Enriching Our Economy

Research to keep our communities strong

Helping farms and agriculture businesses become more profitable and individuals become financially secure boosts the local, state, and national economies. Our programs strive to strengthen the economic viability of all facets of agribusiness, and improve the financial literacy of Tennesseans and beyond so they may build and protect wealth for themselves and future generations.

Assessment of the Economic and Environmental Impact of the Novel Coronavirus (SARS-COV-2) on the Agriculture and Food Systems in Tennessee

Economic Impacts of Tennessee’s Local Food Markets

Advance the Sustainability of Small Farm Enterprises Through Assessment of Income Risks and the Role of Diversification Strategies Among Small Farms in Tennessee and the United States

Assessment of the Economic and Environmental Impact of the Novel Coronavirus (SARS-COV-2) on the Agriculture and Food Systems in Tennessee
Dr. Prabodh Illukpitiya
With a rising death toll from the COVID-19 outbreak, national and global attention has focused on the economic impact of this devastating disease to various sectors of the economy and minimizing damages in future crises. The outbreak has already caused adverse effects and significant damage to affected economies, but little credible data and evidence was available to understand exactly the economic impact of the crisis. The agri-food sector could continue to lose millions of dollars in sales in key local and regional markets, including retail and wholesale outlets, farmer’s markets, restaurants, etc. during the next several months. Further, if the economic effects of the coronavirus extend into the foreseeable future, the estimated losses could increase considerably. The goal of this project is to assess economic impact of COVID-19 in the agri-food sector. The proposed impact assessment on US agri-food sector is aligned with key areas, namely a.) critical and urgent research to the COVID-19 pandemic; and b.) rapid implementation of strategies to minimize impacts. The specific objectives of this project are to: i) assess total economic impact of COVID-19 in agri-food sector in Tennessee; ii.) quantify the economic impact in county level to better understand the effects in local economies; and iii.) analyze environmental impact due to COVID-19. To capture the total impact, an IMPLAN input - output model will be used. We will use IMPLAN U.S. data which comprise 546 industries. Given our focus is the agri-food system, we will carefully select all affected industries from the 546 industries exclusive to IMPLAN. Based on the comprehensive literature review and expert views, we will use several scenarios of expected loss in revenue and employment in the affected industries. This information will feed into IMPLAN software to fill in remaining variables for the industry and region. Based on the results generated in relation to the above specific objectives, this project will provide strategies that can be implemented to minimize the impact of Novel Coronavirus (SARS-CoV-2).

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Economic Impacts of Tennessee’s Local Food Markets
Dr. Enefiok Ekanem
Local food markets developed at varying rates depending on regional differences with substantial growth in the last few years. The southern region, with large numbers of small producers, low incomes and rural characteristics make the study of local food systems important and significant. direct-to-consumer sale of agricultural products is a small but fast-growing segment of U.S. agriculture. The direct-to-consumer marketing of local foods is on the upswing. Data from the 2012 US Census of Agriculture shows that, on average, direct-to-consumer food sales accounted for 5.5% of all farm sales. Two types of local food market definitions used for this project include: (1) markets where transactions are conducted directly between farmers and consumers (direct-to-consumer), and (2) markets where there are direct sales by farmers to restaurants, retail stores, and institutions such as government entities, hospitals, and schools (direct-to-retail/foodservice). Direct-to-consumer marketing of local foods include: farmer’s markets, community supported agriculture (CSAs), farm stands/on-farm sales, and "pick your own" operations. The overall goal of this project is to analyze the impacts of local food markets on the demand, supply and quality of food in Tennessee. Specific objectives of this research are to: (1) Provide information on the development and growth of local food markets in Tennessee, (2) Assess the contribution of local food markets to the demand, supply and quality of food within the food supply chains in Tennessee, (3) Train and equip undergraduate and graduate students with skills in local food system research and, (4) use data and results from the research to draw implications and prescribe policies for rural development. Secondary and primary data will be used. Secondary data from existing publications and primary data from mail surveys, face-to- face interviews, and focus group meetings will be collected and analyzed to accomplish research objectives.

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Advance the Sustainability of Small Farm Enterprises Through Assessment of Income Risks and the Role of Diversification Strategies Among Small Farms in Tennessee and the United States
Dr. Aditya Kahnal
Agriculture in Tennessee is dominated by small farms, defined by the United States Department of Agriculture (USDA) as having less than $350,000 in gross annual farm income. Tennessee has around 69,983 farm operations with 10,900,000 acres of farm operated lands. The 2017 Census of agriculture shows that 66,406 male and 26,054 female principal operators of 69,983 farm operations in Tennessee make on average $10,911 net cash farm income per operation. Interestingly, in terms of annual net cash farm income, only 3,798 operations indicated net gain of more than $50,000 while 1,293 operations indicated net loss of more than $50,000. Several factors may contribute to the different performance of the farm operations and operators, including demographic characteristics, technology adoption and use, income and enterprise diversification, debt/ asset structures and management, and access to capital. Finance is an important component for small farmers because it involves money and funds required to initiate as well as to ensure continuous running of farm activities. Sources of finance however, can either be through borrowing (debt financing) or capital produced through direct effort of farmers (let's refer as equity financing). Farmers ideally need to choose the balanced combination of both, which makes up the capital structure of the farm. The capital structure of a farm refers to the combination between debt and equity financing. The management need to consider what combination of debt and equity to adopt: should more debt financing be adopted so as to earn a higher return? Should more equity financing be utilized so as to avoid the risk of debt and bankruptcy? The current trend suggests that the number of farms are declining in Tennessee, mostly small farms. Since small farms may not compete with large farms in specialized commodity production, small farms need to diversify their production, income sources and need strategic ways to sustain and remain viable in the farm business. Enterprise diversification, income diversification through off-farm jobs, and adoption of alternative agricultural enterprises on the farm are some important strategies to stabilize income. Adoption of alternative enterprises on the farm could bring additional income by utilizing farm resources in best possible way. The studies dealing with small and medium sized operations, their survival strategies, means of finance, diversification, adoption of alternative agricultural enterprises and their roles are overwhelmingly important and timely for Tennessee's agriculture and economy. There have been very limited studies regarding sources and uses of capital and finance among farms in Tennessee and in assessing the roles of diversification, off-farm work, and alternative agricultural enterprises. Execution of various objectives of this project will address these issues and contribute to address this knowledge gap.

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