Locally made products
In our study of nonresident traveler spending in the state, we've added a question to ask respondents about their spending on things which were made in Montana. In the past, I have used sector 405 to capture things made by local artists, etc. Now that we're specifically asking people about purchases of locally made items, I want to be sure this is the best way to enter these expenditures into IMPLAN. We are recording lots of Montana-made arts and crafts, as well as food items and beer/liquor from Montana breweries and distilleries. What are the best sectors to use? THank you, Kara
Hi Kara! Thank you for your post. Now that you have that additional information about nonresident spending; you can break out your analysis into using different Sectors. I did want to confirm that it looks as if you are using the 440 Sectoring Scheme. If not, please let us know as our Sector recommendations below are in the 440 Scheme. Unless you know what the food items are, it is best to run them through retail grocery (324). If you are able to separate food stands you could use food service. We recommend using the Brewery Sector (71) but it should be Margined since it was likely purchased through a retail function. However if you happen to know if it was purchased directly from the brewery, this could change a few things and please let us know if this is the case. Arts/crafts: 405 Thanks!
Thank you. I am using the newer 536 sector scheme. Sorry for that confusion. We have quite a few breweries and distilleries in Montana, so I do think most of what is being reported to us has been purchased directly from the breweries (or distilleries). How do you recommend I deal with that most appropriately? Some examples of the food purchased are huckleberry berry products made in the state, candy made in the state, locally grown foods purchased at farmers markets or bakeries, and locally grown foods purchased at restaurants. With that further clarification, do you still recommend using retail grocery? Are there any edits I should make to better reflect the local nature of those food items, as opposed to grocery items which are less often produced in-state? Thank you, again, Kara
Hi Kara! Thank you for your post. I apologize for the incorrect Sectoring Scheme, thank you for the clarification. Retail Grocery 400 in the 536 Scheme- this recommendation is on the basis of the assumption that these food items are purchased through some form of retail outlet that will 'look like' a grocery store in terms of it's purchasing requirements for store operations. There are no adjustments that need to be made this Sector it should be run as Gross Retail Sales, and will lop off as you described, unfortunately unless you know the specific types of items purchased by the guest, or you want to assume that they make purchases in the same pattern as regular shoppers (which doesn't seem like the most sound assumption)). Brewery 108 in the 536 Scheme Arts/Crafts 492 in the 536 Scheme Since the products are being purchased from the Breweries and not through the Retailer (i.e. you are assuming that the purchase is being made at the brewery's factory operations in their 'retail' store, rather than in another retail venue or in a restaurant operated by the brewery), then we would still recommend using Sector 108 (Breweries). If you know the breakdown from the Breweries and Distilleries then you can model the two separately and use Sector 109 (Alcoholic beverages, brandy distilling) or Sector 110 (Alcoholic beverages, Except brandy distilling). But you won't want to enter the value in directly as Industry Sales in most circumstances because, although the remaining steps of the Value Chain are not involved (i.e. there is no need for the Retail-Wholesale-Transportation portions), they are likely still charging a retail or close to retail price for the beer they are selling. This is done by almost all lines of production that 'compete' with retailer vendors of their products. Thus relative to their standard production, driving the relationships of the Industry stored in the IMPLAN Model, the profit margin on these sales is significantly higher. If we then entered Industry Sales directly into the Model we would effectively be overestimating the amount of requirements, Employment and income associated to those sales, thus the Industry Sales value needs to be adjusted back to 'producer prices ' prior to entering a value into IMPLAN. One way to do this is to find out directly what the difference in sales cost is, if you have access to that information, or you reduce your Industry Sales value to reflect just the breweries Margin of the Value Chain only modeling the portion of the sales that really attributed to beer production and adding the remainder of the sales to the Direct Value Added and the Direct Output (and then the resulting totals) after the analysis is run. This will likely be slightly conservative because some Employment and income and Intermediate Expenditures will be associated to the onsite retail store, however, unless