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The Importance of Indiana Agriculture
Agriculture has a rich heritage in Indiana and Lt. Governor Becky Skillman has noted that agriculture contributes an estimated $25 billion a year to the state’s economy. The agriculture industry involves more than production agriculture, which includes the raising of livestock or crops. It also includes manufacturing, wholesale, storage, support services, tourism, and retail operations. Agriculture is entwined in every aspect of our lives, regardless of where we live through the basic essentials of food, clothing, and shelter. Therefore, it is important to revisit and realize the importance of agriculture in Indiana as its impact is far reaching. Utilizing the U.S. Department of Agriculture (USDA) data, this article discusses agricultural trends and their impacts on Indiana.
Indiana Farmer Demographics
Over the past 60 years, the production agriculture industry has seen the average age of farm operators increase, an increase in off-farm occupations by farm operators, a decline in the amount of available farmland, and a growing spread in farming operation size. Data showing these trends over time can be seen in Table 1. Since the 1987 Census of Agriculture, the average age of farm operators has been greater than 50 with Indiana’s average age at 55. A reason for this advanced age structure of farm operators is the farm’s status as the family home. More than 20 percent of farm operators report that they are retired and have simplified their farming practices, yet they are still counted in the Agriculture Census. The decline in operators under the age of 25 may be attributed to the fact that more farmers are pursuing a college education. Almost one-quarter of farmers today have graduated from college with a four-year degree or more, compared to only 4 percent of farmers in 1964. One reason why farm operators are pursuing higher education is to enhance their ability to adapt to the rapidly changing agricultural marketplace, adopt new farming techniques, and obtain nonfarm jobs.
Table 1 : Indiana Farm Operator and Farm Characteristics Over Time
|2007||2002||1997||1992||1987||1950||Change since 1987*|
|Age of Farm Operator|
|Under 25 Years||396||537||928||1,321||1,669||3,760||-76.3%|
|25 to 34 Years||4,136||4,001||4,940||7,231||9,923||23,321||-58.3%|
|35 to 44 Years||9,217||11,729||12,312||13,496||14,449||34,067||-36.2%|
|45 to 54 Years||16,832||16,260||13,908||13,923||15,607||35,766||7.8%|
|55 to 59 Years||7,999||7,424||6,688||6,720||7,810||34,473||2.4%|
|60 to 64 Years||7,004||6,667||6,014||6,523||7,824||-10.5%|
|65 to 69 Years||5,820||5,268||4,776||5,398||5,742||26,086||1.4%|
|70 Years and Over||9,534||8,410||8,350||8,166||7,482||27.4%|
|Number of Farms and Farm Size|
|Number of Farms||60,938||60,296||57,916||62,778||70,506||166,627||-13.6%|
|1 to 9 Acres||9,720||5,436||4,183||5,141||5,444||14,755||78.5%|
|10 to 49 Acres||19,533||18,595||13,987||14,234||15,010||37,132||30.1%|
|50 to 179 Acres||15,993||18,691||19,913||21,268||24,892||80,319||-35.8%|
|180 to 499 Acres||8,012||9,263||11,099||12,928||15,902||32,375||-49.6%|
|500 to 999 Acres||3,774||4,494||5,268||6,000||6,670||1,835||-43.4%|
|1,000 to 1,999 Acres||2,621||2,827||2,753||3,207||2,588||211||1.3%|
|2,000 Acres or More||1,285||990||713||N/A||N/A||N/A||80.2%|
*Percent change from 1987 to 2007
Note: Farm operator characteristics only represent the principal farm operator (1 per farm). Shaded cells indicate a declining trend.
Source: IBRC, using data from the Census of Agriculture reports
Contrary to prior declines in the number of Indiana farms, the number of farms has increased since 1997. This increase is due to a rapid 40 percent growth in farming operations between one and 50 acres. Table 1 also shows the changes in farm size over time, with mid-size farms showing a steady decline while small and large farms have experienced growth in the past 20 years. Now the concern is focused on the mid-size operations (50 to 1,000 acres) as they have declined by a total of 36 percent over the past 20 years.
