Economic Contribution of the Ontario Chicken Industry - Study prepared October 2013

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Economic Contribution of the Ontario Chicken Industry - Study prepared October 2013
Economic Contribution of
the Ontario Chicken Industry
                    Study prepared October 2013
Economic Contribution of the Ontario Chicken Industry - Study prepared October 2013
Farming and food, stronger together.
A new era of industry collaboration for profitable
   growth, competitiveness and sustainability.

          Ontario Farm Products
          Marketing Commission
Economic Contribution of the Ontario Chicken Industry - Study prepared October 2013
Table of Contents

      Executive Summary.............................................................................................            1
1.0   Introduction...........................................................................................................   2
2.0   Chicken Farming in the Province of Ontario....................................................                            4
3.0   Chicken – An Integral Part of the Farm Economy...........................................                                 8
4.0   Economic Contribution of Chicken Farming in Ontario..................................                                     10
5.0   Contribution of Primary Processing of Ontario Chicken................................                                     18
6.0   Summary of Findings...........................................................................................            24
      Annex I – Background on the Study Authors..................................................                               28
      Annex II – An Overview of the Model...............................................................                        28
Economic Contribution of the Ontario Chicken Industry - Study prepared October 2013
Economic Contribution of the Ontario Chicken Industry - Study prepared October 2013
Executive Summary

Ontario’s chicken industry is an important contributor to the       sales by Ontario chicken farmers generates $2.29 of economic
economic health and growth of the province.                         activity. When combined with the economic activity of
                                                                    chicken processors, every dollar spent results in $2.34
Ontario boasts the largest chicken producer, processor and          in broader economic activity.
consumer base in Canada, with more than 200 million chickens
grown every year by more than 1,000 independent, successful         Increases or decreases in chicken output will have a
chicken farms and processed by some 18 primary processors.          corresponding impact on the economy. For example, if
                                                                    Ontario can increase chicken production by 10%, it will
While most of Ontario’s chicken production is concentrated in       result in $272 million of additional economic activity, and
a band just west of the Greater Toronto Area that stretches         1,913 new jobs created with an overall increase in wage
from Lake Erie to the Bruce Peninsula, the benefits of chicken      payments by $84 million. The increase to Ontario’s GDP
farming and processing stretch across the province. Chicken         will be $138 million, and governments will collect an
farmers have a marketplace value of $760 million, with a            additional $39 million in tax revenue.
Gross Domestic Product of $819 million that supports 11,409
full-time equivalent jobs.

Including the primary processing of chicken, the industry
contributes $2.72 billion to the Ontario economy, with a GDP
of $1.38 billion and supporting 19,183 full-time equivalent jobs.

Tax revenues generated by the chicken industry for the
federal, provincial and local governments total $391 million.

Ontario chicken farmers spent $342 million on feed in
2012, accounting for nearly a quarter of the sales volume
of the province’s feed manufacturers. Supplying this feed
accounted for 19% of all soybeans crushed in Ontario, and
required 14,000 truckloads of corn to be delivered to the
feed manufacturers – that’s 54 trucks on each workday of
the year. Chicken farmers and processors also support chick
hatcheries, energy suppliers, general equipment suppliers
and labour.

But the economic impact of chicken farming goes beyond
agriculture and processing plants. Every dollar of chicken

                                                                                                                                   1
1.0 Introduction

           The Ontario chicken industry generated $760 million in farm                                                     1.1 Project Focus and Organization
           cash receipts in 2012, representing 6.6% of all farm level                                                           of this Report
           cash receipts received from the market by Ontario farmers.
           The chicken industry is a large and valuable contributor to                                                     This report provides a perspective on the overall importance of
           the Ontario farm economy, as well as to the overall provincial                                                  the chicken industry in Ontario from a few different viewpoints.
           economy. When the value of processed chicken is included,
           this overall market value of Ontario’s chicken industry grows                                                   Section 2.0 illustrates the importance of chicken farming
           to $1.16 billion; this is valued as primary processed chicken                                                   across Ontario, which accounts for 6.6% of market cash
           and does not include highly processed chicken such as                                                           receipts across the province. In counties where chicken
           breaded chicken fingers or stuffed chicken products. This                                                       farming is more predominant, such as Wellington County,
           report shows that the overall economic consequence of the                                                       the chicken industry can be as much as double that value,
                                                                                                                           demonstrating the significant impact of chicken production
                                                                                                                           on the farming economy in rural Ontario.
    When the value of processed chicken is
                                                                                                                           In Section 3.0, we examine the linkages between chicken
    included, this overall market value of Ontario’s
                                                                                                                           farming and the agri-food sector, including the chick hatching
    chicken industry grows to $1.16 billion; this is                                                                       sector and the corn and soybean sectors that supply the feed
    valued as primary processed chicken and                                                                                for Ontario chickens.
    does not include highly processed chicken.
                                                                                                                           The overall contribution of chicken farming to the province of
                                                                                                                           Ontario, such as the amount of GDP (value added) contributed
                                                                                                                           by chicken production throughout the province, is explored in
           Ontario chicken supply chain is rather significant, with it                                                     Section 4.0. Across the economy, chicken farming generates
           contributing to more than 19,000 full-time jobs throughout                                                      more than $800 million in GDP. The approach used to
           the Ontario economy.                                                                                            measure the economic contribution of chicken farming is a
                                                                                                                           special application of a generic regional impact model (RIM:
           The overall economic impact of the Ontario chicken industry                                                     Canada) developed by Econometric Research Limited (ERL).
           and its supply chain cannot be ignored. Partners in the                                                         It is a unique model that captures the economic impact of
           chicken industry of Ontario engaged outside economic                                                            different activities at the provincial and national levels. The
           expertise1 to provide factual information to stakeholders                                                       model is based on a novel technology that integrates input
            and policy decision-makers on the economic contribution                                                        output analysis and location theory. [See Annex II for more
           of the supply managed chicken industry within the province                                                      background on the model and on Input/Output analysis.]
           of Ontario and its importance to the overall farm economy
           across Ontario2.                                                                                                The model utilizes a large set of economic and technical
                                                                                                                           databases for Canada that are regularly published by

           1 The JRG Consulting Group in collaboration with Econometric Research Limited (ERL), a firm that specializes in economic impact modelling and analysis. (Annex 1 provides a short background on the study authors.)
           2	In the near future, CFO may collaborate with the other supply-managed commodities in Ontario to offer a broader view of the contribution of the supply-managed sector to the Ontario economy.

2
Statistics Canada3. A short list of Statistics Canada data                                                        piece that is covered in Section 5.0. This analysis includes all
used in the model includes the inter-provincial input output                                                      upstream economic activities4 based on shipments of primary
tables, employment by sector, taxes by type of tax and the                                                        processed chicken. Primary processed chicken includes
level of government collecting it, prices of products, energy                                                     cut up fresh chicken as shipped by processors to retail
used in physical and energy units, etc.                                                                           establishments. The analysis was conducted in this manner
                                                                                                                  for two reasons. First, data is available on the wholesale
Some of the key impact indicators generated by the model                                                          value of primary processed chicken, and this is not the case
include value added, gross output (value of transactions in                                                       for further processed chicken such as chicken kiev. Second,
the economy), employment, wages and salaries, and taxes                                                           this measure is a good indication of the overall economic
received by governments.                                                                                          activity that may be at risk if the regulatory features of the
                                                                                                                  supply management are no longer in force5.
The Ontario chicken economy includes more than chicken
farming; processing Ontario-grown chicken is a significant

3 Statistics Canada: Inter-provincial Input Output Tables, Catalogue No. 15F0042XDB.
4	These are backward linkages through input suppliers, such as chicken farmers and feed manufacturers.
5	Major pillars of supply management include (1) control of imports to pre-specified access levels, (2) production controls within Canada, and (3) the ability to establish a made in Canada price for the live chicken
   supplied by Ontario chicken farmers to processors.

