April 3, 2003

 

Agricultural Processing and Farm Input Manufacturing Enhance State Economy

Undoubtedly, agriculture is an irreplaceable sector of the North Dakota economy, and careful calculations are made each year to estimate the impact of direct agricultural production. However, until recently, little effort has been made to document the magnitude of agricultural processing and input manufacturing, according to Larry Leistritz, North Dakota State University agricultural economist.

Consequently, Leistritz and NDSU research specialist, Randal Coon, performed an analysis to evaluate the extent of these agriculturally-linked sectors contribution to the state’s economy. Data was compiled from a survey of the 76 manufacturing and 160 agricultural processing firms in North Dakota.

The North Dakota Input-Output Model was used as a foundation for gathering statistics. In this formula, impact is measured by changes in indicators such as personal income, retail trade volume, gross receipts for all business sectors and total gross business volume.

The statistical results were phenomenal. "To put the economic impact of farm input manufacturing and value-added agricultural processing firms into perspective, the nearly $1.7 billion in total business activity generated by these enterprises was slightly greater than the estimated $1.6 billion generated by the lignite energy industry in 2002," say Coon and Leistritz.

This business activity also resulted in $348.4 million in additional retail sales activity, and an increased level of personal income of $555.2 million. Furthermore, state tax revenue was expanded by $27.4 million.

Perhaps the creation of in-state job opportunities is an even greater indicator of economic value. In 2002, 9,522 workers were directly employed in the two agriculture related sectors, and another 16,272 in secondary jobs.

As noted in the report, agriculture related business ventures are becoming increasingly important to the state’s economy. Direct agricultural production is still essential, but Coon and Leistritz say that "when farm input manufacturing and value-added agricultural processing are added to the impact assessment, it further highlights the importance of agriculture’s role in the North Dakota economy."

For The Role of Agricultural Processing and Farm Input Manufacturing in the North Dakota Economy full report, visit http://agecon.lib.umn.edu/cgi_bin/detailview.pl?paperid=7794  or for a summary report, http://agecon.lib.umn.edu/cgi_bin/detailview.pl?paperid=7787.

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Sources: Randal C. Coon, (701) 231_1018, rcoon@ndsuext.nodak.edu
F. Larry Leistritz, (701) 231_7455, lleistri@ndsuext.nodak.edu
Writer: Teresa Oe, (701) 231_8371, teresa.oe@ndsu.nodak.edu
Editor: Rich Mattern, (701) 231_6136, richard.mattern@ndsu.nodak.edu