Study shows 15% of economy tied to Ag

Study shows 15% of state’s economy tied to Ag
By Oregon Department of Agriculture

An updated study of Oregon agriculture’s economic footprint shows the industry has actually increased its contribution to the state’s overall economy despite facing the same recessionary challenges other industries have endured. The Oregon State University study, commissioned by the Oregon Department of Agriculture, bolsters the claim that agriculture is a critically important part of the state’s economic past, present, and future.

“This report reinforces the reality that agriculture’s economic footprint in Oregon is wide and deep,” says ODA Director Katy Coba. “Oregonians don’t always realize the impact agriculture has on their lives, but the report indicates the industry remains a vital and relevant to all of us.”

The report, Oregon Agriculture and the Economy: An Update, enhances a similar OSU study done in 2008 to assess agriculture’s economic ripple effect on the state.

Researchers focused on data available in 2009- a year in which agriculture and the overall economy suffered from a recession. Still, the report finds the industry is directly and indirectly linked to about $22 billion in sales of goods and services, which accounts for 15 percent of the statewide total of sales involving all industry sectors. The report also finds that Oregon agriculture directly or indirectly supports nearly 261,000 full or part-time jobs, making up 12 percent of total jobs in the state.

While the 2008 report showed a larger dollar figure for agriculture’s overall impact, the updated report shows that the industry’s relative strength has actually gone up.

“Overall, agriculture’s economic impact is down about $3 billion from the $25 billion listed in the previous report, which reflects the overall economy in Oregon,” says ODA analyst Brent Searle. “But agriculture’s percentage of 15 percent of the net state product is up from 10.6 percent. This indicates agriculture did not decline as much as other industries.”

In addition, the number of agriculture-related jobs captured in the updated report increased by about 47,000. Now, one in eight jobs in Oregon is related directly or indirectly to agriculture.

The report details the entire cycle of agriculture- from the farm to the consumer.

“This report connects the economic flow of dollars all the way through the food system, from farm production through food processing, distribution, wholesale, then retail and food service,” says Searle. “It’s the first time this measurement all the way through the economy has been done.”

The first section of the report examines Oregon’s farm and ranch production. It shows that agriculture was able to reach that 15 percent figure of all economic activity in Oregon even though the number of farms and overall land in farming has been decreasing.

Another section of the report focuses on processing, or adding value to what is agriculturally produced. In 2009, more than $2.2 billion was added to the farmgate value of Oregon-grown food, fiber, and related products. The two categories with the highest added value as measured by dollars are breweries, wineries, and distilleries, and frozen food manufacturing- both reaching nearly $400 million in value-added.

The critical areas of distribution and marketing of Oregon agriculture are detailed in the report. While there is a significant local market for what Oregon produces, the economic impact of exporting products can’t be ignored. The report looks at export demand and captures the “new dollars” brought into Oregon as a result.

“The theory is that new dollars circulating in the economy is how an economy grows,” says Searle. “It’s more than just shuffling the dollars already inside Oregon. Exports bring new dollars into the state.”

There is also a great deal of economic activity taking place simply because there is agricultural production and processing in the first place. The end result, as captured by the report, is something more than Oregonians might think.

“The depth and scope of the industry is greater than what people see when they drive by a farm along the highway,” says Searle. “Behind the scenes is all this other activity that is significant and employs a large number of people that wouldn’t be nearly what it is without agricultural production. Clearly, Oregonians would still be eating even if we didn’t grow anything here, but the economic impact to Oregon would be much smaller. Because we have the economic base of production, the processing, the distribution, the wholesale market, the retail market, and everything in-between, the impact of Oregon’s food sector is amplified significantly.”

The report’s findings carry a heartening message for those in agriculture.

“I think it validates the efforts producers have made and demonstrates the solid economic footing that agriculture generates year after year,” says Searle.

As for the report itself, there is no intention for it to simply gather dust while sitting on a shelf in someone’s office. The study will be used to convince policy makers what is generally good for agriculture is good for the Oregon economy.

“Agriculture is more than just farming,” says ODA Director Coba. “The updated study underscores that agriculture is a leading economic engine in Oregon. All sectors of the economy have struggled the past couple of years, but agriculture continues to add to our job base, our trade balance, our quality of life, our stewardship of resources, and the high quality products we enjoy locally. We need to keep agriculture viable in Oregon. For decision makers, this report supports a need for policies and resources to match the importance of the industry.”

For the one-in-eight Oregonians who have a job connected to agriculture, the report should make them feel good about their contribution to the state’s economy.

For more information, contact Brent Searle (ODA) at (503) 986-4558 or Bruce Sorte (OSU) at (541) 231-6566.

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