Modeling Lease Payments to Farms

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    IMPLAN Support
    Hi Burk! Thank you for your forum post. If you know that farmers spend the income from leasing on the purchase of common household goods, then you can use the household spending pattern. Although we would recommend editing the common purchases such as imputed rental activity, utilities, etc out of the spending pattern, and then the adjusted value entered into Activity Level would need to be net of savings and income taxes. Capital Expenditures might be another possibility of spending if they were current purchases that would be farm related, but not part of the Household Spending Pattern. However if they are in fact paying down debt, since IMPLAN is a production model, this will not really be able to be modeled. From the Models standpoint this type of payment is leakage- new income used to pay for a previous year's production. Thus the year the borrowing, and likely the expenditures, occurred saw the impact, and now we are paying for what we already have - no new production occurs to give us an impact. The only potential impact would be if you could qualify interest fees the banking Sector would receive for it's operations as a result of, say a payment on a loan, if that is the type of debt involved. Thus relative to an Input-Output Analysis Model, there isn't an impact associated to paying off this debt. Please let us know if you have any additional questions. IMPLAN Support Team
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    Burkett.huey@coloradocollege.edu
    Interesting, this helps a lot with thinking about the problem in terms of production. How would I access the capital expenditures activity? Burk
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    IMPLAN Support
    Hi Burk! Thank you for your forum reply. Capital Expenditures are difficult to model as they are often not produced in the study area nor purchased in the region. If these two situations true, then the capital expenditures will not have an impact on the region's economy. However, it would be worth mentioning this purchase in your report. You can model a capital expenditure by using an Industry change activity. That is, you will need to know the specific item being purchased or produced to match it to an Industry's Sector. In addition, if you are not sure if this equipment is being produced locally, you can set LPP to SAM, to let the Model decide. The other method to evaluate Capital Expenditures is to use the BEA's Spending Pattern: http://implan.com/index.php?view=download&alias=27-invenstment-only-ffe-536-sector&category_slug=536&option=com_docman&Itemid=1764. Place this into your Models default folder: Documents > MIG > IMPLAN > Models. This will give you the FFE's (Furniture, Fixtures and Equipment) that are typically used in the farm industry. Activities Options > Import > From Another Model > Direct back to MIG > IMPLAN > Models The first two options are: 11AOEFF- Agricultural Production 115OEFF- Agricultural services You can scroll through the list of commodities that best fit your analysis. It is important again though, to keep in mind that if the debt was incurred on Capital Expenditures, there would still be no impact of the debt payment beyond banking, because the capital purchase occurred in an earlier year, related to the loan or the other funding, would have affected production only in the year of the purchase. Thanks!
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    David Buland
    When we are modeling longer-term lease payments to farms for conservation easement payments, we referred to four studies/surveys by the American Farmland Trust on how the farmers spent their FRPP payments from sales of farmland easements (to keep the land in farming indefinitely). The spending went into these IMPLAN categories. ID BOC Description IMPLAN_Sector Percentage IMPLAN Description 1 Easement Easements (ACEP, WRP, GRP, FRPP) 15006 0.168 Business Transfers (Paying off easement land) 2 Easement Easements (ACEP, WRP, GRP, FRPP) 15006 0.142 Business Transfers (Buying new farmland) 3 Easement Easements (ACEP, WRP, GRP, FRPP) 15012 0.232 Savings (Surplus) not use 4 Easement Easements (ACEP, WRP, GRP, FRPP) 15027 0.042 Personal Tax: Income Tax 5 Easement Easements (ACEP, WRP, GRP, FRPP) 10007 0.141 Households 75-100k Spending Pattern 6 Easement Easements (ACEP, WRP, GRP, FRPP) 57 0.072 Construction of new commercial structures, including farm structures 7 Easement Easements (ACEP, WRP, GRP, FRPP) 3262 0.074 Farm machinery and equipment 8 Easement Easements (ACEP, WRP, GRP, FRPP) 19 0.129 Support activities for agriculture and forestry Total 100% Note that the first four categories of spending are 15000 sectors, and have no impact on the local economy.
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    IMPLAN Support
    Thanks David for posting that response. Hopefully this will help Burke get exactly what he needs. If either of you have any additional questions or concerns, please let us know.
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