Leafy greens are an important part Arizona’s agricultural economy and represent a significant portion of the state’s agricultural sales.
Due to their perishable nature, there is a highly integrated cluster of industries involved in post-harvest activities that ensures the quality and shelf life of leafy green products. These industries are involved in cooling, cutting, washing, packing, processing, storing, and shipping Arizona-grown leafy green products. This requires incredible coordination and logistical efficiency across industries. Therefore, estimating leafy greens’ contribution to the Arizona economy warrants an examination of the whole value chain, including economic activity taking place on-farm as well as in post-harvest industries. We call this cluster the Arizona leafy greens industry cluster.
In addition to the industry cluster’s direct effects on the Arizona economy, a “ripple” of economic activity is generated in other Arizona industries to meet the demand for inputs by leafy greens businesses and the demand for consumer goods and services by households employed by businesses within the cluster. Economists call these indirect and induced multiplier effects.
- Indirect effects measure the economic activity generated by the leafy greens industry cluster’s demand for inputs. This effect is the result of business-to-business transactions; in this case, these occur primarily in the real estate, agricultural support services, insurance, and fertilizer industries, among others.
- Induced effects measure the economic activity generated by house- holds employed by the leafy greens industry cluster spending their earnings at Arizona businesses. This effect is the result of house- hold-to-business transactions which occur in the healthcare, real estate, retail, restaurant, and other industries.
Yet data specific to this commodity group (a subset of vegetables and melons) are not often reported at the state level in government statistics. Furthermore, economic data that are available, such as commodity cash receipts, do not fully capture the economic contributions of leafy greens to the state economy.
Estimating the economic contributions, or the economic activity, of industries involved in the production and distribution of leafy greens is challenging. One major issue is that industries involved in farm-level production and post-harvest activities only have data available at an aggregated level not specific to leafy greens. We use a variety of data sources and methods to estimate the economic activity supported by Arizona-grown leafy greens.
Using estimates for 2015, we use IMPLAN to estimate the total economic contribution of the leafy greens industry cluster, including indirect and induced multiplier effects. Results reported include sales (output), value added (synonymous with Gross State Product [GSP]), incomes, and state and local tax revenues. With limited data, we also estimate employment supported by Arizona’s leafy greens industry cluster.
Findings
Arizona is a national leader in the production of leafy greens.
- In 2015, Arizona ranked second in the nation for the production of lettuce (head [iceberg], leaf, and Romaine) and spinach by weight, and eighth in the nation for cabbage by weight.
- Arizona-grown leafy greens accounted for about one-fifth of national production by weight in 2015. By commodity, Arizona was responsible for 24% of the nation’s production of head lettuce, 19% of leaf lettuce production, 26% of Romaine lettuce production, 21% of spinach production, and 4% of cabbage production.
- Compared to other U.S. counties producing lettuce and spinach in 2012, Yuma County, Arizona, ranked second out of 429 counties for lettuce acreage harvested and second out of 119 counties for spinach acreage harvested. Of 202 U.S. counties producing kale, Maricopa County, Arizona ranked seventh in the nation for acreage harvested.
- Compared to other regions producing leafy greens, Arizona has relatively high yields per acre. Cabbage, typically Arizona’s highest-yielding leafy green commodity, has led the nation in hundredweight produced per acre in four of the last six years, but dropped off in 2015. Over the last six years, Arizona has also had higher yields per acre for Romaine lettuce than California, the other leading state.
Arizona plays a critical role in the year-round supply of lettuce for domestic consumption.
- Year-round availability of lettuce is facilitated by a seasonal rotation of production between major growing regions in Arizona and California. According to USDA Agricultural Marketing Service statistics, from mid-April to late October, California’s Central Valley ships an average of more than 1.1 billion pounds of lettuce per month. From late November to mid-March, western Arizona ships an average of 1.0 billion pounds of lettuce per month.
- At its most productive point in the season, from the first week of December 2014 through the first week of March 2015, Arizona supplied an average of 82% of the nation’s lettuce. Over this same period, 16% was supplied by California and 2% was supplied by Florida.
- The peak in weekly lettuce shipments occurred on December 6, 2014, where Arizona accounted for 92% of the nation’s lettuce shipments.
Leafy greens are an important commodity in Arizona’s agricultural economy.
- Since 2010, on average, leafy greens have accounted for 17% of the state’s total agricultural cash receipts (crops + livestock). However, the value of production for leafy greens is heavily dependent on prices received. In 2014, a low-price year for leafy greens, cash receipts for Arizona’s largest leafy green commodities (cabbage, spinach, and lettuce) were $468 million and accounted for only 11% of Arizona’s total agricultural cash receipts. In 2015, leafy greens cash receipts rose to $779 million and accounted for 19% of the state’s total agricultural receipts.
