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California agriculture contributes significantly to the state economy

Feb 20, 2008 9:55 AM

A recent study by the UC Agricultural Issues Center has documented California agriculture's significant contribution to the California economy.

Now available on the Web, "Agriculture's Role in the Economy," provides the center's estimates of the direct and multiplier effects of agriculture in the state and in regional economies, as well as a summary of relevant government statistics. Also discussed in the report is the economic role of agriculture in California relative to other countries.

"Agriculture's Role in the Economy," as a stand alone chapter 5 of the Measure of California Agriculture, is available for free download from the UC Agricultural Issues Center Web site at http://www.aic.ucdavis.edu.

The report documents that, in addition to farms, about 90,000 commercial establishments in California are connected to agricultural production, including farm machinery manufacturing, food and beverage manufacturing companies and others. According to the Center's analysis, in 2002 the combined agriculture production and processing industry in California directly accounted for $97.7 billion of the state sales output, 3.8 percent of jobs, 2.5 percent of labor income and $39.6 billion (2.9 percent) of labor and property income and indirect business taxes.

Overall, including ripple effects, agricultural production and processing generated 7.3 percent of all jobs, 5.6 percent of all labor income and 6.5 percent ($90.2 billion) of labor and property income and indirect business taxes in the state.

The employment multiplier for the California agricultural production and processing industry in California was found by the Center to be 1.94 in the year 2002, meaning that for every job in agricultural production and processing an additional 0.94 jobs are generated in the state. With reference to the combined agricultural production and processing industry, for every $1 of direct labor income in agriculture, $1.27 additional labor income is generated in the state.

In addition to analyzing the role of agriculture in the state economy, the report analyses economic effects in the Central Valley, San Joaquin Valley, Sacramento Valley and Central Coast regions.

Discussing the global context, the UC Agricultural Issues Center report concludes that, if California were a country, its agricultural value would rank between fifth and ninth among countries of the world, depending which currency exchange rates are used, ahead of Canada, Mexico, Germany and Spain.

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