Beyond Arizona Agriculture's $31 Billion Number
Author
Published
1/13/2025
Released November 19th, Arizona agriculture and agribusiness’ overall economic contribution to the state is now $30.9 billion, a number based primarily on the United States Department of Agriculture’s (USDA) Census of Agriculture. This nearly $31 billion represents an almost $8 billion dollar increase over the previous $23.3 billion number released back in 2017. Any new economic numbers in the agriculture industry in Arizona can only be calculated and released after the latest USDA Census of Agriculture, conducted every five years.
The Department of Agricultural & Resource Economics, University of Arizona Cooperative Extension’s economic team of Claudia Montanía, Dari Duval, George Frisvold, José Quintero first announced the numbers at Arizona Farm Bureau’s Annual Meeting in Tucson last November. The team’s primary data set was the Census of Agriculture but rolled in other economic data sets including Department of Labor numbers related to employment in the agriculture and agribusiness sectors.
Recognized along with colleagues Ashley Kerna Bickel and Dari Duval for the Extension’s Economic Impact Assessment Team Award in the past, George Frisvold, Ph.D., leads what I personally call the “A-Team” in economic research. Their agricultural-based economic assessments on the local, state, and national levels have helped define and advance the true contributions of Arizona agriculture’s now nearly $31 billion industry. Dr. Frisvold and his current team approach their economic research with the expected caution, calmness, and curiosity required of one mining for nuggets of gold, but in their case information and knowledge.
Joining the faculty at the University of Arizona in 1997, Dr. Frisvold previously was a visiting scholar at the National Institute of Rural Development in Hyderabad, India, a lecturer at Johns Hopkins University, and Chief of the Resource and Environmental Policy Branch of USDA's Economic Research Service.
His research interests include domestic and international environmental policy, as well as the causes and consequences of technological change in agriculture. In 1995-96, Dr. Frisvold served as a Senior Economist for the President's Council of Economic Advisers with responsibility for agricultural, natural resources, and international trade issues.
He is currently the Bartley P. Cardon Chair of Agribusiness Economics and Policy and an associate editor for two journals: Pest Management Science and Water Economics and Policy. In 2020, Dr. Frisvold co-authored the National Academies of Science, Engineering, & Medicine report, Safeguarding the Bioeconomy: Finding Strategies for Understanding, Evaluating, and Protecting the Bioeconomy while Sustaining Innovation and Growth.
Despite the challenges facing Arizona and American agriculture including not having an updated farm bill, Arizona’s economic numbers in the agriculture sector were welcome news. To Dr. Frisvold and others, they reflect a resiliency in a critical and “must-have” industry. As former Arizona Farm Bureau President Stefanie Smallhouse likes to say, “We don’t farm in the desert despite it, but because of it.” Those 300-plus days of sunshine and robust soils and talented farmers mean the efforts to make agriculture and agribusiness successful in Arizona pay off in healthy numbers despite challenges.
Arizona Agriculture: Based on the numbers outlined in the introduction of this article, what is the most important takeaway to this study that you'd like to share with our Arizona farmers and ranchers?
Dr. Frisvold: Despite several challenges, Arizona agriculture and agribusiness are still going strong. A number of stakeholders have emphasized that there’s a lot of economic activity in terms of post-harvest packaging, warehousing, distribution and processing that need to be accounted for. We’ve listened to and included that in this latest economic report.
For a thorough assessment, all agriculture and agribusiness require data mining, and this economic report does that.
Arizona Agriculture: I recall last year you'd mentioned our $23.3 billion number was a bit "long in the tooth." In other words, it had been some time since the last study. But explain to our readers why this is the case, especially because of the USDA Census of Agriculture.
Dr. Frisvold: The USDA Census of Agriculture is conducted every five years. The most recent survey year was 2022. Our new results are based on that year. Previous surveys were conducted for 2017 and 2012. Our last economic impact contribution relied heavily on the 2012 Census, so it’s just over 10 years old, so yes, it’s “long in the tooth.”