As the saying goes in the agriculture industry, “agriculture is more than just cows, sows, and plows.” In 2008, slightly more than 129,000 Hoosier workers were involved in an agricultural-related occupation, a decline of 3,000 workers from 2007.1 Additionally, the 2007 Census of Agriculture showed Indiana had 91,590 farm operators on 60,938 farms, with 36,343 of these operators indicating that farming was their primary occupation (see Table 1). The Census of Agriculture only determines primary occupation for three operators per farm, so this number may be understated. Thus, it is assumed that roughly 168,650 Hoosiers were involved in an agricultural occupation in 2007.2 Therefore, agricultural occupations consisted of 4.5 percent of all Indiana employment in 2007 (see Table 2).
Table 2 : The Agriculture Industry and Indiana's Workforce, 2005 to 2007
|State Employment (BEA)||3,684,823||3,705,903||3,727,784|
|Agricultural-Related Occupations (IDWD)+||133,095||133,205||132,310|
|Farm Operators (USDA)||34,977*||34,977*||36,343**|
|Agriculture as Percentage of Workforce||4.6%||4.5%||4.5%|
*The Census of Agriculture is only taken in years that end with "2" or "7;" therefore the number of farm operators was averaged between years 2002 and 2007. The 2002 data may be underrepresented because it only reflects the number of principal operators (1 per farm) who consider farming as their primary occupation.
**2007 data includes up to three operators per farm who consider farming as their primary occupation. Therefore, the 2007 data may be underrepresented, but better stated than 2002 data.
+Data for hunting and trapping, farm product warehousing and storage, tobacco manufacturing, seafood product preparation and packaging, animal aquaculture, and sheep and goat farming were either suppressed or had less than 50 employees. To include these industries, 25 employees was arbitrarily selected to serve as proxy for employment; therefore, the total agricultural-related employment may be slightly under or over-represented.
Source: IBRC, using data from the Bureau of Economic Analysis (BEA), Indiana Department of Workforce Development (IDWD), and USDA Census of Agriculture
The top 10 agricultural-related occupations include a diverse array of employment ranging from production agriculture to value added manufacturing of raw agricultural products. Due to the dominance of manufacturing in Indiana, it is not surprising to see five of the 10 occupations in this sector (see Table 3).
Table 3: Top 10 Indiana Agricultural Occupations by Employment, 2008
|1||Farming as a Primary Occupation||36,343*|
|2||Grocery and Related Product Merchant Wholesalers||13,332|
|3||Other Wood Product Manufacturing**||10,428|
|4||Animal Slaughtering and Processing||8,939|
|5||Wood Kitchen Cabinet and Countertop Manufacturing||8,602|
|6||Bakeries and Tortilla Manufacturing||8,027|
|8||Wood Office Furniture Manufacturing||4,559|
|9||Other Food Manufacturing***||4,462|
|10||Farm Supplies Merchant Wholesalers||4,441|
*This number represents up to three operators per farm that consider farming as their primary occupation and may be understated. Farming as a primary occupation is derived from the 2007 Census of Agriculture and may be more or less than the declared number for 2008.
** Other wood product manufacturing includes manufacturing of wood window and doors; cut stock, resawing lumber and planing; other millwork (including flooring); wood container and pallets; manufactured homes; and prefabricated wood building materials.
*** Other food manufacturing includes manufacturing of roasted nuts and peanut butter; other snack foods; coffee and tea; flavoring syrup and concentrate; mayonnaise, dressing and other prepared sauces; spices and extracts; and perishable prepared foods.
Source: IBRC, using data from the Indiana Department of Workforce Development (IDWD) and the 2007 Census of Agriculture
Of all the agricultural occupations, the top five highest paying were pesticide and other agriculture chemical manufacturing ($106,322), research and development in the physical engineering and life sciences ($82,171), commodity contracts brokerage ($69,246), food product machinery manufacturing ($64,387), and agricultural implement manufacturing ($60,487).
