The multiplier effects of the Finnish sugar sector
Avainsanat:
sugar sector, multiplier effects, sugar utilizing industry, input-output model, domestic productionAbstrakti
Background information on the economic role of industries is crucial to policy and decision makers due to the involvement of public financing. At the provincial and municipal level, the economic role of industries is crucial for employment and tax revenues that sustain the livelihood of the provinces and municipalities in Finland.
This study employed an input-output model (IO model) to answer the question on the linkages between the sugar sector with the different industries in the economy and how much production, value-added and employment would be lost if the sugar sector in Finland would disappear totally. The IO-model would produce the direct, indirect and induced economic effects usually referred to as the multiplier effects of the sugar sector.
The gross output of sugar beet production is approximated at about € 33million, and the value-added sugar beet production is estimated at € 17.2 million. The output of the sugar factories is approximated to be € 165.7 million, and the value-added is estimated at € 39.6 million. Even though the effects of primary sugar beet production and sugar factory production including multiplier effects seem rather small compared to the total effects at the regional level, the actual effects are felt at the municipalities level in the form of decreasing tax revenues and unemployment if the sugar sector in Finland disappears and is not substituted for by other forms of production and industry.
The output effects of the sugar chain production including sugar beet production, sugar factories and sugar utilizing industries totals € 14 371.0 million when indirect multiplier effects € 8 258.3 million in addition to direct effects € 6 112.7 million are taken into account. The value-added effects of the sugar chain production totals € 4 451.5 million when indirect value-added effects € 2 857.7 million in addition to direct value-added effects € 1 593.8 are taken into account. The employment effects of the sugar chain production totals 58 733 persons as the indirect employment effects 37 979 persons in addition to direct effects 20 754 persons are taken into account. As far as employment effects are concerned, the number of employees does not refer to full-time employees, but included also all those who are involved at any stages of the sugar chain production. The indirect effects include multiplier effects due to both household spending and intermediate input purchases. Hence, if the sugar utilizing industries are included in the production chain, the multiplier effects are considerable.
There is data to prove that without domestic production, the sugar price is higher for Ireland compared to the other EU member states due to imperfections in the EU sugar market after the reform of the EU sugar regime in 2006. The sugar price for consumers in Ireland is the highest compared to the United Kingdom (UK), Finland and Germany. The UK and Finland are not self-sufficient in producing sugar for the domestic market, but Germany has been always producing over its self-sufficiency limit. Therefore, the consumers in Germany enjoy the lowest price for sugar compared to Ireland, Finland and the UK. Due to the existing domestic sugar production in Finland and the UK, the price of sugar is lower in these countries compared to Ireland.