                                                                                                                                                                                                                           3
2.0 Chicken Farming in
         the Province of Ontario

       Ontario is the largest chicken-producing province in                                                  Bruce Peninsula to the shores of Lake Erie (see Figure 2.1–
       the country, accounting for 32.2% of Canadian chicken                                                 counties with darker shading have a larger share of the
       production6 in 2012. This share of national production is                                             overall Ontario chicken production). Wellington County is the
       less than Ontario’s share of the Canadian population, which                                           provincial leader in chicken production, with $108.9 million in
       stands at 38.7% with a population of 13.5 million Ontarians.                                          sales value for 2012 accounts and 14.3% of Ontario’s chicken
       Quebec is the second largest chicken-producing province and                                           production, which is followed by Huron County at 12.3% and
       accounts for 27.4% of Canada’s chicken output.                                                        Niagara Region at 11.7%.

       In 2012, Ontario chicken famers shipped 447 million                                                   The map (Figure 2.1) also indicates the location of the 18
       kilograms of chicken to primary processors, which generated                                           primary chicken processing plants in Ontario that receive
       $760 million in farm cash receipts, as reported by Statistics                                         live chicken supplied by Ontario farmers. These primary
       Canada. This value is:                                                                                processors are located in the chicken production regions
                                                                                                             and near the major chicken consuming region (the GTA).
       • 14.4% of farm cash receipts generated by Ontario’s
          livestock and poultry sector; and                                                                  The three largest counties, in terms of chicken production,
                                                                                                             account for 38% of provincial production, with the top five
       • 6.6% of all market based cash receipts received by                                                 accounting for 55.4% of Ontario’s chicken production. The top
          Ontario farmers in 2012.                                                                           10 chicken producing counties are highlighted in light grey in
                                                                                                             Table 2.1, and account for 79% of Ontario’s chicken production.
       Within Ontario, the importance of chicken production varies
       across the province, but it is largely concentrated in a band
       west of the Greater Toronto Area that stretches from the

       6 It can be noted that in 1990, Ontario accounted for 34.8% of overall Canadian chicken production.

4
Figure 2.1      Location of Chicken Production and Chicken Processing Plants
                                                                                              Lake
                                                               Sudbury                      Nipissing
                                                               District

                                                                                                                             Nipissing
                                                                                                                             District

                            Manitoulin
                             District                                                 Parry Sound
                                                                                        District
                                                                                                                                                          Renfrew County                           Ottawa
                                                     Georgian Bay                                                                                                                     Nepean        Gloucester
                                                                                                         Muskoka
                                                                                                         District                                                                                             Stormont
                                                                                                        Municipality
                                                                                                                            Haliburton                                         Lanark County
                                                                                                                             County

                                                                                                                                                                   Frontenac
                                                                                                                                                   Hastings          County
                            Lake Huron                                                                                                              County
                                                                                                                                    Peterborough
                                                                                           Simcoe                      Victoria        County
                                                                                           County                      County
                                                               Grey County
                                               Bruce
                                               County

                                                                                Dufferin
                                                                                County
                                                                                             Richmond Hill
                                                                   Wellington                                            Oshawa
                                         Huron County               County        Brampton
                                                                                                            Toronto                      Lake Ontario
                                                                                                                                                                                               Chicken Production
                                                       Perth                                                                                                                                   Share by County
                                                      County                 Kitchener           Oakville
                                                                                               Hamilton                                                                                                 15%
                                                               Oxford                                            St. Catharines
                                                               County
                                                                          Brant County
                                         Middlesex
                                          County
                                                     London
                           Lambton                                                                                                                                                                      8%
                            County               Elgin County

                          Kent County                                                                                                                   Chicken Primary
                                                Lake Erie                                                                                               Processing Plants                               0%
           Essex County

Table 2.1     Value of Ontario Chicken Production, by County, 2012

                                         2012 Market      County Share of                                                                                                      2012 Market      County Share
 County                                                                                                                           County
                                         Value ($million) Ontario Value (%)                                                                                                    Value ($million) of Ontario Value

 Wellington                                          $108.9                                14.3%                                  Gengarry & Stormont                                     $8.0                           1.1%
 Huron                                               $93.6                                 12.3%                                  Prince Edward                                           $7.9                           1.0%
 Niagara                                             $88.7                                  11.7%                                 Grey                                                    $6.9                           0.9%
 Oxford                                              $64.7                                  8.5%                                  Northumberland                                          $5.9                           0.8%
 Perth                                               $64.7                                  8.5%                                  Dufferin                                                $5.2                           0.7%
 Haldimand-Norfolk                                   $59.4                                   7.8%                                 Peel                                                    $5.0                           0.7%
 Waterloo                                            $34.9                                  4.6%                                  York                                                    $4.9                           0.6%
 Middlesex                                           $33.3                                  4.4%                                  Ottawa-Carleton                                         $3.7                           0.5%
 Bruce                                               $29.6                                  3.9%                                  Halton                                                  $3.6                           0.5%

 Hamilton-Wentworth                                   $21.3                                 2.8%                                  Victoria (Kawartha Lakes)                               $3.0                           0.4%
                                                                                                                                  Kent                                                    $2.8                           0.4%
 Durham                                              $19.0                                  2.5%
                                                                                                                                  Lennox & Addington                                      $1.2                           0.2%
 Lambton                                             $16.2                                  2.1%
                                                                                                                                  Essex                                                   $1.1                           0.1%
 Elgin                                               $15.0                                  2.0%
                                                                                                                                  Renfrew                                                 $0.9                           0.1%
 Prescott & Russell                                  $14.9                                  2.0%
                                                                                                                                  Sudbury                                                 $0.1                           0.0%
 Simcoe                                              $14.8                                  2.0%
                                                                                                                                  All Ontario                                          $759.60                           100%
 Brant                                                $11.7                                 1.5%
                                                                                                                                                                  Source: Calculations based on distribution of quota units in late 2012
 Peterborough                                         $8.7                                  1.1%

