Contribution of Grain Production to the Washington EconomyT. Randall Fortenbery

Professor and Grain Commission Endowed Chair, School of Economic Sciences, Washington State University

Table 2Potential Impacts of Tax Policy Change on Wheat Farming - 2010

No Tax Change Implement B&OValue of Washington Wheat Production $997,004,000 $992,178,501

Induced Output (earned from spending for personal activity) $232,842,308 $231,715,351

Indirect Output (earned from business to business transactions) $754,950,372 $717,391,688This assumes producers reduce production in response to higher costs) TOTAL ECONOMIC OUTPUT $1,984,796,680 $1,941,285,540

CHANGE IN ECONOMIC OUTPUT (UPPER BOUND) -$43,511,140Change in Value of Farm Output -$4,825,499Change in Induced Output -$1,126,957Change in Indirect Output -$37,558,684

CHANGE IN ECONOMIC OUTPUT (LOWER BOUND) -$5,952,456Change in Value of Farm Output -$4,825,499Change in Induced Output -$1,126,957

Table 1

Contribution of Wheat Production to the Washington State Economy – 2010

Value of Washington Wheat Production $997,004,000

Indirect Output (earned from business to business transactions) $754,950,372

Induced Output (earned from spending for personal activity) $232,842,308TOTAL ECONOMIC OUTPUT $1,984,796,680

Direct Employment (all grain farms) 18,274

Indirect Employment (from business to business transactions) 5343

Induced Employment (from personal activity) 1751TOTAL EMPLOYMENT 25,814

Grain production and processing are important contributors to the overall economic well-being of the State of Washington. While benefits are substantial for the state as a whole, they are particularly important to rural areas of Eastern Washington. This summary highlights some of the more important contributions of grain producers to the State of Washington.

In 2009, the value of Washington grain production totaled over $666 million dollars. Just under 90 percent, $594 million, was accounted for by wheat. Based on both increased production and higher average prices, Washington’s 2010 wheat crop alone was worth over $997 million. In addition, businesses supporting wheat producers in 2010 earned $755 million dollars as a result of providing inputs and services to grain famers. Thus, for every dollar of farm generated revenue, there was another $0.76 earned by those businesses providing support to grain farmers.

In addition to providing income to other businesses through business to business transactions, income earned through wheat farming is spent on personal products and services (for example, meals away from home, attending a movie, etc.). The value of off-farm purchases by Washington grain producers and their employees was about $233 million in 2010. In other words, every dollar earned in grain farming produced an additional 23 cents in earnings to

TABLE 3Potential Impacts of Sales Tax Policy Change

Implement New Sales Tax on Seed, Fertilizer, and Pesticides

Total Washington Wheat Acres 2010 2,330,000

Costs per Acre Subject to Tax $75.00Tax per Acre at 6.5 Percent $4.88TOTAL TAX LIABILITY $11,358,750

TABLE 4Potential Impacts of Fuel Tax Policy Change

Implement New Sales Tax on Off-Road Diesel Fuel

Total Washington Wheat Acres 2010 2,330,000Average Gallons of Diesel Fuel Used per Acre 7.35Fuel Tax per Acre at 37.5 cents per gallon $2.76TOTAL TAX LIABILITY $6,422,063

businesses providing services and goods to farm families and employees. All total then, every dollar from wheat farming resulted in another 99 cents in economic activity throughout the state, much of in the communities where the grain producers operate.

Washington grain production provided the equivalent of 18,720 full time on-farm jobs in 2010. In addition, the business to business activity of grain famers resulted in an additional 5343 jobs in business servicing grain farms. This is about 5.3 off farm jobs created by agribusiness for every $1 million in Washington grain production. Another 1.8 jobs per $1 million in grain production value, or 1751 jobs, resulted from businesses providing personal goods and services to grain farmers and employees. Thus, over 25 jobs result from each $1 million earned in grain farm revenue. This means that in 2010, Washington grain production supported 7094 jobs in addition to the nearly 19,000 directly related to grain production.

Another way to interpret the employment data is that for every job directly related to grain production in the State of Washington, another 0.39 jobs are created either to facilitate business to business transactions, or to provide the privately demanded goods and services of grain producers.