As a season ends, November is a natural time to look at agricultural production. We can take accounting of how crops did. We can measure our hay supply and assess how livestock look going into winter. It’s all about putting a year in perspective.
In that sense, it’s also a good time to remember how agriculture fits into the broader economy. Regardless of how rural areas or more heavily populated communities see the world, we are all intertwined and depend on each other.
I recently read a study from the St. Louis Agribusiness Club that drove that idea home. Each time the USDA’s Census of Agriculture is conducted, the ag club commissions research that uses the data to calculate the value agriculture brings to the region.
St. Louis is a good candidate for such a study because of the rich, diverse agricultural land surrounding the city and the heavy presence of large agribusinesses in the metropolitan area. In MFA’s trade area, Kansas City is a similar example.
The most recent St. Louis Ag Club report found that farmers in the 11 counties surrounding the city have annual gross sales of $1.4 billion from all commodities. That is farm-gate income, but agriculture doesn’t end at the farm gate. We’ve all heard of the multiplier effect in economics—when income created in an economy results in spending—creating additional income for businesses. Those businesses, in turn, further expand the economy with their own spending.
When you consider the equipment, inputs and services those farmers in the 11-county St. Louis region need to operate, some $411 million goes from the farm to other businesses. But if you take the combined effect of what agriculture brings to the region, what the study calls the total effect, you find that the St. Louis metro area and the surrounding counties see gross sales of $43 billion from agriculture. That’s the combined direct effect of jobs and income from agribusinesses along with the indirect effects of supplier and household spending. The number represents about 10% of the area’s gross domestic product.
Nationwide, agriculture, food, and related industries contribute more than $1 trillion to the U.S. gross domestic product—with about $133 billion coming straight from commodity production (including forestry and fishing in this case).
Again, you see a multiplier effect because the base products gain value as they move through the consumer chain as food, beverages and textiles. About 1% of the U.S. GDP comes out of the farm gate, but agriculture and related industries make up more than 5% of it.
In the states where MFA has retail operations, agriculture contributes more to the economy than the national average. One good measure is the number of jobs related to agriculture, which is another bridge between what separates rural and urban culture.
Based on 2019 Bureau of Labor Statistics employment data, some 480,000 jobs are directly related to agriculture in Missouri. The number in Iowa is 325,000, while agricultural jobs in Kansas and Arkansas are 259,000 and 240,000, respectively. These figures add up to massive payrolls that inject billions of dollars in each state’s economy—and not just in farming communities.
We often hear that farmers are less than 2% of the population, which is true. A figure you don’t hear as often is that jobs directly related to food and agriculture— from the local farm through the retail chain—make up about 15% of the nation’s workforce and represent about $730 billion in wages. I’m not sure that those of us closer to the farm end of the value chain think of an urban restaurant worker as part of our team, and vice versa.
It is probably fair to say that neither of these segments, the urban or the rural, properly appreciate the other. For those of us in agriculture, the sheer population of urban areas clearly represents the market for what we produce, along with the workforce required to add value to agricultural commodities.
For those who don’t farm, rural areas should clearly be recognized as the stewards of land and source of food, fiber and fuel for a nation.
I don’t think it is broadly understood that while agriculture is obviously an economic force in rural places, it is also a foundation for economic activity in urban centers. It takes farmers, food supply chain workers and consumers—all of us—to make the system work.
This Thanksgiving season, that is worth remembering.
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