                                                                                                                                                                                                                                           5
The table on the previous page highlights Ontario’s top                                                             Table 2.2
    counties and regions in terms of overall chicken production.                                                        Counties Ranked by Share of Chicken Value to Overall
    The importance of chicken production to the overall farm                                                            Farm Cash Receipts
    economy within a county is illustrated in Figure 2.2, which
                                                                                                                                                                                                                Chicken
    shows the importance of chicken production within a county                                                                                                       2012                  County
                                                                                                                                                                                                                Share of
                                                                                                                                                                     Market                Share of
    based on the chicken contribution to farm cash receipts in                                                            County
                                                                                                                                                                     Value                 Ontario
                                                                                                                                                                                                                County
                                                                                                                                                                                                                Cash
    a county7. Again Wellington County is the top county, with                                                                                                       ($million)            Value (%)
                                                                                                                                                                                                                Receipts
    13.3% of county farm output being chicken production; this                                                            Wellington                                      $108.9                14.3%                13.3%
    is followed by Niagara at 10.3% and then Peterborough at                                                              Niagara                                          $88.7                11.7%                10.3%
    9.6% of its output (See Table 2.2).                                                                                   Peterborough                                      $8.7                 1.1%                 9.6%
                                                                                                                          Huron                                            $93.6                12.3%                 8.9%
                                                                                                                          Hamilton-Wentworth                               $21.3                 2.8%                 8.2%
    The data indicates that the chicken industry is an important                                                          Oxford                                           $64.7                 8.5%                  7.9%
    part of the local agricultural economies in the counties                                                              Haldimand-Norfolk                                $59.4                 7.8%                  7.4%
    that are in the southeast to northwest band on the west                                                               Perth                                            $64.7                 8.5%                 6.9%
                                                                                                                          Prince Edward                                     $7.9                 1.0%                 6.3%
    side of the GTA. Counties where the farm value of chicken
                                                                                                                          Durham                                           $19.0                 2.5%                 6.2%
    production in a county exceeds the provincial average of                                                              Waterloo                                         $34.9                 4.6%                 5.9%
    6.6% of all farm production (based on cash receipts) are                                                              Bruce                                            $29.6                 3.9%                 5.8%
    highlighted in grey in Table 2.2.                                                                                     Brant                                            $11.7                 1.5%                 5.4%
                                                                                                                          Peel                                              $5.0                 0.7%                 4.7%
                                                                                                                          Middlesex                                        $33.3                 4.4%                 4.3%
    There is a high correlation between the counties where                                                                Prescott & Russell                               $14.9                 2.0%                 4.1%
    chicken has the highest share of farm cash receipts and the                                                           Elgin                                            $15.0                 2.0%                 3.4%
    largest chicken producing counties8, as indicated by the last                                                         Northumberland                                    $5.9                 0.8%                 3.1%
                                                                                                                          Simcoe                                           $14.8                 2.0%                 3.1%
    two columns in Table 2.2. In counties with chicken production
                                                                                                                          Dufferin                                          $5.2                 0.7%                 3.1%
    above the provincial average, we can expect that the amount                                                           Lambton                                          $16.2                 2.1%                 2.9%
    of valued added (or GDP) in the region due to chicken will be                                                         Grey                                              $6.9                 0.9%                 2.7%
    meaningful. GDP captures all of the value added by chicken                                                            Halton                                            $3.6                 0.5%                 2.3%
                                                                                                                          Victoria (Kawartha Lakes)                         $3.0                 0.4%                 2.2%
    producers as well as the value added by all of their suppliers
                                                                                                                          Gengarry & Stormont                               $8.0                 1.1%                 1.7%
    (feed mills, hatcheries, labour, etc.).                                                                               York                                              $4.9                 0.6%                 1.6%
                                                                                                                          Lennox & Addington                                $1.2                 0.2%                 1.5%
                                                                                                                          Ottawa-Carleton                                   $3.7                 0.5%                 1.1%
                                                                                                                          Renfrew                                           $0.9                 0.1%                 0.8%
                                                                                                                          Sudbury                                           $0.1                 0.0%                 0.7%
                                                                                                                          Kent                                              $2.8                 0.4%                 0.5%
                                                                                                                          Essex                                             $1.1                 0.1%                 0.2%
                                                                                                                          All Ontario                                    $759.60                100%                  6.6%

                                                                                                                        Source: Calculations based on distribution of quota units in late 2012 for first two columns and 2011
                                                                                                                        Census of Agriculture data and 2010 chicken production for the third column.

    7 This calculation used 2011 Census data, which reports on 2010 cash receipts for a county, and compared that overall county value to the 2010 value of chicken production in that county (which is based on internal CFO data).
    8 It can be noted that Middlesex is the 8th largest chicken producing County; however, its share of farm cash receipts is below the provincial average, given the importance of other agricultural production in the county.

6
Figure 2.2   Importance of Chicken Production to Farm Cash Receipts Within a County

                                                                 Parry Sound
                                                                   District
                                                                                                                                     Renfrew                              Ottawa
                                                                                                                                      County

                                                                                                                                                                                   Stormont
                                                                                                                                                           Lanark
                                                                                                    Haliburton                                             County
                                                                                                     County
                                                  Georgian Bay
                                                                                                                                               Frontenac
                                                                                                                          Hastings
                                                                                                                                                 County
                                                                                                                           County
                 Lake Huron                                                                               Peterborough
                                                                                                             County
                                                                                              Victoria
                                                   Grey                                       County

                                Bruce             County              Simcoe
                                County                                County

                              Huron
                              County                                                                             Lake Ontario
                                                           Mississauga              Toronto
                                          Perth
                                         County

                                                                         Hamilton
                                                                                        St. Catharines                                               Share By County
                        Middlesex
                         County          London                                                                                                                     15%
             Lambton
              County

                                                                                                                                                                    8%
              Kent
             County

                                                                                                                                                                    0%

                                                   The data indicates that the chicken industry is an important part
                                                   of the local agricultural economies in the counties that are in the
                                                   southeast to northwest band on the west side of the GTA.

                                                                                                                                                                                              7
3.0 C
         hicken – An Integral Part
        of the Farm Economy

       While the production of chicken is a key economic driver –                                                     (valued at the farm gate of corn farmers) and $112 million
       especially in parts of rural Ontario west of the GTA – the                                                     of soymeal from Ontario’s soybean crushers.
       economic impact of the industry goes well beyond what
       is produced on the chicken farm.                                                                               This volume of soybean meal accounted for 19% of all
                                                                                                                      soybeans crushed in the province, and the purchase of
       The economic importance of the Ontario chicken industry                                                        $141 million of Ontario soybeans to manufacture the
       must also be considered from the perspective of its major                                                      soybean meal. The value of purchases by soybean crushers
       linkages in the Ontario farm economy. Through the purchases                                                    is higher than the meal value since the value of the soy oil
       of various goods and services, chicken production generates                                                    is not shown in Figure 3.1.
       a positive economic impact throughout its supply chain.
       Viewed another way, chicken production is adding value to                                                      The Ontario chicken industry also used an estimated 549,000
       the corn and soybeans grown in the province of Ontario, as                                                     tonnes of corn in 2012, which required 14,000 truckloads
       these grain and oilseed products are converted into meat                                                       of corn delivered to feed manufacturers – the equivalent of
       protein on the chicken farm.                                                                                   54 loads every day of the workweek in 2012. This annual
                                                                                                                      volume of corn is more than the amount of corn used by a
       Figure 3.1 (on the next page) provides an illustration of                                                      typical 200-million-litre ethanol plant9 located in Ontario.
       the product and financial flows associated with chicken
       production. The 2012 chicken volume of production of 447                                                       In total, chicken feed manufacturers purchased 10% of the
       million kilograms by Ontario chicken farmers through its                                                       2011/12 soybean crop and 8% of the 2011/12 corn crop10. The
       forward linkage to primary processing enabled the $1.16                                                        production of chicken in 2012 generated $282 million in farm
       billion in output of primary processed chicken products.                                                       gate sales of corn and soybeans11, which accounts for 9.5%
                                                                                                                      of Ontario corn and soybean cash receipts for 2012. These
       This volume of chicken production required $342 million of                                                     grain and oilseed farmers in turn purchased an estimated
       prepared feed from Ontario feed manufacturers and $140                                                         $66 million in seed, fertilizer and crop protection materials.
       million of chicks from Ontario’s hatcheries. These two inputs
       account for 63% of the value of the chicken supplied by                                                        These economic linkages from chicken production back
       chicken farmers in 2012.                                                                                       through to input suppliers illustrate the interdependencies
                                                                                                                      between chicken production, the grain production sector and
       The 2012 volume of chicken production required an                                                              processing (of feed and soymeal). These backward linkages
       estimated 813,000 tonnes of prepared feed, with the feed                                                       for all purchases made by Ontario chicken farmers are
       destined for Ontario chicken production accounting for 23%                                                     used to calculate the economic activity generated in rural
       of the value of shipments from all Ontario feed mills (based                                                   Ontario by the chicken production sector. If Ontario chicken
       on value of sales as measured by Statistics Canada). These                                                     production did not exist, a good portion of the level of
       feed mills in turn required approximately $141 million of corn                                                 economic activity occurring in the Ontario economy linked
                                                                                                                      to chicken production would also not exist.

        9 A 200 million litre ethanol plant will use between 480,000 to 500,000 tonnes of corn in a year.
       10	The 2011/12 crop is used for comparison since corn and soybeans are harvested in the fall and are the major feedstock for the feed manufacturing sector in 2012.