We like to base analysis off the Census of Agriculture because it is the most detailed survey of U.S. agriculture. We also rely on other annual survey data from other USDA surveys, the Department of Commerce, and the Department of Labor. Each data source provides some unique information about Arizona, but each one also leaves things out.
It’s good to look at all these different sources together with the Census to get a more complete picture of what is going on. We also like to compare numbers across different data sources to check for consistency. The Census of Agriculture picks things up, especially at the county level that no other survey does. Because agricultural production and prices are so volatile, you don’t want to do this kind of study every year because the number would bounce up and down year-to-year. Ten years is too long between studies, but I think every five years is about right. So hopefully we’ll get a new number out as soon as possible after the 2027 Census of Agriculture.
Arizona Agriculture: On the big number at nearly $31 billion, you told me that’s not really the number you pay attention to. Why and what do you extrapolate from the data that really excites you?
Dr. Frisvold: To be honest, economists don't pay too much attention to that top-level total sales contribution number. Sales is a number that is easiest for most people to understand. Economists would focus more on value-added (equivalent to GDP), which is a smaller net, number. I find that the parts that go into that $31 billion number are more meaningful.
Yuma is the center of U.S. winter vegetable production. Nogales is a center of border food trade. There's a giant beef and dairy complex in the center of the state that serves the Phoenix metro area, the 10th largest metro area in the country. Up north there is public lands ranching and tribal agriculture that feeds into that Central Arizona beef complex. Plus, there is even a small but growing winery sector. The diversity and national importance of Arizona agriculture is really difficult to capture in any single number.
There’s been a lot written recently about water used to produce alfalfa, but also people’s desire for local food. The vast bulk of feed and forage production in Central Arizona is supporting beef and dairy products going to the Phoenix and Tucson metro areas. Alfalfa is the local food of your local food.
Arizona Agriculture: What was your combination of datasets used to compile these numbers and why is this grouping so important to understanding the economic impact of Agriculture in our state?
Dr. Frisvold: I mentioned the USDA, Commerce, and Labor data we use already. In addition, we use the data and software from the IMPLAN model to measure multiplier effects. IMPLAN is a proprietary input-output model economists use to estimate how spending in some sectors of the economy affects spending in other sectors.
For example, agricultural producers buy inputs, agricultural input producers in turn need inputs that they buy from other industries. Those industries require inputs, and so on. So agricultural production sets off a chain reaction of demand and spending that we would not have in Arizona if not for agriculture.
A lot of this spending is outside of agriculture. Farmers, ranchers, and their employees also spend their profits and salaries on consumer goods and services. Spending on these consumer goods and services are mostly non-agricultural, but the spending wouldn’t happen if not for agriculture. These multiplier effects mean that Arizona agriculture generates incomes and supports jobs in industries far beyond agriculture. The direct effects of agriculture are things anyone can estimate just looking at federal statistics.
The IMPLAN model, by estimating these multiplier effects is the “secret sauce” that captures the full contribution of agriculture to Arizona’s economy. Now IMPLAN’s basic framework is based on much of the data we also use, but their coverage at the county level can be spotty. Also, their base model assumes national averages of costs of production, output per worker, etc. Relying on national averages for agricultural production can really bias results.
Arizona production tends to have higher costs and higher yields than the national average. So, we have to take the data and model variables from IMPLAN and re-adjust them to accurately reflect Arizona agriculture. The detailed Census of Agriculture data is really vital to get estimates that accurately reflect Arizona production conditions.
Arizona Agriculture: We've had some big hits lately in agriculture with water cuts especially, why is this data so significant despite our challenges in agriculture?
Dr. Frisvold: The data show that producers are innovating and diversifying into higher-value production to get more value per drop of water. Despite these cuts, Central Arizona is still a national hub of agricultural production. Cuts have been sharper since 2022, so we’re monitoring things on the ground at the county level to see how and how well growers are adapting.
