Economic Impact of Alfalfa Farming

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    IMPLAN Support
    Hi Dan! Thank you for your forum post! Since your accounts payable has a record of all invoices for the Intermediate Expenditures- the grocery list of what is needed to create your Industry's production; then our recommendation is to customize the spending pattern to reflect your list of expenditures. This is especially true in the Agriculture Sectors as our data sources are not as comprehensive. If I may ask, how are you currently modeling the impact? Analysis By Parts or a standard Industry Change Activity? If you are using Analysis By Parts, do you also have a value for corporate profits, dividends taxes on production and imports as a part of your Output value? In regards to employment, if you know how many employees are employed by the Alfalfa Farm in AZ; then yes! Since you stated some of your workers are contractors; you would not count those workers if they are counted by the contracting company. Do they work for another company and the farmer hires them from that company, or are they independent workers, such as migrant workers, and the farm pays income directly to those workers. How they are classified will depend on the answer to that question. An additional comment about Employment is that it is a roll up of Full/Part Time and Seasonal Workers. This is not a Full Time Equivalent (FTE) however if all you have is an FTE, we do have a spreadsheet that will help you to convert the FTE's into a head count value. In regards to wage data, the Employee Compensation value, should you decide to override IMPLAN's estimate, is a fully loaded payroll value. This is to include, salary/wages, taxes and benefits. If you are using actual wage level they need to be converted over to Employee Compensation before entering them into the model. Thanks!
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    court@edpco.com
    Thanks for the response, I think this gets us closer to be able to begin modeling. A few follow up questions: 1. To put your guidance into practice in the model, how do I customize the spending pattern? My experience so far in IMPLAN modeling is limited to an industry change activity with either industry sales or employment as inputs. 2. I do not have any information on corporate profits or dividend taxes, though we could make that specific request if needed. I do know that the operation's entire production of alfalfa is utilized for the parent company's cattle feed and may not record profits. 3. The wage data given to us was an hourly wage for most classes of worker. Is there a conversion factor that can be used to convert these to a fully loaded wage estimate?
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    IMPLAN Support
    Hello, 1. To gain the ability to customize the spending pattern, you can import it. We suggest using the Analysis By Parts method to capture the payments to workers as well. Please see this article on [url=http://implan.com/index.php?option=com_content&view=article&id=359&Itemid=1797]Analysis By Parts[/url], and this video: https://www.youtube.com/watch?v=ClqdO9-wqgU&index=11&list=PLiosUB8174HFNb9dEDXdSeRrCE2i3f1pT 2. The article and video on analysis-by-parts should make this clearer, so we recommend that you think about this only after consulting those sources. The case study here http://implan.com/index.php?option=com_content&view=article&id=386:386&catid=149:analysis-by-parts might be especially useful for you. When doing analysis-by-parts, you can choose to use either the value of output or the sum total of your intermediate expenditures as your activity level for the spending pattern component of the scenario. If you use the sum total of your intermediate expenditures, you will want to make sure the sum of your coefficients in 1, so that the activity level measures the total of your intermediate expenditures. Typically, when you first import a spending pattern, the sum of those coefficients is less than one, and the difference would be the share of output “spent” on value added. This wouldn’t require any adjustment if you use output level as your activity level, but you would want to make sure you fully measure output. Other property income (OPI), which includes most prominently depreciation and corporate profits, and taxes on production and imports (TOPI), which includes most prominently property taxes and sales taxes, are part of output. So, if you add only compensation and intermediate spending to estimate the level of output and use that level as the “activity level” for your industry spending pattern, you’ll undercount intermediate expenditures (assuming OPI and TOPI are positive; OPI can be negative). But OPI and TOPI do not drive indirect or induced impacts (unless you have internalized government or corporations in your model, which we generally advise against), so if you a) use your total intermediate expenditures as your activity level and b) make sure the sum of the coefficients in your spending pattern is 1 (you can force this to be the case by going to Event Options>Change All>Normalize Events), then you won’t have to worry about underestimating indirect and induced effects. You might still want to include OPI and TOPI in your estimate of direct output, though. 3. We do have a conversion sheet as IMPLAN is Employee Compensation and also not FTE equivalent (http://implan.com/index.php?view=document&alias=4-536-fte-a-employment-compensation-conversion-table&category_slug=536&layout=default&option=com_docman&Itemid=1764) Please let us know if you have additional questions. IMPLAN Group Staff
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