Determining the Methods for Measuring the Economic and Fiscal Impacts Associated with Organic Crop Conversion in IowaExecutive SummaryThis research demonstrates methods for comparing the potential region-wide economic impact value of organic versus conventional crop practices. The impetus for this research was the passage of a county ordinance in Woodbury County, Iowa, allowing a maximum of $50,000 of county property tax abatements for qualifying conventional-to-organic production conversions.This study used Iowa State University Cooperative Extension Service crop enterprise budget information to compare the returns to operators of two productions systems: a conventional corn-soybean rotation versus an organic rotation consisting of corn–soybeans–oats-alfalfa. That information was translated into a format for inclusion within an input-output model of the Woodbury County economy. That modeling system accounts for how industries buy labor and inputs for production and what the consequences are to the regional economy when labor and other input demands change.The research demonstrated that there are very strong differences not only in the superior average returns to organic farming operators when compared to conventional corn–soybean operations, but in the overall economic impacts. Comparing the two scenarios and supposing 1,000 acres in each, we found that the organic rotation produced 52 percent more industrial output economic impact (gross sales) than the conventional option, 110 percent more value added, 182 percent more labor income, and 56 percent more jobs from the same 1,000 acres of production than from conventional corn and soybean rotations.The research next evaluated the overall economic efficiency of the county property tax abatement program. Economic efficiency means that the county engaged in an activity designed to promote a desirable community outcome, and in the course of doing so, recovered its forgone tax dollars. Our research found that the five-year abatement program would be worth $14,119 a year for 1,000 acres of converted organic land and that the county could therefore support 3,541 acres of conversion with its $50,000 property tax abatement program. The research found that the labor income economic impacts of the organic conversion would generate $7,918 annually in property taxes, leaving an annual estimate gross property tax deficit of $6,281. The research noted that, because the region was generating more laborers paying those property taxes, their households would require county services leaving the net increase in property taxes after paying for county services to be very close to zero. This leads us to conclude that it is unlikely that the economic impacts of the conversion would be sufficient to repay the property tax abatements over a reasonable period of time.March 2007 Published by the
Leopold Center for Sustainable Agriculture |