New report shows agriculture productivity consistently up

Farmers in Ohio have been producing more and, on average, earning slightly more too.

Improved technology, rising crop yields, farmer ingenuity and lower prices for farm inputs have led to higher agricultural productivity, specifically annual increases of 1.6% since the 1950s, according to a report produced by a team of agricultural economists from the College of Food, Agricultural, and Environmental Sciences (CFAES) at The Ohio State University. The just-released report examines trends in Ohio’s agricultural and food production sectors, analyzing data from 2015, the most recent statistics available.

Farm incomes too have steadily improved, having increased an average of 2.2% a year since 2005.

Combined, Ohio’s agricultural and food production cluster employed 402,874 (one out of every eight) Ohioans in 2015 and contributed $33 billion (5.3%) to Ohio’s gross state product, a measure of the market value of all goods and services produced within the state.

Along with the $33 billion, the state’s agricultural and food production cluster contributed an additional $20 billion to Ohio’s 2015 economy indirectly through farmer payments for various expenses such as rent and accounting services, as well as income that farm employees used to buy goods and services.

Adding the direct and indirect earnings, the total contribution of the agricultural and food production sectors to Ohio’s economy in 2015 was $53 billion.

“It’s going up, but slower than other parts of the state’s economy,” said Tim Haab, one of the report’s authors and chair of CFAES’ Department of Agricultural, Environmental, and Development Economics.

As expected, increased productivity on the farm has led to decreasing commodity prices and a reduction in employment opportunities in agricultural and food production, according to the report. Since 1994, Ohio’s employment has declined by 23.5% in the farm input sector, 38% in agricultural production (farming), 16.9% in food processing and 47.1% in food wholesaling/retailing. The loss of agricultural jobs is especially challenging for people living in Ohio’s rural areas, where employment opportunities are already limited, Haab said.

“Employment matters, especially in rural communities,” he said. “Manufacturing and employment have been declining, disproportionately affecting rural communities.”

Consistent with national trends, the food-processing sector in Ohio has seen a continuous decline since 2005, the report states. Food processing involves changing anything that is grown or raised into a marketable product, such as cattle into steak or tree into lumber. Much of that decline was driven by the drop in demand for wood for either paper or furniture. Once a thriving industry in Ohio and nationwide, forestry has seen significant losses in recent years.

Among the positive trends highlighted in the report is that Ohio’s restaurants and bars have experienced strong growth, employing more people and contributing an increasing amount to the state’s economy since 1994. Restaurants and bars employ 496,342 Ohioans, a 37.5% increase since 1994.

“According to the Economic Contribution of Agricultural and Food Production to the Ohio Economy report, agricultural and food production in Ohio continues to grow despite decreasing employment and decreasing commodity prices,” said Cathann A. Kress, vice president for agricultural administration and dean of CFAES. “Total sales in the agricultural and food production cluster with restaurants and bars in 2015 was $123.8 billion up from $105.2 billion in 2010.”

Agriculture and food production remain a vital part of Ohio’s economy, Haab said.

“This report is an opportunity to identify the trends and determine the implications so that all parties involved can work to ensure the future of rural communities and all of Ohio,” he said.

The report is the result of a collaborative analysis and writing process that included the CFAES Department of Agricultural, Environmental, and Development Economics outreach committee, external peer reviewers and stakeholders. The last report outlining the contribution of Ohio’s agriculture and food-related industries to the state’s economy was released in 2012.

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