Agriculture Productivity and Output
Over time, the amount of land in Indiana devoted to agricultural production has declined, ranging from nearly 19.7 million acres devoted to farms in 1950 to the latest estimate of 14.8 million acres, a decline of 25 percent (see Figure 1). Although the quantity of land availability has declined, the size of farming operations has risen, in part due to the number of retiring farm operators. Purchasing farmland is expensive; ranging from $3,351 to $4,994 per acre in Indiana, depending on the land quality.3 Therefore established farmers with available capital have a greater chance of purchasing the land than smaller, beginning operators. This increases average farm size over time.
Figure 1: Land Devoted to Farms and Average Farm Size
Source: IBRC, using data from the Census of Agriculture reports for 1950 through 2007 and Indiana National Agricultural Statistics Service data for 2008
Despite the conversion of farmland to residential and commercial use, productivity levels have dramatically increased from 1960 to 2004 (the latest available data). Indiana’s agricultural productivity increased 2.3 percent to 1.42, placing the state seventh in the nation in productivity, much better than Indiana’s rank of 27th in 1960. This surge likely came from the adoption of technology amongst Indiana farm operators as they lagged far behind the technology leaders in 1960.4
The advancement of agricultural productivity has helped Indiana’s farm operators be more efficient and increase their production levels. Indiana is currently ranked in the top 10 in sales value of several commodities (see Table 4). The state dominates in the production of corn, soybeans, poultry, hogs, and milk and other dairy products from cows (particularly ice cream).
Table 4: Indiana’s Output of Agricultural Products, 2007
|Item||Farms||Sales ($1,000)||U.S. Rank in Sales|
|Layers (Chickens that Produce Eggs)||3,583||11,731,996||3|
|Corn for Grain||24,597||4,306,502||5|
|Soybeans for Beans||22,569||2,247,468||4|
|Poultry and Eggs||3,798||887,196||15|
|Hogs and Pigs||3,420||783,507||5|
|Milk and Other Dairy Products from Cows||2,071||583,212||14|
|Cattle and Calves||18,483||275,196||27|
|Nursery, Greenhouse, Floriculture and Sod||888||126,241||27|
|Wheat for Grain||5,033||107,744||19|
|Vegetables, Melons, Potatoes, and Sweet Potatoes||1,380||78,719||25|
|Other Crops and Hay||8,493||64,391||36|
|Other Animals and Other Animal Products||1,057||25,457||15|
|Fruits, Treenuts, and Berries||749||19,193||28|
|Horses, Ponies, Mules, Burros, and Donkeys||2,749||15,472||24|
|Sheep, Goats, and Their Products||3,000||7,422||23|
|Cut Christmas Trees and Short Rotation Woody Crops||202||2,662||21|
|Pullets for Laying Flock Replacement||519||N/A||5|
|Broilers and Other Meat-Type Chickens||399||N/A||23|
Source: IBRC, using data from the 2007 Census of Agriculture and Indiana National Agricultural Statistics Service
The state not only produces a large amount of agricultural products, but also ranked as the ninth largest exporter of agricultural commodities in the United States in 2008 at nearly $3.8 billion. Since 2004, the value of agricultural exports has nearly doubled (94.5 percent). Top exported products and their U.S. rankings include soybeans and its products (fourth), seeds (fifth), feed grains and products (sixth), poultry and products (seventh), and live animals and meat (10th).5 Exports increased in nearly every commodity except tobacco and dairy between 1999 and 2008 (see Figure 2).
Figure 2: Indiana Agricultural Export Trends, 1999 to 2008
Source: IBRC, using data from the USDA Economic Research Service
The majority of the agricultural commodities mentioned and shown in Figure 2 are non-value added products, meaning raw products. Table 5 shows the agricultural output along with the remainder of the state’s exports.6 Of all the goods exported from Indiana, the greatest shares belong to transportation equipment manufacturing (22.7 percent), chemical manufacturing (17.8 percent), machinery manufacturing (13.7 percent), and crop and animal production (12.6 percent). Agricultural products are involved in three of the top four exporting industries and its relative share is shown in the chemical and machinery manufacturing sections below. Overall, the agricultural industry sectors contributed roughly 17.6 percent of the state’s exports for a value of $5.3 billion in 2008.