Arizona Agriculture: Okay, now I'm asking you to be the philosopher, perhaps a pontificator, not the economist. Why is Arizona agriculture so significant as an economic driver in this state? What should we as agriculturists be discussing besides the big number?
Dr. Frisvold: The entire Arizona agribusiness system provides unique things to the nation as a whole, not just to the state. Arizona agriculture is extremely productive, especially relative to other parts of the Colorado Basin. So as disputes over Colorado River water use continue (and they are sure to continue) it is important to keep in mind what agriculture does for consumers not just in Phoenix and Tucson, but what it contributes to food production nationally and regionally.
Arizona Agriculture: Are there any stories behind some of these numbers that are important for us to hear about?
Dr. Frisvold: We estimated the agribusiness system directly and indirectly supported more than 126,000 full- and part-time jobs, employing more than 160,000 unique workers. This estimate of unique workers is likely an underestimate. Different federal agencies and surveys have estimates of people employed in agriculture. Each source is incomplete, and numbers are not consistent across sources. More people are working in agriculture than the “official numbers” (and there are multiple “official numbers”) suggest. We try to account for this, but we’re still conservative. Also, seasonal peaks in employment will be much higher than estimates averaged over a year.
Arizona Agriculture: What was most surprising and why?
Dr. Frisvold: Going in, we already knew that the big three agricultural counties – Maricopa, Pinal, and Yuma – were agricultural powerhouses, ranking in the top 1% of all U.S. counties in a number of agricultural sales indicators.
What surprised me was the strength of Arizona’s other counties. Cochise County is in the top 10% of all U.S. counties in total crop sales and top 8% in vegetable sales. Graham County is in the top 10% in cotton and cottonseed sales. Apache, Coconino, Mohave, Navajo, and Yavapai are in the top third of all U.S. counties in vegetable production.
In terms of vegetable production in the state, these counties are swamped by Yuma, whose sales are greater than 99.9% of all other U.S. counties. Sales in these Northern Arizona counties are small relative to Yuma, but they are significant relative to other U.S. counties. So, there are interesting shifts in Northern Arizona toward higher value vegetable production. A lot of this is happening on Tribal farms. It’s something I want to explore further.
Arizona Agriculture: How do we use these numbers for the future?
Dr. Frisvold: I can say a little about how the old number was used. Members of Congress use it when writing to the Executive Branch about trade disputes and policies. It’s used in comments to EPA about implications of pesticide regulations. At the University of Arizona, researchers use the number when applying for competitive federal grants to highlight potential benefits of research. State agencies use during policy debates over the allocation of Colorado River waters. Now these groups can cite a more up-to-date number instead of one a decade old. With state-level policies, such as groundwater regulation, I think it focuses attention on the value of agriculture and the costs of taking water away from agriculture.
Arizona Agriculture: These numbers, certainly the USDA Census of Agriculture numbers, are a historical moment in time. In fact, the numbers were captured in 2022 and here we are at the beginning of 2025. Help us understand the significance despite the historical timeframe of the numbers.
Dr. Frisvold: With this type of analysis, we are always looking in the rear-view mirror. USDA conducted the Census of Agriculture in 2022, but didn’t release the data until mid-February of 2024. So, for our Regional Economic Analysis (REAP) team, it was “all hands-on deck” to get the analysis complete by last November.
People get frustrated with the lags in the data. Anyone can look at prices on their smartphones and have a number for today. For sales and production, though, there are lags of a year or more. Also, several agencies update their numbers repeatedly. So, we must wait until the “dust has settled” before conducting analyses.
The numbers show that as of 2022, Arizona agriculture and agribusiness are going strong. We’re the national epicenter of winter vegetable production. We’re a hub of U.S.- Mexico agricultural trade. We have a large dairy, beef, and feed complex that provides local food to the 10th largest metro area in the country. We have a small but growing wine industry in the state and growing vegetable production in Northern Arizona. So, there’s a promising combination of traditional strengths and diversification and innovation. Going forward, Arizona is going to face challenges with water availability, labor availability and global trade disputes. But I think the overall numbers signal, so far so good.