8
Figure 3.1        Overview of Financial and Product Flows in the Chicken Industry, 2012

                                                                                                  Primary Processing
                                                                                                  of Ontario Chicken
                                                                                                  $1,160 M. (output)
                                                                                                  ($150 M. to labour)
                                                                                                  3,750 jobs

                                                                                                  Ontario Chicken Farmers
                                                                                                  $760 M. (output)
                                                                                                  447 M. kgs

                                                           Feed Manufacturing                                                                                          Chick Hatcheries
                                                           $342 M. in sales                        538 jobs                                                            Required
                                                           (23% of all sales)                      ($25 M. to labour)                                                  $140 M. in sales
                                                           813,000 tonnes                                                                                              201 M. chicks

                              Soymeal
                              $112 M. in sales
                              (19% of all shipments)
                              224,000 tonnes

                              Ontario Soybeans                                                                                                                         Ontario Corn
                              $141 M. in sales                                                                                                                         $141 M. in sales
                              283,000 tonnes                                                                                                                           549,000 tonnes
                              233,000 acres                                                                                                                            143,000 acres
                              (10% of 2011 crop)                                                                                                                       (8% of 2011 crop)

                                             Ontario Corn and Soybeans
                                             $282 M. in sales                                            $35 M. in seed
                                             376,000 acres                                               $24 M. in fertilizer
                                             (9% of acres)                                               $6 M. in crop protection
                                             550 farms with 500 acres

11 This volume also represents ~ 7% of all corn, wheat and soybean production in the province, and represents the output of 1,155 average grain and oilseed farmers.

                                                                                                                                                                                           9
4.0 Economic Contribution of
          Chicken Farming in Ontario

        As noted above, Ontario chicken production generated $760                                                    economy, multiplying the effects of the original expenditures
        million in farm gate value in 2012. Chicken production, just like                                            on overall economic activity.
        the provincial economy, is a complex of interacting sectors.
        Focusing only on the direct contributions of chicken farming                                                 The following is a measurement of the direct, indirect and
        results in a truncated and limited view of its entire and full                                               induced impacts of chicken farming to the economy of
                                                                                                                     Ontario. The most recent year for which data is available
                                                                                                                     (2012) is used to give a recent estimate of these contributions.

                                                                                                                     4.1 Impact of Chicken Farmer Expenditures
                                                                                                                          on Overall Economic Activity

                                                                                                                     The economic driver of the Ontario chicken industry is the
                                                                                                                     expenditures made on inputs and household consumption
                                                                                                                     by the chicken production sector, made possible by the
                                                                                                                     $760 million total value of chicken production in 2012.
                                                                                                                     These expenditures include the purchasing of key inputs
                                                                                                                     to produce the chicken and consumption items by chicken
        contributions to the provincial economy. Producing $760 million                                              farming households and others impacted directly or indirectly
        of chicken output requires inputs from several sectors, including                                            by chicken farming. In an input/output analysis total
        feed manufacturers, chick hatcheries, energy suppliers and                                                   expenditures equate to the total value of production, since
        labour. These input suppliers to chicken production also require                                             all income is expended in some manner. These expenditure
        supplies purchased in the economy, such as trucks to deliver                                                 levels and the resulting linkages13 drive the economic impact
        feed and chicks and energy to operate plants and equipment,                                                  and the measurement of economic contribution.
        etc. The economic contribution of a sector is driven by its
        purchases from other sectors in the economy and resulting                                                    Initial expenditures – This figure indicates the
        economic activity throughout the economy.                                                                    amount of expenditure directly made by Ontario
                                                                                                                     chicken farmers. It is these expenditures that
        Through this economic activity, the overall economic                                                         typically drive the results.
        contribution of Ontario chicken production can be assessed.
        Such assessment is based on using a regional impact model                                                    Initial expenditures in the Ontario chicken production sector
        (an input-output model) developed by Econometric Research                                                    drive associated economic activity through the indirect
        Limited that estimates the economic impact of economic                                                       effects (suppliers purchasing their required supplies) and
        activities12. This approach shows how expenditures by chicken                                                the induced effect (the impact of expenditures by labour on
        farmers to produce a dollar’s worth of chicken purchased by a                                                goods and services).
        processor, for example, circulates and re-circulates within the

        12 An overview of the model used and the general approach are provided in Annex I.
        13	There are two resulting types of linkages – upstream (backward) and downstream (forward) based on the expenditures of the farm sector. Downstream linkages of farm production are the impacts on users of farm
            products such as processors. Impacts on suppliers of fertilizer, machinery, and energy, are examples of upstream linkages. Our analysis only accounts for these upstream linkages.

10
A dollar spent on producing these primary agricultural                                                        Table 4.1
products – such as chicken – circulates and re-circulates                                                     I mpact of Ontario Chicken Farming on Ontario
within the economy, multiplying the effect of the original                                                     Economic Activity, 2012
expenditures on overall economic activity. This process is
referred to as the economic multiplier effect and it                                                                                         Initial Expenditure $760 Million
operates at several levels:

• The initial expenditures on equipment, materials and
   labour, which are generally referred to as the direct
  costs of operation – the initial (direct) effects;

• Subsequent purchases by suppliers of materials                                                                                      Gross Output
   and services to sustain the original and derivative
                                                                                                                                      $1,740 Million
   expenditures – the indirect effects; and

• The induced effects that emerge when farm operators
   and workers in the sectors stimulated by initial and indirect
   expenditures spend their additional incomes on consumer
   goods and services.
                                                                                                                                                        Direct $760 Million
The impact of these initial expenditures14 on output of the
economy is shown in Table 4.1. The $760 million of direct                                                                       Indirect & Induced $980 Million

                                                                                                              Multiplier 2.29
A dollar spent on producing these                                                                             The output multiplier is 2.29, which means that for each
primary agricultural products – such as                                                                       million dollars in chicken output (sales) by the farm sector,
chicken – circulates and re-circulates                                                                        there are total sales (or transactions) of $2.29 million
                                                                                                              throughout the Ontario economy.
within the economy, multiplying the
effect of the original expenditures on                                                                        Source: JRG Consulting Group and Econometric Research Limited calculations

overall economic activity.

                                                                                                              Multipliers – These are summary measures that
                                                                                                              represent the division of the total impacts (direct,
economic output of chicken farmers generates $980 million                                                     indirect and induced) by the initial expenditures. For
in indirect and induced expenditures, resulting in total                                                      example, the gross output multiplier associated with
economic activity of $1.7 billion in transactions throughout                                                  the Ontario chicken farming business is calculated by
the economy. This figure is solely the result of chicken                                                      dividing the total gross impact by initial expenditures.
production, and accounts for the supply chain linkages for                                                    The only exception is that of the employment
chicken farmers (e.g., feed companies, professional services,                                                 multiplier where total employment is divided by direct
energy, labour, etc.).                                                                                        employment in order to preserve the common units.

14	The distribution of these initial expenditures across inputs and household income made by Ontario chicken farmers are calculations made which include a variety of sources, such as expenditure data supplied by
    Statistics Canada, proprietary engineering costing data associated with chicken production, and other confidential sources.

                                                                                                                                                                                                                       11
4.2 V
                alue Added Due to Ontario Chicken                                                                           Table 4.2
               Farming Production Activities                                                                                 Value Added by Ontario Chicken Farming, 2012

           The total impact of chicken farming on economic activity                                                                                         Initial Expenditure $760 Million
           in Ontario is distinct from the value added due to Ontario
           chicken production. Value added15, which is the same as Gross
           Domestic Product (GDP), is a preferred indicator of impact
           and is defined to include the sum of wages, rent, interest,

                                                                                                                                                        Value Added
     Based on Input/Output analysis, an
                                                                                                                                                       $839 Million
     estimated $430 million in value added was
     generated by the non-farm sector due to the
     economic activity created within the chicken
     production sector.

