Agriculture will continue to be a driver in Idaho’s economy again this year despite continued challenges related to on-farm income and expenses and uncertainty over exports, economists say.
That’s because the industry is so large, University of Idaho Agricultural Economist Garth Taylor told the legislature’s joint Economic Outlook and Revenue Assessment Committee.
At just over 4 percent, Idaho’s agricultural economy ranks fourth nationally as a percentage of state Gross Domestic Product, Taylor said. That doesn’t include food processing.
South Dakota leads at 6 percent, followed by Nebraska and North Dakota. Iowa is fifth.
Some 20 percent of Idaho sales come from farming and food processing, which together account for 16 percent of state GDP and 14 percent of jobs.
In an annual report, Taylor and fellow UI ag economist Ben Eborn said agriculture is Idaho’s largest export-driven base industry as ranked by base sales, third largest by base GDP and fourth largest by base jobs.
A base industry brings new money into an economy by supplying other geographic markets.
Cash receipts from the sale of crops and livestock were estimated at $7.2 billion in Idaho in 2018, largely unchanged from 2017, he and Eborn reported.
Economic growth from agriculture over the long term comes from production, not price, Taylor told lawmakers.
For example, inflation-adjusted sales of Idaho milk and potatoes from 1980 to 2016 rose despite price declines, the report said.
During that period, milk production per cow and potato yields per acre increased by 65 percent and 48 percent, respectively. The dairy herd more than doubled, and potato acreage increased by 2 percent.
Idaho farmers face many challenges this year, Taylor said in an interview. They include milk prices at or just above break-even following four years of decline, high world stocks of grain, mediocre corn prices that impact much of the agricultural economy and tough export markets.
Idaho agricultural exports, which have grown for four consecutive years, will again be slowed by the strong U.S. dollar and tariffs, he said.
Regarding tariffs, “it’s hard to sort out which will go into effect, which we can go around, and which will hurt us,” Taylor said.
Milk was the biggest single contributor to the economy, at 33 percent, followed by cattle and calves at 23 percent and potatoes and wheat at 12 percent and 7 percent, respectively.
High yields dragged down the prices of wheat, barley, sugar beets, hay and potatoes.
Net farm income — now in decline for five straight years and 43 percent below the 10-year average — was the lowest since 2009, when milk prices fell to record lows, the report said.
In 2018, dairies had a 6 percent drop in receipts to $2.4 billion. Production rose by 2 percent but prices were 8 percent lower. Milking cows numbered about 600,000.
Cattle and calf revenue dropped by 1 percent to $1.6 billion. Exports supported higher-than-expected beef prices following four years of U.S. beef herd expansion. Beef cows numbered about 510,000 at the start of 2018, up 2 percent.
Potato revenues, at $864 million in 2018, were down 4 percent. Production rose by an estimated 3 percent as yields hit a record high per acre. However, the estimated average price is down by 13 percent.
Wheat revenues in 2018 increased by 16 percent to $490 million. Production rose by 15 percent.
Sugar beet revenues increased by 3 percent to an estimated $302 million. Production was up 1 percent even as growers harvested fewer acres, reflecting strong yields, and the average price per ton rose 2 percent.
Other changes from 2017 to ’18 include a 3 percent increase in barley revenue to $245 million; a 14 percent increase in dry bean revenue to $74 million as acreage increased; and a gain of 26 percent in cash receipts from hay to $483 million.