Last week, the Governor of Missouri was interviewed on NPR and stated that farming was the number one industry in his state. I’ve heard the same claim from Indiana politicians. In fact, one Hoosier solon claimed farming was “the backbone of Indiana’s economy.” I responded, “every corpse has a backbone.”

Why do people in Missouri and Indiana believe such exaggeration? Perhaps, at one time (in the 19th century) it was true. Farming does take up a lot of the land we see traveling from one place to another. Plus, the farm lobby is still disproportionately strong.

How important is farming? Folks from Purdue love to say, “if you eat, you’re are part of farming.” Oh, so true! Plus, if you eat, you’re part of trucking, dentistry, and waste disposal.

Let’s look at three different measures not provided by the biggest farm lobby of all, the U.S. Department of Agriculture:

First, value added, the part of Gross Domestic Product (GDP), our basic measure of economic activity, attributed to Agriculture nationally, (including farming, forestry, fisheries and hunting) is 0.8 percent or 19th of 19 private sector industries. Number one is (drum roll) real estate, rental and leasing at 13.3 percent, followed by Manufacturing at 11.4 percent of GDP.

To be blunt, total value added from farming is less than 0.8 percent of the U.S. economy. What will the farm lobby say? “Well, you’ve got to remember farmers buy lots of stuff and lots of money passes through their hands that wouldn’t be spent if we didn’t have farming.”

No one is talking about not having farming! That’s the argument of a child, not an industry. We measure economic activity as the value of the goods sold less the value of goods purchased. That’s what we call value added. And the sum of value added by all economic activity in the marketplace is (GDP).

For Missouri, Agriculture (Ag) is 1.1 percent of the state’s GDP. For Indiana, Ag is 0.9 percent of the state’s GDP. In each of those two states, Ag is 19th of the 19 major private sector economic activities in GDP. Only in South Dakota does Ag exceed five percent of the state’s GDP.

Second, personal income, the sum of earnings, rent, dividends, interest, and transfer payments (Social Security, Medicare, Unemployment compensation, etc.) are received by, guess who, persons. Farm earnings are net of the expenses of farmers, but include government subsidies. How many carpenters, janitors, teachers, surgeons can say the same?

In the nation, farming accounts for 0.4 percent of total personal income. In Missouri, the figure is 0.46 percent, Indiana 0.33 percent.

Third, jobs. Farming, fishing and forestry account for a lofty 0.34 percent of jobs in the U.S., 0.18 percent in Missouri, and 0.12 percent in the Hoosier Holyland.

These are data for 2018. Not 1820, which might have been the source for the Governor of Missouri. They are from the U.S. Bureau of Economic Analysis and the U.S. Bureau of Labor Statistics, not the fake news agents working in the speech writing cubicle of every Statehouse.

Morton J. Marcus is an economist formerly with the Kelley School of Business at Indiana University. His column appears in Indiana newspapers, and his views can be followed his podcast.

© 2019 Morton J. Marcus

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