                                                                                                                                                                       Direct $389 Million

           depreciation on capital items and profits and is a measure of                                                                        Indirect & Induced $430 Million
           the net contribution of an industry or sector to the economy.
                                                                                                                                                                                          Multiplier 1.08
           Table 4.2 shows that the direct value added economic impact                                                                       Source: JRG Consulting Group and Econometric Research Limited calculations
           of Ontario chicken production in 2012 was $389 million, with a
           total direct and indirect impact of $839 million throughout the
           Ontario economy after considering the indirect and induced                                                         Value Added – This figure represents net output
           effects. The direct GDP includes the economic impact of                                                            generated by the initial expenditures of Ontario
           chicken farmers and production and captures the value added                                                        chicken farmers in the province. It is typically the sum
           by the input suppliers to the chicken production sector, which                                                     of wages, rent, interest, depreciation, and profits.
           sustains the direct expenditures. Based on input–output
           analysis, an estimated $430 million in value added was                                                             When all of the indirect and induced economic activity
           generated by the non-farm sector due to the economic activity                                                      is considered, the value added (or GDP) due to chicken
           created within the chicken production sector.                                                                      production is $839 million. The multiplier is 1.08 implying that
                                                                                                                              for each $10 million in farm level sales, another $10.8 million
                                                                                                                              in GDP is created throughout the Ontario economy.

           15 This is different from gross output, which represents the sales of the sector and includes the value of the output of its suppliers.

12
The national average for this income multiplier is just over
1.0 across all industries.

This value added (GDP) measure captures the net
contributions added to the economy due to an activity.
The gross economic impact explained in Section 4.1 reflects
the value of transactions in the economy and not the retained
value added. As with all of these measures of economic
impact, the economic contribution reported only measures
economic impact (e.g., value added due to farm production)
based on upstream purchases (purchase from input suppliers).

The economic contribution of further downstream economic
activity, such as chicken processing, is not captured in the
above analysis, but is examined in Section 5.0 – including
the GDP associated with primary processing of Ontario-raised
chicken, including the economic impacts associated with
chicken production (as chicken production is a supplier to
chicken processors).

                                                                13
4.3 E mployment and Labour Income Impact of                                                               Employment – This refers to the total person years
                 Ontario Chicken Farming                                                                               (full-time equivalent jobs) generated by farm output.

            The chicken farming industry creates and sustains jobs                                                     Ontario chicken farmers directly support 5,834 FTE jobs, which
            across the province – and especially in rural areas – with                                                 includes employment in direct input suppliers such as in feed
            the economic activity associated with chicken production                                                   companies associated with supplying feed to chicken farmers
            supporting 11,409 full-time equivalent (FTE) jobs across Ontario.                                          (refer back to Figure 3.1), hatcheries, energy suppliers,
                                                                                                                       suppliers of other services, etc.
            As seen in Table 4.3, chicken production resulted in $451
            million paid in wages and salaries throughout Ontario in                                                   Another 5,575 FTE jobs are supported through the indirect
            2012, with $193 million associated with direct employment                                                  and induced impacts. This impact results in an employment
            and $258 million based on the indirect and induced economic                                                multiplier of 1.96, which means that for every direct job
            activity associated with chicken farming. Wages and salaries                                               created by chicken production, another 0.96 jobs are created
            are a part of value added, with this $451 million equal to                                                 through the induced and indirect activities, resulting in a total
            55% of the total $819 million in value added due to chicken                                                of 1.96 FTE jobs16.
            farming and the upstream economic activity associated
            with chicken production.                                                                                   Total employment because of Ontario’s chicken farms is
                                                                                                                       11,409 FTE jobs. By way of comparison, a large Canadian
            The direct wages and salaries of $193 million are more                                                     food manufacturing company such as Saputo had a reported
            than those paid by chicken farmers to employees and family                                                 10,200 employees in 201217.
            members. This labour income includes the wages and salaries
                                                                                                                       These measures indicate that for every million dollars in farm
                                                                                                                       level chicken output, this output generates 7.7 direct FTE jobs
     Chicken production resulted in $451 million                                                                       and a total of 15.0 FTE jobs (after considering indirect and
     paid in wages and salaries throughout                                                                             induced effects)18. It should also be noted that there are more
                                                                                                                       jobs generated off the chicken farm than on the chicken farm.
     Ontario in 2012.
                                                                                                                       For example, a chicken farm with $1 million in output could
                                                                                                                       employ two to three individuals.

            paid to workers that supply inputs to chicken producers,                                                   The distribution of employment resulting from the output
            such as feed suppliers, hatcheries, suppliers of contract                                                  of Ontario chicken farmers is shown in Table 4.4 (p.16),
            services, suppliers of energy, providers of professional                                                   with these employment estimates based on the input-output
            services (e.g., lawyers, bankers, and accountants), etc.                                                   impact model.

           16 The Canada wide average employment multiplier is somewhat higher, at 2.5 across all industries.
           17 Source: Globe and Mail, Report on Business, “Ranking Canada’s Top 1,000 Public Companies by Profit”, June 28, 2012.

14
The agriculture sector has an associated 5,939 FTE jobs                                                          The food and beverage manufacturing sector jobs reported
due to chicken production, which is 52% of the overall                                                           in Table 4.4 are primarily in the feed manufacturing sector,
employment impact. These agricultural jobs include those                                                         with the input model suggesting 174 FTE jobs due to chicken
on chicken farms, as well as those on corn and soybean                                                           farming. Prior estimates based on principal statistics as
farm operations, hatching egg producers, as well as others                                                       reported by Statistics Canada suggest potentially 538 FTE
that support chicken production. The second largest sector                                                       jobs in feed manufacturing19.
that benefits via employment from chicken production is
the retail trade sector, which supports 985 FTE jobs. This is
followed by services, such as business services, education
and health services, and finance, insurance & real estate. The
transportation sector accounts for 258 FTE jobs, and travel
and marketing employment is just under 200 FTE jobs.

Table 4.3
Employment Impact due to Ontario Chicken Production, 2012
                                                                                                                                    Initial Expenditure $760 Million

                               Employment                                                                                    Wages & Salaries
                                 11,409                                                                                       $451 Million

                                                     Direct 5,834                                                                              Direct $193 Million

                             Indirect & Induced 5,575                                                                      Indirect & Induced $258 Million

                                                                                                                                                                             Multiplier 1.96
                                                                                                                                Source: JRG Consulting Group and Econometric Research Limited calculations

18 The Canadian average (all industries) is 6.7 direct jobs and 18.0 total jobs per million dollars of output.
19 Some of these jobs can be categorized as transportation and marketing jobs within the input-output model.

