Economic Impact of Milk Production in the State of New Mexico1

The goal of this study was to quantify the economic role of dairy farming in New Mexico and to identify its linkages with allied industries in terms of income, value added, and employment impacts. An input-output model was used to estimate the direct, indirect, and induced impacts of the dairy farm industry on the economy of New Mexico. The results showed that in 2005, New Mexico's dairy farm industry had a total economic impact of $1.98 billion and accounted for 14,313 jobs. Therefore, dairy farming in New Mexico had an output multiplier (income) of 1.92, a labor income multiplier of $248 thousand/$ million of gross sales, and an employment multiplier of 13.91 jobs/$ million of gross sales. Furthermore, the New Mexico dairy farms accounted for 13.1% of the total agricultural outputs, 20.5% of the agricultural jobs, 1.5% of total state economic activity, and $80 million in tax revenue. With the exception of Lea, Eddy, and Bernalillo counties, which are diversified, the dairy farms accounted for more than two-thirds of the agricultural outputs and for more than two-fifths of the agricultural employment in counties where dairy farms are concentrated.