you have a way to estimate this portion of the breweries sales, we recommend using the conservative method. As far as the products purchased at Bakeries, Farmers Markets and Restaurants; the Sectors are below. Farmers Market: 407 These can be pretty hard to examine unless you know specifically what is purchased at the farmers market. Operational costs are typically pretty small for these venues but they are probably closest to the operations 407 which includes street vendors and temporary produce stands. If you know what is purchased in these venues you can treat it very much like the description of breweries above, since farmers that sell at farmer's markets are often making the retail cost or a higher than retail sales value on their products. Bakeries- Like breweries these can be modeled with Sector 94 but again you'll need to make an adjustment to the sales value. Family Restaurants, full service 501 Family Restaurant, limited service 502- out of curiosity -are these meals prepared by restaurants that are using locally grown produce and meats - and it is the local Intermediate Expenditures that you are trying to capture, or is this packaged food purchased from a restaurant to take home. Either of these Sectors would work either way, but if you are trying to capture the former (changing the local purchasing of Intermediate Expenditures for restaurants) that requires additional modeling using the Analysis-by-Parts methodology to adjust LPP and then you do have to know what the local rate of purchase is for those restaurants to be able to manually adjust from the Models estimated ratio of local supply to meet demand. The more information you know about where the products are being purchased the more information you can put into IMPLAN.
I'm still in need of some assistance with figuring out how to deal with local made/produced products in a model. After sorting through all of our survey data reported as things purchased that were made or produced in the state, I've ended up categorizing into the following sectors: 397 (locally made home furnishings) 401 (locally made lotions, soaps, etc.) 404 (locally made sporting equipment such as fishing flies) 492 (locally made arts, crafts, jewelry) 405 (locally made souvenirs, etc) I've got a lot of different local food items, including things like like baked goods, huckleberry jam, honey, beef jerky, candy. Some of these were certainly purchased in shops, some at farmers markets, some restaurants. I'm not quite sure if it's best to just go with sector 503, or if perhaps I should split it between 503 and 502/501. Regarding the beer and alcohol purchases, I'm not sure if I can get information to help in adjusting those sales back to producer prices, as suggested, for use of sectors 108 and 109. In that case, should I use sector 400 instead? With all of these sectors, is there some way to edit event options to better reflect the local nature of these products? I know there must be, but I'm not sure how to best do it! I need to differentiate these locally produced product sales from standard retail sales. Thank you.
HI Kara! The Sectors you are looking at are all fine, but represent the retail component only, so you will see the traditional 'loping-off' effect of retail, because those Sectors can only Model the retail component. Just as we described with your breweries situation, if you want to try to capture local impacts of these you will have to be able to determine a producing Sector. You do not need to know the Margins, just simply set them. In Pro that is done through the [b]Event Options> Edit Event Properties>Margins> Yes[/b]; http://implan.com/index.php?option=com_content&view=article&id=309#Margin. In IMPLAN-Online that is set by setting the Retail Yes button. IMPLAN then calculates the Margins for you, although you may want to edit these since in many cases it is unlikely there were wholesale components and in the case of farmers markets not really transportation components (because transportation would be fuel costs for farmer's selling, presumably, rather than commercial truckers, etc.) and in some cases not a retail store either. Again, an analysis on Farmers Markets can be pretty hard to examine unless you know specifically what is purchased at the farmers market. Operational costs are typically pretty small for these venues but they are probably closest to the operations 407 which includes street vendors and temporary produce stands. If you know what is purchased in these venues you can treat it very much like the description of breweries above, since farmers that sell at farmer's markets are often making the retail cost or a higher than retail sales value on their products. Being able to identify a producer is the only way to capture those 'additional' local production impacts. Local Purchase Percentage only looks at the Sector itself, so having those set to 100% will make the retailer 100% but will have no impact on the production fed into the retail environment. Thanks
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