                                                                                                                                                                                                             15
Table 4.4                                                            4.4 Tax Revenues Resulting from Ontario
     Employment Generated by Ontario Chicken                                   Chicken Farming
     Production, 2012
                                                                          Besides its direct and indirect impacts on the Ontario
                                                                          economy, Ontario chicken production also generates tax
                                            FTE
                                            Employment
                                                                          revenues for governments. Table 4.5 shows the total
      Industry                                             Distribution
                                            Due to Chicken                contribution to tax revenues generated by the economic
                                            Production
                                                                          activity (direct, indirect, and induced) generated due to
      Agriculture                                5,939         52.1%      Ontario farmers supplying $760 million in chicken to primary
      Retail Trade                               985           8.6%       processors. The federal government receives $122 million in
      Business and Computer Services             800           7.0%       tax revenues, the Ontario government $77 million and local
      Education and Health Services              716           6.3%
                                                                          governments $23 million, mostly through property taxes.
      Finance, Insurance, & Real Estate          511           4.5%
      Accomodation Services                      395           3.5%
      Other Services                             305           2.7%       Taxes – The impact model generates a large number
      Transportation & Storage                   258           2.3%       of taxes (income taxes, HST, property taxes, etc.)
      Construction                               224           2.0%
                                                                          each of which is linked with the level of government
      Travel & Marketing                         194           1.7%
      Food, Feed & Beverage Manufacturing         174          1.5%       receiving it.
      Administration & General Office            156           1.4%
      Communiaction and Utilities                148           1.3%       Total taxes collected by government as a result of the
      Machinery and Equipment                     95           0.8%
      Chemicals and Chemical Products             85           0.7%
                                                                          economic activity due to chicken production are 29% of the
      Petroleum Products                          68           0.6%       value of chicken shipped by Ontario chicken famers to primary
      Transportation Margins                      62           0.5%       chicken processors.
      Transportation Equipment                    50           0.4%
      Primary Metals                              44           0.4%
      Electrical Products                         40           0.4%
                                                                          As reported in Table 4.6, personal income tax accounts for
      Metal Fabricating                           38           0.3%       56% of the taxes generated [$125/$222] based on all of the
      Mining                                      25           0.2%       direct, indirect and induced impacts of chicken production.
      Paper and Allied Products                   19           0.2%
      Rubber and Plastics                         17           0.1%
      Printing and Publishing                     14           0.1%
                                                                          Total taxes of $222 million were generated due to
      Non-Metal, Minerals                         11           0.1%       Ontario chicken production in 2012.
      Wood Industries                             8            0.1%
      Other Manufacturing                         8            0.1%
                                                                          A summary of the overall impact of chicken farming in the
      Logging                                     7            0.1%
      Furniture                                   6            0.1%
                                                                          province of Ontario is shown in Figure 4.1, where the initial
      Clothing Industries                         3            0.0%       expenditures by Ontario chicken farmers of $760 million
      Primary Textiles                            3            0.0%       generate $1.74 billion in mostly upstream transactions
      Total                                     11,409         100%
                                                                          throughout the province, which results in economy wide

16
GDP of $819 million, of which $451 million are payments to         Table 4.5
labour. All levels of government receive $222 million in tax       Government Revenues Generated by Ontario
revenue due to this economic activity.                             Chicken Production, 2012
At the county level, with Wellington County accounting for
14.3% of Ontario’s chicken output, the associated $108.9
million of output has the following contributions to the overall
Ontario economy:
                                                                                          Government
• Provides for 1,631 jobs throughout Ontario, with associated
   labour income of $64.5 million;
                                                                                           Revenue
                                                                                         $222 Million
• Adds another $249 million in overall economic activity
   throughout the province;

• Increases provincial GDP by $120 million; and

• Generates $31.5 million in tax revenues to all levels                                                           Federal Taxes
  of government.
                                                                                                              Provincial Taxes
Figure 4.1                                                                                                             Local Taxes
 Economic Impact of Ontario Chicken Farming                                    Source: JRG Consulting Group and Econometric Research Limited calculations

$ Million
  2,000
                                                                   Table 4.6
  1,800
  1,600                                                            Taxes by Level of Government and Type of Tax, 2012
  1,400
  1,200
                                                                                                       Federal        Provincial         Local          Total
  1,000
    800                                                             Personal Income Tax                    $80              $45                             $125
    600                                                             Corporate Profit Taxes                 $34              $19                             $53

    400                                                             Property & Bus. Tax                                                      $23            $23
                                                                    Harmonized Sales Tax                    $8              $13                             $21
    200
                                                                    Total                                 $122              $77              $23            $222
      0
              Initial     Gross    Value   Wages and   Taxes
            Expenditure   Output   Added    Salaries

                                                                                                                                                                   17
5.0 Contribution of Primary
          Processing of Ontario Chicken

        The prior section highlighted the economic contribution of                                                    Table 5.1
        Ontario chicken farming; with the result of this farm level                                                   Impact of Primary Processing of Ontario
        output, the economy-wide GDP increases by $819 million                                                        Chicken on Economic Activity, 2012
        of GDP (value added), 11,409 FTE jobs are generated, and
        $222 billion in tax revenues is contributed to all levels                                                                                  Initial Expenditure $1,161 Million
        of government.

        But chicken production is only one pillar of the industry.
        In this section, the economic contribution of the major
        downstream partner of chicken farming – primary processing
        of chicken – is highlighted using the same economic
        contribution model as used for chicken farming20.                                                                                     Gross Output
                                                                                                                                             $2,722 Million
        5.1 I mpact of Expenditures by Primary
             Processors on Overall Economic Activity

        Overall expenditures in the chicken supply chain (which
        ends with primary processed chicken products) are more
        than $1.1 billion, which is also the estimated output of
        primary chicken processing in Ontario for 2012. This level of                                                                                         Direct $1,161 Million
        output is approximately 3% of the $40 billion in shipments
        of Ontario’s food and beverage manufacturers for 2012. The                                                                   Indirect & Induced $1,561 Million
        top expenditure areas in the supply chain are feed at 30%
        of this expenditure profile, labour and management at 19%                                                     Multiplier 2.34
        of overall expenditures, hatchery supplied chicks at 12%                                                      The output multiplier is 2.34, which means that for each
        of expenditures, which is followed by freight (both inbound                                                   million dollars in the output by primary processors of chicken,
        to processors with live chicken and outbound with primary                                                     there are total sales (or transactions) of $2.34 million
        processed products) accounting for 7% of overall expenditures.                                                throughout the Ontario economy 21.

        Overall economic activity due to this level of output is $2.7
        billion in expenditures, or transactions in the economy, with
        $1.6 billion of this associated with indirect and induced
        expenditures throughout the economy.
                                                                                                                      Source: JRG Consulting Group and Econometric Research Limited calculations

        20 The expenditure profile used for this analysis assumes an integrated supply chain, where input expenditures by primary processors and chicken farmers are combined. Double counting is avoided by replacing
             processor expenditures on Ontario chicken by the actual expenditure profile attributed to Ontario chicken farming.

18
Multipliers – These are summary measures that                             $10 million in output of primary processors, another $11.9
represent the division of the total impacts (direct,                      million in GDP is created throughout the Ontario economy.
indirect and induced) by the initial expenditures.
For example, the gross output multiplier associated                       This measure captures the net contributions added due to
with the Ontario chicken farming business is                              an activity. Gross output, while larger, reflects the value
calculated by dividing the total gross impact by                          of transactions in the economy and not the retained value
initial expenditures. The only exception is that of the                   added. As with all of these measures of economic impact,
employment multiplier, where total employment is                          the economic contribution reported only measures economic
divided by direct employment in order to preserve the                     impact of upstream activity (e.g., value added due to
common units.                                                             purchases from input suppliers). The economic contribution
                                                                          of further downstream economic activity (further processed
5.2 V
     alue Added Due to Primary Processing                                chicken, such as breaded and stuffed chicken products), or
    of Ontario Chicken                                                    retail sales of chicken is not captured in the above analysis.
                                                                          Only the economic activity associated with upstream activities
As noted above, the total output contribution of Ontario                  (suppliers to the supply chain) is accounted for.
chicken production is distinct from the value added due to
Ontario chicken production. Value added (or GDP) includes                 Table 5.2
the sum of wages, rent, interest, depreciation on capital items
                                                                          Value Added by Primary Processing of Ontario
and profits and is a measure of the net contribution of an
                                                                          Chicken, 2012
industry or sector to the economy.
                                                                                                  Initial Expenditure $1,161 Million
Table 5.2 shows that the direct value added associated with
primary processing of Ontario-grown chicken was $677 million
in 2012, including the economic impact of chicken production
outlined in Section 4.2. Direct GDP includes the value
added of primary processing, chicken farming, and the direct
suppliers to primary chicken processing and chicken farming.
Overall GDP associated with this economic activity was                                         Value Added
$706 million greater throughout the Ontario economy after                                    $1,383 Million
considering the indirect and induced effects.