Table 5: Indiana Exports by NAICS Code, 2008
|NAICS Code||NAICS Code Description||Value ($000)||Percent of Exports|
|336||Transportation Equipment Manufacturing||6,843,996||22.42%|
|111- 112||Crop and Animal Production||3,788,200||12.41%|
|334||Computer and Electronic Product Manufacturing||1,912,883||6.27%|
|331||Primary Metal Manufacturing||1,833,372||6.01%|
|335||Electronic Equipment, Appliances, and Component Manufacturing||1,078,941||3.53%|
|332||Fabricated Metal Product Manufacturing||719,702||2.36%|
|326||Plastics and Rubber Products Manufacturing||676,849||2.22%|
|990||Special Classification Provisions||342,882||1.12%|
|325320||Pesticide and Other Agricultural Chemical Manufacturing||308,373||1.01%|
|323||Printing and Related Support Activities||297,223||0.97%|
|33311||Agricultural Implement Manufacturing||282,526||0.94%|
|333210||Sawmill and Woodworking Machinery Manufacturing|
|333294||Food Product Machinery Manufacturing|
|910||Waste and Scrap||240,078||0.79%|
|321||Wood Product Manufacturing||211,379||0.69%|
|327||Nonmetallic Mineral Product Manufacturing||170,370||0.56%|
|337||Furniture and Related Product Manufacturing||130,167||0.43%|
|324||Petroleum and Coal Products Manufacturing||68,004||0.22%|
|314||Textile Product Mills||59,393||0.19%|
|312||Beverage and Tobacco Product Manufacturing||40,475||0.13%|
|212||Mining (except Oil and Gas)||29,454||0.10%|
|113||Forestry and Logging||26,385||0.09%|
|316||Leather and Allied Product Manufacturing||13,901||0.05%|
|980||Goods Returned to Canada||9,360||0.03%|
|511||Publishing Industries (except Internet)||1,242||0.00%|
|211||Oil and Gas Extraction||128||0.00%|
|114||Fishing, Hunting, and Trapping||54||0.00%|
Note: Shaded rows indicate an agricultural industry sector. See endnote number 6.
Source: IBRC, using data from the Office of Trade and Economic Analysis (OTEA) and USDA Economic Research Service
Concerns may still linger about Indiana agriculture’s trends, but the data show that agriculture is indeed an important (and growing) sector in our state economy. Although it employs a small share of the workforce, its output is quite impressive and has a strong impact on the state’s export values. Our agriculture industry is diverse and dynamic, thus we expect to see the industry’s output to continue its growth in the future whether it be through specialty or mainstream agriculture paths. Through consumer support, Indiana agriculture can continue to flourish and enhance our state’s economy.
- Data on Indiana agricultural occupations came from the Indiana Department of Workforce Development (IDWD) for years 2005 through 2008. These data do not include sole proprietors, which would include a large percentage of farmers, and it does not include retail agricultural occupations.
- This assumption is determined by adding 36,343 (the number of farm operators from the Census of Agriculture) and 132,485 (the number of agricultural workers in 2007, according to the Indiana Department of Workforce Development).
- C. Dobbins and K. Cook, Indiana Farmland Values and Cash Rents: Relative Calm in a Turbulent Economy, Purdue Agricultural Economics Report, 2009, www.agecon.purdue.edu/extension/pubs/paer/2009/august/dobbins.asp.
- E. Ball, Agricultural Productivity in the United States: Data Documentation and Methods, Economic Research Service, USDA, 2010, www.ers.usda.gov/data/agproductivity/methods.htm.
- U.S. agricultural exports, by leading states: estimated value by commodity group, FY 2008. Compiled by the Economic Research Service using data from USDA’s National Agricultural Statistics Service and U.S. Department of Commerce, Census Bureau.
- Data for this graph come from the Office of Trade and Economic Analysis (OTEA) and the USDA. These two agencies have different methodologies on gathering agricultural export data, with the USDA’s data showing a more robust picture of Indiana’s exports. Therefore, NAICS 111 and 112 utilize USDA’s data while the remainder of the data come from the OTEA. There may be a slight overlap in data in NAICS 111 and 112 with 311 and 312, but it was assumed to be minimal due to the low value of exports for dairy and tobacco products.
Economic Research Analyst, Indiana Business Research Center, Indiana University Kelley School of Business