In addition, sweet potato growers in Alabama are providing products for school lunch programs and foods for daycare and summer nutrition programs, Fields said.

Opportunities for expansion

Hopefully, the analysis can help encourage investments in the state’s specialty crop infrastructure, which lags behind neighboring states.

“This could be an entirely different industry with some infrastructure investments for processing,” Fields said. “A lot of fruits and vegetables are sold directly to consumers, and a lot of products are wasted because they are highly perishable.”

The state’s fruit and vegetable industry is unique in that it is present throughout the state, with some production in almost every county, he said. It’s also very diverse, including multiple crops, from cucumbers to peaches.

While there has been a recent uptick in the demand for organic specialty crops, consumers will pay even more for local products, Fields said.

“There are opportunities for serving these local markets—selling to individuals, restaurants and others,” he said. “When the water crisis hit in California, a lot of people were looking at Alabama because of our favorable climate. We have the capacity to grow our fruit and vegetable production, and that isn’t the case with some of our row crops.”

For the nine-month analysis, Fields and Guo used IMPLAN economic impact assessment software and associated databases for Alabama to estimate the industry’s impact.

“We also were interested in multipliers—how those employed within the industry spend their money, and what producers buy to actually support the industry,” Fields said. “We worked with some of the state’s specialty crops organizations to validate what was being reported. Many times, the impact of small farms is missed in standard reporting,”

The total economic impact captures the industry’s ripple effect, revealing the following:

• The fruit, vegetable and tree nut industry generates additional 0.5 dollar in the state economy per dollar of output.
• On average, fruit and tree nut production generates over 17 jobs per $1 million in direct sales.
• On average, vegetable and melon production generates eight jobs per $1 million in direct sales.
• Processed fruits and vegetables generate two additional jobs for each job within its own industry.

by Paul Hollis, Auburn University