Value Added – This figure represents net output
generated by the initial expenditures of Ontario
chicken farmers and primary processors of chicken
in the province. It is typically the sum of wages, rent,
                                                                                                               Direct $677 Million
interest, depreciation, and profits.
                                                                                        Indirect & Induced $706 Million
When all of the indirect and induced economic activity is
considered, the value added (or GDP) due to the output of                                                                         Multiplier 1.19
$1.16 billion in primary processed chicken is $1.38 billion in                        Source: JRG Consulting Group and Econometric Research Limited calculations

value added. The multiplier is 1.19 implying that for each

21 The Canadian average sales multiplier is 2.57 across all industries.

                                                                                                                                                                   19
5.3 E mployment and Labour Income Impact of                                                                salaries was paid to workers throughout the province,
          Primary Processing of Chicken                                                                          (after accounting for the indirect and induced effects).
                                                                                                                 These wages and salaries are 61% of total value added
     Chicken farming generated an estimated employment of                                                        of nearly $1.4 billion.
     11,400 FTE positions across the province. When primary
     processing of chicken is included, the overall employment                                                   Employment – This refers to the total person years
     level associated with chicken industry economic activity                                                    (full-time equivalent jobs) generated by the value
     increases to 19,183 FTEs (see Table 5.3). By way of                                                         of primary processed chicken output.
     comparison, Canada’s largest food manufacturing company
     in 2011, Maple Leaf Foods, employed 19,800 employees22.                                                     The direct employment impact of this economic activity is
                                                                                                                 10,269 FTE jobs, and another 8,914 FTE jobs are created
     Based on expenditures associated with businesses in the                                                     through the indirect and induced impacts. This impact results
     chicken supply chain, a total of $843 million in wages and                                                  in an employment multiplier of 1.87, which means that for

     Table 5.3
     Employment and Labour Income Impact of Primary Processing of Chicken
                                                                                                                                   Initial Expenditure $1,161 Million

                                       Employment                                                                                Wages & Salaries
                                         19,183                                                                                   $843 Million

                                                       Direct 10,269                                                                             Direct $416 Million

                                  Indirect & Induced 8,914                                                                    Indirect & Induced $427 Million

                                                                                                                                                                              Multiplier 1.87
                                                                                                                                  Source: JRG Consulting Group and Econometric Research Limited calculations

     22 Source: Globe and Mail, Report on Business, “Ranking Canada’s Top 1,000 Public Companies by Profit”, June 28, 2012,

20
every direct job created by chicken production and processing,                                                   Table 5.4
another 0.87 jobs are created through the induced and                                                            Employment Generated by Primary Processing
indirect activities, resulting in a total of 1.87 FTE jobs23.                                                    of Ontario Chicken, 2012

These measures indicate that for every million dollars in                                                                                               FTE
processed chicken output, this output supports a total of                                                                                               Employment                Additional
                                                                                                                  Industry                              Due to       Distribution Jobs Due to
16.5 FTE jobs (after considering indirect and induced                                                                                                   Chicken                   Processing
effects)24. Slightly more than 50% of the jobs generated                                                                                                Production
are outside of the agriculture and the primary processing                                                         Agriculture and Primary Processing       9,278       48.4%         3,339
of chicken sectors (See Table 5.4).                                                                               Retail Trade                             1,810       9.4%           825
                                                                                                                  Business and Computer Services           1,241       6.5%           441
                                                                                                                  Education and Health Services            1,324       6.9%           608
The distribution of employment resulting from the output                                                          Finance, Insurance, & Real Estate         891        4.6%           380
of Ontario chicken farmers is provided in Table 5.4, with                                                         Accomodation Services                     709        3.7%           314
these employment estimates based on the input-output                                                              Other Services                            523        2.7%           218
                                                                                                                  Transportation & Storage                  892        4.6%           634
impact model. The agriculture sector and primary processing
                                                                                                                  Construction                              331         1.7%          107
of chicken sector has an associated 9,278 FTE jobs due to                                                         Travel & Marketing                        334         1.7%          140
chicken, which is 48% of the overall employment impact.                                                           Food, Feed & Beverage Manufacturing       244         1.3%          70
The last column in Table 5.4 shows the incremental                                                                Administration & General Office           433        2.3%           277
                                                                                                                  Communiaction and Utilities               217         1.1%          69
employment impact by including the primary processing of
                                                                                                                  Machinery and Equipment                   134        0.7%           39
Ontario grown chicken. An additional 3,339 FTE jobs are                                                           Chemicals and Chemical Products           115        0.6%           30
generated in the agriculture and primary processing sector                                                        Petroleum Products                        110        0.6%           42
due to inclusion of processing, with the vast majority of these                                                   Transportation Margins                    92         0.5%           30
                                                                                                                  Transportation Equipment                  98         0.5%           48
jobs occurring at the primary processing plant. In Figure 3.1,
                                                                                                                  Primary Metals                            71         0.4%           27
we estimated that employment at primary chicken processing                                                        Electrical Products                       66         0.3%           26
operations was 3,750 jobs.                                                                                        Metal Fabricating                         63         0.3%           25
                                                                                                                  Mining                                    39         0.2%           14
                                                                                                                  Paper and Allied Products                 32         0.2%           13
Areas where the addition of primary processing to the
                                                                                                                  Rubber and Plastics                       34         0.2%           17
analysis created considerably more employment include:                                                            Printing and Publishing                   29         0.2%           15
retail trade with an incremental 825 FTE jobs, which is                                                           Non-Metal, Minerals                       17         0.1%            6
a result of consumption expenditures on consumer goods                                                            Wood Industries                           11         0.1%            3
                                                                                                                  Other Manufacturing                       15         0.1%            7
(based on direct, indirect, and induced expenditures), and
                                                                                                                  Logging                                    9         0.0%            2
transportation and storage by another 634 FTEs, which                                                             Furniture                                 11         0.1%            5
is expected based on the inbound live chicken deliveries                                                          Clothing Industries                        6         0.0%            3
and outbound shipments of chicken parts associated                                                                Primary Textiles                           4         0.0%            1
                                                                                                                  Total                                   19,183       100%          7,774
with primary processing.

23 The Canada wide average employment multiplier is somewhat higher, at 2.5 across all industries.
24 The Canadian average (all industries) is 6.7 direct jobs and 18.0 total jobs per million dollars of output.

                                                                                                                                                                                                21
5.4 T ax Revenues Resulting from Primary
          Processing of Ontario Chicken

     Inclusion of primary processing in the chicken supply chain
     increases overall government revenues from $222 million
     (See Table 4.5, p.17) to $391 million, as reported in Table 5.5.
     The federal government receives $214 million, with the
     majority through personal income taxes (See Table 5.6).
     The provincial government receives $136 million, and the
     local governments obtain $41 million through property taxes.

     Taxes – The impact model generates a large number
     of taxes (income taxes, HST, property taxes, etc.)
     each of which is linked with the level of government
     receiving it.

     Total taxes collected by government as a result of the
     economic activity due to chicken production and primary
     processing are 34% of the value of processed chicken output.                                                As an example, if chicken output were to decrease by 10%
                                                                                                                 in Ontario, or if policies prohibited Ontario chicken production
     Total taxes of $391 million were generated due to                                                           to expand by 10% or by 45 million kilograms, and have
     Ontario chicken production in 2012.                                                                         production move closer to its share of the Canadian
                                                                                                                 population25, then the economic impact can be measured
     Accounting for the $1.16 billion of purchases by primary                                                    as follows:
     processors of Ontario chicken and Ontario chicken farmers
     generates $2.7 billion of economic activity throughout the                                                  • Foregone employment in the Ontario economy of
     province. This level of economic activity generates $1.4 billion                                               1,918 full time jobs;
     of GDP across Ontario, of which $843 million is paid as wages
     and salaries. Total tax revenues received by all levels of                                                  • Foregone payments to labour of $84 million;
     government due to this economic activity are $391 million.
                                                                                                                 • Foregone provincial GDP of $138 million;
     One can postulate that if chicken farming did not continue in
     its present form, then a portion of the economic contribution                                               • Foregone tax revenues to provincial and local
     generated by chicken farmers and primary processors would                                                      governments of $18 million.
     no longer be relevant.