Arizona’s leading leafy green commodity is lettuce.
- In 2015, Romaine lettuce accounted for the largest proportion of Arizona leafy greens cash receipts (39%). This was followed by head lettuce (33%), leaf lettuce (19%), spinach (7%), and cabbage (2%).
- Head lettuce consistently accounts for the majority of leafy greens acreage harvested in Arizona. In 2015, Arizona harvested 32,500 acres of head lettuce, 20,900 acres of Romaine lettuce, 10,300 acres of spinach, 9,300 acres of leaf lettuce, and 2,600 acres of cabbage.
Yuma County produces a large majority of Arizona’s leafy greens.
- County-level data from the 2012 Census of Agriculture report that Yuma County accounted for 97% of the state’s harvested acreage of lettuce and 90% of the state’s harvested acreage of spinach.
- Maricopa County accounted for 97% of the state’s harvested acreage of kale.
The contribution of leafy greens to the state economy extends beyond on-farm production.
- In 2015, the leafy greens industry cluster’s total sales contribution to the Arizona economy was an estimated $2.0 billion. Direct sales (cash receipts) from on-farm production of Arizona’s major leafy greens commodities (cabbage; spinach; and head, leaf, and Romaine lettuce) and forward-linked cluster industries accounted for approximately $931.5 million in sales, while indirect and induced multiplier effects accounted for more than $1.0 billion in sales.
- Based on these 2015 production-level estimates, the leafy greens industry cluster’s total contribution to Arizona’s gross state product (GSP) was nearly $1.2 billion. This included approximately $950 million in wages, salaries, and proprietor income.
- Total state and local tax contributions from Arizona’s leafy greens industry cluster for 2015, including multiplier effects, were an estimated $64 million.
Arizona’s leafy greens industry cluster supports a host of different jobs in the state, both directly and indirectly.
- In 2015, Arizona leafy greens production required more than 16.9 million hours of hired on-farm labor. This included directly hired, con- tract, and other agricultural support service workers employed on-farm. The vast majority of these labor hours are required during the November-to-March harvesting season.
- There were more than 18,000 full- and part-time jobs directly and indirectly supported by the leafy greens industry cluster in Arizona on an annualized basis. More than 60% of these jobs were direct, on-farm jobs, which included farm proprietor jobs, directly hired farm labor, and agricultural support service workers (usually hired through farm labor contractors). Other jobs supported were in post-harvest industries, in industries that provide inputs to the cluster, and in industries that provide consumer goods and services to workers and proprietors in the cluster.
- In 2015, 2,266 jobs in lettuce and spinach production were certified under the H-2A visa program for seasonal agricultural workers. The H-2A nonimmigrant program provides Arizona (and other) farms with short-term agricultural labor when the number of available domestic workers is determined by the U.S. Department of Labor to be insufficient. For lettuce, H-2A certified positions rose from 1,676 in 2010 to 2,066 in 2015
- The number of unique farm workers employed in leafy greens production is greater than the number of jobs. Recent research from California found an average of two unique farm workers reported for each year- round, full-time equivalent farm job. Assuming this relationship holds for Arizona—with similar production systems—this suggests there are nearly 27,000 individuals working in jobs directly or indirectly sup- ported by the Arizona leafy greens industry cluster.
Methods
We use a variety of data sources and methods to estimate the economic activity supported by Arizona-grown leafy greens. The chosen method for the economic contribution analysis uses agricultural cash receipts for on-farm production and cost-and-return farm budgets to estimate the economic activity in post-harvest industries.
The economic contribution analysis was conducted using input-output modeling and the premier software for this type of analysis, IMPLAN Version 3.1. IMPLAN is a regional economic modeling system based on national average production conditions. The model was refined based on best available, recent data to more accurately reflect economic conditions and agricultural practices in Arizona.
Because economic contribution analyses provide estimates for a snap- shot in time and agricultural commodities often experience inter-annual fluctuations in price and production, we conduct two economic contribution analyses: one for 2014 and one for 2015. We only report the results for 2015 as this is the year of interest. The first analysis, 2014, was conducted because it accords with the data available from the IMPLAN modeling software. We use the 2014 IMPLAN model as a baseline for the 2015 analysis and account for price and production-level differences between 2014 and 2015.
Results of the economic contribution analysis are reported through the following metrics: sales (output), value added, labor income, and state and local taxes.
Finally, the study also estimates employment supported by Arizona’s leafy greens industry cluster. A “bottom up” approach was used to de- rive hours of work required on farm, based on crop enterprise budgets and acreage data. Hours worked were then converted to on-farm job equivalents following methods employed in previous farm labor studies (Martin, 2014). IMPLAN was used to estimate employment supported in leafy greens post-harvest industries and in industries affected by indirect and induced effects