The Uncelebrated Places Where America's Farm Economy Is Thriving

We consume their products every day but economists give them little attention, and perhaps not enough respect. Yet America’s agriculture sector is not only the country’s oldest economic pillar but still a vital one, accounting for some 3.75 million jobs — not only in the fields, but in factories, laboratories and distribution. That compares to about 4.3 million jobs in the tech sector (which we analyzed last month here). Net farm income totaled $108 billion in 2014, according to preliminary figures from the USDA, up 24% from 2004.

This growth may not be impressive by Silicon Valley standards, but most farms and agribusinesses are likely to be with us longer than the latest social media darlings. Online crazes like FarmVille may come and go, but people always have to eat, and in the rest of world, many of them are eating more, and, as the old saying goes, “higher on the hog.” As the world’s leading exporter of agricultural products, the U.S. farm sector is capitalizing on that. The dollar value of U.S. agricultural exports rose to a record $152.5 billion in 2014, making up about 9% of total U.S. goods exports for the year. It’s one of a short list of sectors in which the United States has continued to consistently post a trade surplus — $42 billion last year.

For 2013, the USDA estimated that agricultural exports supported about 1.1 million full-time private-sector jobs, which included 793,900 off the farm (in the food processing industry, the trade and transportation sector and in other supporting industries).

There are many communities in America where agriculture is still a primary industry — even the dominant one. Working with Mark Schill, head of research at the Grand Forks, N.D.-based Praxis Strategy Group, we analyzed the performance of the nation’s largest 124 agriculture economies and put together a list of the strongest ones. We ranked the 124 metropolitan statistical areas based on short- and long-term job growth (2004-14 and 2012-14) in 68 agriculture-related industries (including food processing and manufacturing, wholesaling and farm equipment), average earnings in these communities, earnings growth, and the share of agribusiness in the local workforce.

Short On Water, But Still In The Lead

California may be struggling with a terrible drought, but its agricultural economy still thrives in the domestic and international markets. Six of our top 10 U.S. agricultural economies are in California, including No. 1 Madera, No. 3 Merced and No. 6 Bakersfield. These California regions have a similar profile: an outsized concentration in agribusiness, roughly 10 times the national average, reasonable growth, and low but rising wages.

All these areas did poorly during the recession, and some, notably Merced, have served as exemplars of what The New York Times described as the “ruins of the American dream.” Many California farm communities, particularly those closer to the ultra-pricey Bay Area, hoped that lower land prices would bring skilled workers, and maybe jobs, to their towns from places like Silicon Valley.

But if this aspiration to become a high-tech exurb has floundered in many places, the traditional agricultural economy has continued to roll along. Since 2004, agribusiness employment in our top-ranked agricultural economy, Madera, has surged 36.6%, which is impressive given that nationwide over the same time span, agribusiness employment has remained pretty much unchanged. Although pay for local agriculture-related jobs remains relatively low, wages have risen 15.7% over the past decade to $26,557 for the 14,700 people in this sector. (Note that farm owners on the whole are doing quite well. In 2013, the average farm household income was $118,373, according to the Congressional Research Service, 63% higher than the average U.S. household income of $72,641.)

The key to California farming is dominance in specialized, high-value sectors. California accounts for a remarkable 80% of the world’s almonds, and that lucrative cash crop has been key to Madera’s prosperity — the county produced $623 million worth of almonds in 2013. The area is a big producer of milk and grapes as well, and has a thriving organic farm sector.

Most of the other California leaders share a similar profile, but with sometimes different specializations. Grapes dominate No. 3 Bakersfield’s agricultural production, while Salinas (eighth), where we have both worked as consultants, describes itself as “the salad bowl of the world,” growing 70% of the nation’s lettuce. The area’s specialization in “fresh” has also made it a center of agricultural research and marketing, which provide higher-income opportunities than more traditional farm-based activities. The Salinas area  has also developed a thriving winery scene along the nearby Santa Lucia Mountains as well as a burgeoning number of organic farms production sector in recent years.

Heartland Hotspots

The other hot spot for the agriculture economy is the nation’s breadbasket. Our second-ranked agriculture hub, Decatur, Ill., grows the cash crops that built Middle America — corn and soybeans cover 80% of the area’s land. Due largely to the more mechanized nature of the area’s wet corn milling industry, and the large related industries, notably Archer Daniels Midland, the average local agribusiness worker makes $85,900 a year, almost three times the wages in Madera and other California farm areas.