     25 Production would need to increase by 20% to have production comparable to Ontario’s share of national population.

22
At the local level, Niagara accounts for 11.7% of Ontario’s      Table 5.5
chicken output, which results in $135.5 million of primary       Government Revenues due to Primary
processed chicken products and has the following                 Processing of Ontario Chicken, 2012
contributions to the overall Ontario economy:

• Provides for 2,240 jobs throughout Ontario, with associated
   labour income of $99 million;

• Adds another $318 million in overall economic activity
                                                                                        Government
   throughout the province;
                                                                                         Revenue
• Increases provincial GDP by $162 million; and                                        $391 Million
• Generates $46 million in tax revenues to all levels
  of government

                                                                                        Federal Taxes $214 Million
Figure 5.1
                                                                                    Provincial Taxes $136 Million
Economic Impact of Primary Processing
of Ontario Grown Chicken                                                                       Local Taxes $41 Million
$ Million                                                                    Source: JRG Consulting Group and Econometric Research Limited calculations

  2,500

                                                                 Table 5.6
  2,000
                                                                 Taxes by Level of Government and Type of Tax, 2012
  1,500

                                                                                                     Federal        Provincial         Local          Total
   1000
                                                                  Personal Income Tax                   $147              $83                             $230
    500                                                           Corporate Profit Taxes                 $50              $28                             $71
                                                                  Property & Bus. Tax                                                      $41            $41
                                                                  Harmonized Sales Tax                   $16             $125                             $141
      0
              Initial     Gross    Value   Wages and     Taxes    Total                                 $214             $136              $41            $391
            Expenditure   Output   Added    Salaries                                   Source: JRG Consulting Group and Econometric Research Limited calculations

                                                                                                                                                                    23
6.0 Summary of Findings

        Chicken farming is important within the Ontario farm sector and also an important contributor to the overall economic
        well-being of the Ontario economy. A few high-level noteworthy statistics (for 2012) for Ontario chicken production include:

        • A marketplace value of $760 million;                             • Through feed purchases of $342 million, accounts for
        • Accounts for 6.6% of Ontario’s farm cash receipts;                  23% of the sales value of Ontario’s feed manufacturers

        • Accounts for 14.4% of Ontario’s farm cash receipts for          • Through the use of corn and soymeal in manufacturing
           livestock and poultry;                                             prepared feed, accounts for 9.5% of the market cash
                                                                              receipts obtained by Ontario corn and soybean farmers;
        • Five counties of Wellington, Huron, Niagara, Oxford, and
           Perth account for 55% of output;                                • Accounts for $140 million of purchases in day-old chicks
                                                                              from hatcheries;

        The resulting economic activity of $1.74 million across Ontario due to overall farm level expenditures associated with chicken
        production generates within Ontario:

        • Employment of 11,409 full time jobs;                             • GDP of $819 million; and
        • Wages and salaries of $451 million;                              • Tax revenues to all levels of government of $222 million.

        Ontario’s chicken production is processed within the province at primary processing plants, where the chicken is supplied to users
        as primary cuts, whether for retail use or for further processing into more value added chicken products. Valuing chicken at the
        primary processing level results in $1.16 billion of output and produces the following economic contributions across Ontario:

        • $2.72 billion in overall economic activity;                      • Provincial GPD of $1.38 billion; and
        • Employment of 19,183 full-time equivalent jobs;                  •Taxes to all levels of government of $391 million.
        • Payments of $843 million in wages and salaries;

        Increases or decreases in chicken output have an impact on the result of the economy. For example, if Ontario can increase
        chicken production by 10%, the following economic contributions can be noted:

        • $272 million of additional economic activity;                    • Ontario’s GDP increases by $138 million;
        • 1,913 jobs created;                                              • Tax revenues collected by the provincial government and
        • Payments to employees increase by $84 million;                      by local governments increase by $18 million.

        As well, if past polices have prohibited growth of the Ontario chicken industry, these above impacts are indicative of the
        foregone economic contribution of the Ontario chicken industry.

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25
Economic Contribution
     of Ontario Chicken
     at the level of chicken farming

         Gross Output
        $1,740 Million
                                                   Value Added
                                                  $839 Million

                                Wages &Salaries
                                $451 Million

              Employment
                11,409                             Government
                                                    Revenue
                                                  $222 Million

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Economic Contribution
                     of Ontario Chicken
                         at the level of primary processing

                              Gross Output
                             $2,722 Million
   Value Added
 $1,383 Million

                  Wages & Salaries
                   $843 Million

 Government                          Employment
  Revenue                              19,183
$391 Million

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Annex I
     Background on the Study Authors
     This report was prepared for Chicken Farmers of Ontario by the following authors

     JRG Consulting Group provides management consulting                                                                 Econometric Research Limited (ERL) is a leading consulting
     services to the agri-food sector across Canada, to private                                                          firm in the area of economic impact analysis and in the design
     sector companies, trade and industry associations, commodity                                                        of computer models for community economic development and
     organizations, legal counsel, investors and government                                                              sectorial impact assessment. ERL is led by Dr. Atif Kubursi,
     agencies. JRG Consulting Group has provided economic                                                                who is also a professor at McMaster University. ERL has carried
     contribution studies in other sectors including the horticulture                                                    out a large number of studies in the area of economic impact
     sector, the Canadian supply management sector, and Ontario                                                          of agriculture and various food industries that are located in
     agriculture and food. JRG Consulting Group is led by Dr. John                                                       Ontario and across Canada. Some of these projects have been
     Groenewegen, who has provided consulting services to the                                                            in association with other leading Canadian consulting firms.
     agri-food sector in the areas of economic analysis, industry                                                        In collaboration with JRG Consulting Group, ERL has also
     competitiveness, market feasibility, business strategy and                                                          completed some very specific studies of special relevance to
     planning and policy analysis for 28 years. John has a Ph.D.                                                         agriculture and agri-food sector in Ontario in the area of the
     in agricultural and applied economics from the University of                                                        impact of agriculture, food processing and the impact of the
     Minnesota and is a Certified Management Consultant (CMC).                                                           Canadian horticulture sector on the Canadian economy.

     Annex II
     An Overview of the Model
     Inter-industry tables (or process schedules) are widely used                                                        to other unrelated industries. As a result, this industry may have a
     accounting frameworks for the analysis of sectorial linkages26.                                                     profound influence on the economy through its indirect relations
     In this framework, sectorial relationships appear in a web of                                                       with other industries. Using live chicken as an example, this
     interconnectedness since each sector is considered to buy its                                                       production requires replacement birds (chicks) that come
     input requirements from many sectors and sell its outputs to                                                        from within agriculture, feed from the feed manufacturing
     several other sectors and compete for some scarce factors                                                           sector, machinery from industry, energy from the mines and
     with other sectors.                                                                                                 refineries, and labour. These define the direct requirements
                                                                                                                         (or expenditures) to sustain the production of chicken.
     Input-output analysis quantifies the linkages that an industry
     has with other industries in the economy. Specifically, an                                                          The supply of feed requires grain from within agriculture,
     industry may buy or sell directly from only a few industries,                                                       energy, labour, transportation equipment, and machinery; and
     but its customers and suppliers may be intricately connected                                                        the production of machinery requires steel, plastics, energy

     26 Wassily Leontief. 1966. Input-Output Economics. Oxford: Oxford University Press, A. Smyshlyaev (Ed.). 1985. Input-Output Modeling. New York. IIASA., William H. Miernyk. 1965. Input-Output Analysis, New York. Random House.

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