IU study: Agriculture contributes $37.9 billion to Indiana's economy
May 16, 2013
BLOOMINGTON, Ind. -- Agricultural industries contributed $37.9 billion to Indiana's economy in 2011, according to a new report from Indiana University's Kelley School of Business.
"Agriculture's Bounty: The Economic Contribution of Agriculture," produced by the Indiana Business Research Center, also said that the state's agricultural output supports nearly 190,000 Hoosier jobs. Of those jobs, 103,000 are directly involved in crop production and processing.
"It is understandable why Indiana's agricultural industries have been encouraged to expand in the past decade," said co-author Tanya Hall, an economic research analyst at the IBRC. "The pastoral scenes along Indiana highways are more than just fields of corn and soybeans or barns of hogs and chickens. Those scenes represent the livelihoods of some 190,000 Hoosiers."
Approximately 83 percent of Indiana's geography -- 19.4 million acres -- is devoted to farming or forests.
Agricultural activities alone, such as the production of crops or livestock and the manufacturing of processed goods, accounted for $25.4 billion in economic output. Ripple effects accounted for another $12.5 billion as it included the purchase of supplies from Indiana-based companies ($7.6 billion) and paychecks linked to households of agriculture-related employees ($4.9 billion).
"From creating jobs to contributing to the state's GDP, agriculture is an important industry in our state," said Jane Ade Stevens, chief executive officer of the Indiana Soybean Alliance, which provided funding for the study. "This study helps draw attention to how big of an impact agriculture has on our economy."
The commodity with the greatest amount of output was eggs -- about 6.5 billion were produced in 2011 -- followed by 3.5 billion pounds of milk, or 353.9 million gallons.
However, the commodities with the highest total production value were grains such as non-silage corn, oats and wheat, with a total value of $13.9 billion; and soybeans (also known as oilseeds), valued at $2.8 billion.
Farming of these crops accounted for more than half of all workers in Indiana agriculture -- more than 54,000 jobs -- and ripple effects supported another 29,800 jobs around the state. Hog and other animal production had the next largest total employment impact with 16,930 jobs.
"Grain production also dominated agriculture's contribution to Indiana GDP," Hall said. "The combined effects of grain production totaled an estimated $3.2 billion in value added, which accounted for one-quarter of the agricultural total and represented 1.2 percent of Indiana GDP. Soybean production was the second highest in value added, totaling $2.1 billion."
Indiana is known for quality hardwoods, and sawmills and furniture production establishments employ more than 35,500 workers. According to Indiana Department of Natural Resources statistics cited in the report, nearly 88 percent of logs processed in Indiana in 2010 came from within the state.
"Despite increasing population and development, the quantity of forest land has increased over the years, allowing Indiana to continue its timber harvesting without sacrificing forest land growth," said Hall, who also is a family farmer.
The report also highlights how the state's agriculture and forestry industries provide revenue for federal, state and local governments in the form of corporate profits, indirect business taxes, personal taxes and contributions to social insurance.
The economic activity related to Indiana agriculture and forestry created about $970 million in state and local revenue and nearly $1.5 billion in federal collections.
A key conclusion of the report is that the value of Indiana's agricultural production has grown over the past decade and should continue to do so in coming years.
"This has been caused by increased domestic and worldwide demand for agricultural products and byproducts, leading to sustained high prices," Hall said. "Attempts to increase output, however, have often been hampered by the weather (for crops), high input prices (for livestock), soft demand or increased competition (for furniture).
"As the world's population grows and fortunes of developing countries improve, there will be still greater pressure to increase production, even as resources and territory become scarcer."