In fourth place is St. Joseph, a metropolitan statistical area that straddles the Missouri and Kansas border. The area has become a major center for food processing companies – particularly meat — as well as animal pharmaceuticals. It’s a major hub along the Kansas City Animal Health Corridor, where nearly a third of the $19 billion global animal health industry is concentrated.

Other heartland growth areas include No. 11 Grand Island, Neb., No. 12 Evansville, Ind., and No. 14 Waterloo-Cedar Falls, Iowa. All these areas specialize in the agribusinesses that have long defined agriculture in the Midwest: cattle, grains and corn.

Just two areas in our top 10 are outside California and the heartland. Yakima, Wash., markets itself as the “fruit bowl of the nation,” and accounts for roughly 60% of the nation’s apple production, as well as a major share of cherries and pears. About 30% of the local workforce is employed in agriculture or related businesses. Perhaps the most surprising entrant on our list is the only large metro area in the top 10: ninth place Atlanta-Sandy Springs-Roswell. While agribusiness is not dominant in Atlanta, it makes the list due to high rankings in agribusiness wages ($74,932, 2nd) and wage growth (up 24.5% since 2004). This is driven by high-value sectors such as flavoring syrups and concentrates for the beverage industry (Coca-Cola is based in the city), farm machinery manufacturing, coffee and tea, and breweries. Its high ranking also reflects the vast sprawl of the area, which still also includes many large poultry producers, as well growers of rye, peanuts and pecans.

The Agricultural Future

Even as population growth slows in the United States and other developed nations, higher birth rates in emerging markets mean the world will require a 70% increase in food production by 2050. The shift of China alone from self-sufficiency in grains such as wheat, corn and soybeans to import dependence all but guarantees growth opportunities for American producers.

To be sure, agricultural producers and the areas they are concentrated in face many challenges. Climate change is expected to impact the growing of certain crops. Severe water shortages, like the one California is experiencing, could threaten many agricultural areas throughout the traditionally arid West.

These challenges will force food producers and processors to adapt. But what kind of farms will meet the challenge? It seems likely that most of the demand will be filled by large, often family-controlled concerns, as has been the trend for decades. As of 2012, some 66% of U.S. farm production by dollar value was accounted for by just 4% of the country’s farms. The century-long process of mechanization that has steadily reduced the numbers of farm workers has moderated in recent decades. The farms of the future are increasingly high-tech and run by highly skilled professionals and technicians.

Simply put, large producers tend to be better suited to adapt to change, and particularly at marketing abroad. But at the same time, we can expect growth in more specialized fields, such as organic fruits, vegetables and meat as well as wine and specialty products, like olive oil. In fact two California areas known for artisanal production have logged considerable growth in recent years and placed highly on our list: Napa (13th) and Santa Maria-Santa Barbara (16th). In future years, we can expect that many other areas, even in the heartland, may look to these niches for profits.

The notion of a stable peasantry, so important in a country like France, and the romantic attachment to farming among many urbanities, does not apply to most of rural America.

As de Tocqueville noted in the first half of the 19th century, agriculture in America is a business. “Almost all farmers of the United States,” he observed,” combine industry with agriculture; most of them make agriculture a trade.”

The idea of living on the land may impress old hippies, urban exiles and hipsters, but for most U.S. agricultural communities, the attachment comes from producing jobs, incomes and opportunities for local residents. This may not be as utopian an approach as some might like, but it has brought more food to more tables than any farming economy in the world.

To determine the top regions for agribusiness, Mark Schill of Praxis Strategy Group, mark@praxissg.com, examined employment data in 68 ag- and food production-related industries, including crop and animal production. Only metropolitan areas with at least 5,000 total jobs in the 68 industries are included in the analysis. The five measures are equally-weighted. Location quotient is the local share of jobs in agribusiness divided by the national share in the same industry group. Data is from Economic Modeling Specialists, Intl (EMSI).

Joel Kotkin is executive editor of NewGeography.com and Roger Hobbs Distinguished Fellow in Urban Studies at Chapman University, and a member of the editorial board of the Orange County Register. He is also executive director of the Houston-based Center for Opportunity Urbanism. His newest book, The New Class Conflict is now available at Amazon and Telos Press. He is also author of The City: A Global History and The Next Hundred Million: America in 2050.  He lives in Los Angeles, CA.

Mark Schill is a community process consultant, economic strategist, and public policy researcher with Praxis Strategy Group.