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IMPLAN Blog

Understanding the Farm Bill: How SNAP and Commodity Prices Shape America's Job Market and Economy

The Farm Bill is a comprehensive piece of legislation that governs various agricultural and food programs, including SNAP, and has significant implications for the agricultural sector and the broader economy.

Agriculture and food manufacturing are vital pillars of the US economy, generating over 11 million jobs. These jobs are split between direct employment in the sectors (4.7 million), supply chain effects (3.0 million), and household expenditures (3.3 million). Together, these industries contribute more than $1.25 trillion to the US GDP, which accounts for 4.8% of the total GDP.

The Supplemental Nutrition Assistance Program (SNAP) plays a crucial role in supporting low-income households, providing $120 billion annually to 22 million households for food expenditures. This program significantly influences the agricultural economy and job market.

The leading agricultural states, based on economic contribution, include:

  • California: $153 billion
  • Texas: $107 billion
  • Iowa: $100 billion
  • Illinois: $99 billion
  • Wisconsin: $78 billion

Impact of Decline in SNAP Purchasing Power

For every 1% decline in the purchasing power of SNAP payments is projected to result in a loss of approximately 27,000 jobs. Due to the high efficiency of agricultural production and manufacturing, the direct job losses in these sectors are relatively low, totaling just over 3,000 jobs. However, other sectors would experience significant job losses:

  • General Merchandise and Retail: 9,000 jobs
  • Food and Beverage Stores: 3,000 jobs
  • Administrative Support Services: 1,000 jobs
  • Professional, Scientific, and Technical Services: 1,000 jobs

Price Changes in Soybeans

Fluctuations in soybean prices are expected to have spillover effects on several downstream industries:

  • Soybean and Oilseed Processing
  • Fats and Oils Refining
  • Breakfast Cereal Manufacturing
  • Non-Chocolate Confectionery Manufacturing

Price Changes in Wheat

Similarly, changes in wheat prices will impact downstream industries, including:

  • Flour Milling
  • Bread and Bakery Products
  • Dry Pasta Manufacturing
  • Tortilla Manufacturing

Future Implications

Decreases in the purchasing power of SNAP benefits will have wide-ranging effects on the entire agricultural products supply chain. This includes direct impacts on agricultural production and manufacturing and indirect impacts on related industries such as retail and food services. Furthermore, policy changes affecting commodity prices will have both upstream effects on producers and their suppliers and downstream effects on industries that use these commodities as inputs.

Addressing these potential changes through thoughtful policy and economic strategies will be crucial in maintaining the stability and growth of the agricultural sector and its associated industries.

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Topics: Data, Economics, Agriculture

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