Arizona's Agribusiness System: Contributions to the State Economy, An Economic Contributions Analysis for 2014

Including direct, indirect, and induced effects, the total contribution of Arizona’s agribusiness system to state sales was an estimated $23.3 billion in 2014.

• Of this $23.3 billion in total sales:
  • $5.5 billion was directly contributed by primary agriculture—crop production, livestock production, and agricultural support service industries, such as farm
    labor contracting.
  • $9.3 billion was directly contributed by agricultural input manufacturing, agricultural processing, and agricultural marketing and distribution.
  • $8.5 billion was generated in the Arizona economy through indirect and induced effects.

In 2014, the agribusiness system directly and indirectly supported an estimated 138,000 full- and part-time jobs and more than 162,000 unique workers.

• Of these 138,000 jobs:
  • On-farm labor in primary agriculture accounted for more than 58,000 jobs.
  • An additional 19,000 jobs were supported in agricultural input manufacturing, agricultural processing, and agricultural marketing and distribution.
  • More than 60,000 jobs were supported by spending on inputs purchased from other industries by agribusiness enterprises (indirect effects) and spending of agribusiness profits and wages (induced effects).
• The number of unique farm workers hired by Arizona farms and ranches is greater than the number of jobs. Recent research from California found an average of two unique farm workers for each year-round, full-time equivalent hired farm job. Assuming this relationship holds for Arizona—which has similar production systems—the number of unique hired workers would be 49,378, resulting in a total of 162,982 unique workers supported by the Arizona agribusiness system.

Using the standard metric for measuring the size of a state economy, gross state product (GSP), the agribusiness system directly contributed an estimated $4.3 billion to Arizona’s total GSP of $281 billion in 2014.

• The state’s top five agribusiness industries, in terms of their direct contribution to GSP, were agribusiness wholesale, agricultural support services (largely farm labor contracting and harvesting activities), dairy cattle and
  milk production, beef cattle ranching, and fluid milk manufacturing. Rounding out the top ten in value-added contribution were vegetable and melon farming, bread and bakery manufacturing, other snack food manufacturing, dog and cat food manufacturing, and hay and all other crop farming (which in Arizona is largely alfalfa and other forage).

In 2014, including multiplier effects, the agribusiness system directly and indirectly supported $5.6 billion in labor income, the wages, salaries, and benefits paid to workers and the incomes earned by business owners.

• Approximately $1.5 billion in income was earned by individuals that work on farm, whether they work in the crop, livestock, or agricultural support service industries.
• Another $1.2 billion in income was paid to individuals that work in agricultural input manufacturing, agricultural processing, or agricultural marketing and distribution.
• $2.9 billion in income was supported in other Arizona industries through indirect and induced effects.

Arizona is a national leader in the production of many agricultural commodities. In 2014:

• Arizona ranked second in the nation for the production of lettuce, spinach, broccoli, and cauliflower, providing 25%, 21%, 4%, and 11% of the nation’s production, respectively.
• Arizona produced 28% of the nation’s production of cantaloupe and 22% of the nation’s production of honeydew.
• Arizona ranked third in the nation for the production of durum wheat (wheat used to make pasta), accounting for 16% of national production, and fourth in the nation for the production of pecans, accounting for 8% of
  national production.
• Arizona ranked second in the nation for production of Pima cotton and tenth for the production of upland cotton.
• Arizona ranked eleventh in the nation for cattle on feed and twelfth in the nation for milk production.

A majority of agricultural producers in Arizona are small-scale producers, both in terms of acreage and annual sales.

• According to the 2012 Census of Agriculture, approximately 60% of Arizona’s agricultural operations had less than 10 acres in production and 87% of Arizona’s agricultural operations had annual sales receipts of less than $25,000.

A large majority of Arizona’s agricultural production comes from just a few farms.

• In 2012, 10 operations accounted for one-quarter (25%) of Arizona’s agricultural sales; 46 operations accounted for 50% of all sales; and 168 operations accounted for 75% of all sales. Less than 1% of farms accounted for 75% of Arizona agricultural sales, with 99% of farms accounting for the remaining 25% of the state’s agricultural sales.
• In 2012, three Arizona counties (Maricopa, Yuma, and Pinal) accounted for more than 75% of the state’s agricultural production.

The types of agricultural commodities produced in Arizona vary across the state, with some regions more heavily involved in livestock production and other regions more heavily involved in crop production.

• Northern Arizona primarily consists of counties with the majority of their agricultural sales coming from livestock production and is an area that has a higher proportion (more than 50%) of principal operators that are women and/or Native Americans.
• Central Arizona is known for both livestock and dairy production, with Maricopa and Pinal counties ranked in the top 1% of U.S. counties for milk sales and cattle inventories in 2012.
• With the exception of Santa Cruz County, which is largely a livestock-producing county (with more than 85% of the county’s total market value of sales coming from livestock), counties in southern Arizona are characterized by higher levels of crop production.
• Finally, western Arizona is largely a crop producing region, and is home to Yuma County, one of the leading U.S. counties in the production of leafy greens and other vegetables.

To fully account for the wide range of agriculture-related businesses in the state, the agribusiness system includes primary agriculture (crop, livestock, and agricultural support service industries), agricultural input manufacturing, food and fiber processors, and specialized, agricultural marketing and distribution industries. In this study, the definition of the agribusiness system has been slightly expanded from previous studies to include agriculture-related economic activity taking place within the larger warehousing, wholesale, and retail industries. The results of this analysis are not directly comparable to past years’ results due to these adjustments. A more detailed discussion of the agribusiness industries included in the economic contribution analysis is provided in the Appendix.

The contributions of Arizona’s agribusiness system to the state economy were modeled in IMPLAN 3.1. The model was customized using the best available, most recent data to more accurately reflect production practices in Arizona and economic conditions in 2014. Data and research methods used to estimate the contribution of the agribusiness system are presented in the Appendix.