IU study: Agriculture contributes $44.1 billion to Indiana's economy

  • March 16, 2015


BLOOMINGTON, Ind. -- Agricultural industries in Indiana account for more than $31 billion in direct sales and nearly $13 billion more in ripple effects such as related supply-chain purchases and spending by workers, according to a new report from Indiana University’s Kelley School of Business.

The new report, "Beyond the Farm: A State and Regional Report on the Economic Contribution of Farms, Forests and Related Industries," also said that the state's agricultural output supports nearly 190,000 Hoosier jobs. Of those jobs, 107,500 are directly involved in agricultural production and processing.

Using the most recent census data available from the U.S. Department of Agriculture, researchers at the Indiana Business Research Center found that agriculture creates $14.9 billion in value added -- an amount equal to nearly 5 percent of Indiana's gross domestic product.

"Keep in mind that Indiana's farmers and agriculture-related manufacturers generated these impressive numbers during a tough year plagued by severe drought. These impacts would likely be higher in a more typical year," said Matthew Kinghorn, economic analyst at the IBRC.

"The findings in this report demonstrate that efforts to support, or even expand, Indiana's agricultural production and processing can have positive ripple effects throughout the state's economy," Kinghorn added. "This is especially true in regions of the state that are facing declines in other key industries. Therefore, the degree to which agriculture is able to contribute to Indiana's economic growth going forward will be an important economic indicator for the state."

“Agriculture is a major driver of economic development in our state, and this study helps tell that story,” said Jane Ade Stevens, CEO of the Indiana Soybean Alliance, which provided funding for the study. "In addition, this study highlights the stability of agriculture as it was able to contribute $44.1 billion to Indiana’s economy even in the devastating drought of 2012.”

In addition to providing an overview of agricultural activity for Indiana, the report also highlights its impact in different regions of the state and by congressional district.

Central, north central and northeast regions of Indiana generate the greatest contributions to the Indiana economy. Southwest Indiana also is a strong contributor, particularly in agricultural processing and manufacturing industries. South central and southeast areas of the state are the least agriculturally productive, due to a lack of high-quality farmland.

In the 4th District (represented by Todd Rokita), the combined effects of agriculture produce nearly $2.7 billion in value added and support about 33,600 jobs.

By comparison, the 1st and 7th districts (represented by Pete Visclosky and Andre Carson, respectively) rank near the bottom in both categories because they largely are urban districts. However, the manufacturing-heavy nature of agricultural activities in the 7th District produces a large employment multiplier, the report said.

Indiana's agricultural output is heavily concentrated in corn and soybean crops, which together account for 63 percent of the state's total agricultural production.

The Hoosier state also was a national leader in hog and pig production, generating nearly $1.3 billion in sales -- the fifth-highest total in the United States.

Poultry and egg production was the only other agricultural industry in Indiana to exceed $1 billion in sales in 2012 -- totaling $1.3 billion and ranking 13th-best among all states.

Researchers compared the volume of corn production from 2007 to 2012 (the last two USDA Census of Agriculture years) and found nearly a 40 percent decline in the volume of corn produced for grain. This drop was attributed to the historic drought in 2012.

"Other Midwestern states like Missouri and Illinois saw even sharper declines in grain corn production over this period," Kinghorn wrote. "It is important to point out that Indiana rebounded to tally two consecutive record years for grain corn production in 2013 and 2014.

The report also highlights how the state's agriculture and forestry industries provide revenue for federal, state and local governments in the form of corporate profits, indirect business taxes, personal taxes and contributions to social insurance.

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Media Contacts

George Vlahakis

  • IU Communications
  • Office 812-855-0846
  • Cell 812-345-1500
  • IU Inc.

Matthew Kinghorn

  • Indiana Business Research Center
  • Office 812-856-0459

Megan Kuhn

  • Indiana Soybean Alliance
  • Office 317-347-3620