In 1999, jobs on dairy farms and in dairy processing plants produced about $1.9 billion in income for 80,500 jobholders in Wisconsin. Total industry sales came to $11.7 billion, or 1.3 percent of the state”s total industrial sales. That”s a pile of money, but it”s only a partial measure of the dairy industry”s contribution to Wisconsin”s economy, according to a researcher at the UW-Madison”s College of Agricultural and Life Sciences.

To get the entire picture, CALS agricultural economist Steve Deller went beyond milk money, tracing the ripples of dairy dollars throughout the economy to measure the “multiplier effect” – additional dairy-related economic activities in other industries that multiply the effects of dairy production and processing.

After applying the multiplier effect, Deller found that the dairy industry accounts for about 174,000 jobs, or 5.1 percent of Wisconsin employment; about $5.7 billion in household income, or 3.6 percent of gross state product; and about $18.5 billion in industrial sales, or 5.9 percent of the state”s total industrial sales.

The dairy industry uses trucks, machinery, fuel, financial services, and a range of other inputs. These linkages create a network of interdependent industries, which generate additional jobs and income in non-dairy industries, according to Deller. In addition, dairy industry workers spend their money on groceries, housing, cars, entertainment, and other goods and services. In turn, the employees of these industries spend their income on goods and services.

Dairying permeates our economy. For example, it affects Wisconsin”s construction industry to the tune of nearly 3,600 jobs annually, Deller reports. Retail and wholesale trade takes in nearly $1.2 billion in household income from dairy. And the government gets its share – on-farm dairying creates $241 million in federal taxes, while the dairy industry overall generates more than $1 billion for Uncle Sam. Dairy farmers pay about $158 million in state and local taxes (not counting K-12 school taxes), while all of dairying generates $688 million in state and local taxes.

This information came from issue no. 2 of Rethinking Dairyland, a series of brief reports on the state of Wisconsin”s dairy industry and the factors that will influence its evolution. All reports in the series, along with expanded versions containing additional data and graphics, are available here .