Estimation of Economic Impact Multipliers for the Texas Coastal Bend Cotton Industry

Cotton production in the Texas Coastal Bend has decreased since 2006 due to extreme drought, sharp increases in input prices, increases in the price of feed grains and relatively weak cotton prices. Stakeholders in the Texas Coastal Bend area, both producers and service providers to the cotton industry, are concerned that reduced cotton production will have a significant, negative economic impact on the area. This study develops economic impact multipliers for Texas Coastal Bend, based on regional enterprise production budgets developed with producer and Texas AgriLife extension service input, surveys regarding costs from local gins and input from local oilseed mills and cotton compresses. The regional income and cost data provided on the industry budgets and surveys were calculated in terms of costs per dollar of income. Each cost category provided by survey respondents was matched to an industry sector in the IMPLAN input-output model. Four types of impacts were calculated from the Type SAM model: output (gross sales), value-added, labor income, and employment. The total economic output contribution of cotton production and processing in the region was $620 million. Of that total, $451 million was attributable to cotton farming, $92 million to ginning, $52 million to oil milling and whole seed sales, and $25 million to the compress.