How Agriculture Supports the American Economy and Main Street Businesses

Agriculture is a cornerstone of the American economy, extending its influence well beyond the confines of fields and farms. It nourishes populations at home and worldwide while supporting diverse jobs across sectors. The agriculture industry underpins the broader business community, fuels the nation every day, and is a substantial contributor to the U.S. economy.

The following data underscores the pivotal role of American agriculture in bolstering economic prosperity on main streets across the United States.

Agriculture Is Essential to the American Economy

In 2023, agriculture, food, and related industries contributed approximately $1.53 trillion to the U.S. economy, accounting for 5.6% of the total GDP. This encompasses a wide collection of sectors, including farms, food services, textiles and leather manufacturing, food and tobacco manufacturing, forestry and fishing, and food and beverage stores.

As a significant contributor to the nation's GDP, the agricultural sector not only sustains rural communities but also fuels urban economies through a complex web of supply chains and business activities. The impact of production and agricultural exports extends far beyond the farm gate, sustaining local, national, and global economies.

Food Spending Supports Many Sectors

When a consumer spends $1 on food produced in the U.S., just $0.07 of that dollar goes back to the farmers. The rest supports the wrap-around industries that deliver, sell, and market food products to consumers, including food services, food processing, retail, wholesale, energy, transportation, finance/insurance, and other sectors. This ripple effect of the food dollar stems from agricultural activities and directly benefits local restaurants, supermarkets, and other Main Street businesses.

Food & Agriculture Supports More Than 34 Million Jobs

In 2022, there were more than 22 million people directly employed by the agriculture and food sectors, representing 10.4 percent of total U.S. employment. The largest share of these jobs is in food services, including restaurants and bars. Overall, the people working directly in the agriculture and food sectors-those working on farms, in food and beverage stores, in forestry or fishing, or in food, beverage, and tobacco manufacturing-contribute nearly $3.8 trillion in economic output and earn wages amounting to nearly $1 trillion.

Additionally, people working indirectly with the agriculture and food sectors comprise over 12 million additional jobs, contribute nearly $3.1 trillion in economic output, and earn wages amounting to $915 billion.

This cascading effect is what makes the agriculture and food industries so vital to local business, workers, and economies across the country. Agriculture stimulates job creation among suppliers and adjacent businesses including communication firms, finance and technology industries, the local real estate market, manufacturing plants, and various entertainment venues. This interconnectedness supports small businesses and fosters a sense of joint community resilience and prosperity.

Exports Are Critical to American Agriculture

The U.S. is one of the world's largest agricultural exporters, and American farmers and ranchers depend on exports. Around 20% of U.S. farm products by value are exported each year, according to the American Farm Bureau Federation. Agricultural exports reached $175 billion in fiscal year 2023.

For many crops, such as wheat or almonds, more than half the harvest is sold abroad. U.S. farmers and ranchers are so productive there's no way Americans could consume this bounty alone. The Farm Bureau estimates that one American farm produces enough to feed 166 people annually, making exports essential to the prosperity of the U.S. farm and ranch economy.

The competitiveness of U.S. agriculture reflects the strength of the entire supply chain, including manufacturing, logistics, and financial services. When U.S. agricultural products are in high demand internationally, it indicates that the country is producing high-quality goods efficiently, which is a positive signal for investors and businesses alike.

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Farm and food market exports drive significant economic activity. According to USDA estimates, each $1 in agriculture exports generates over $2 in additional domestic economic activity.

Grain exports, for instance, boost farm activity through input purchases like fuel and fertilizer, which stimulate manufacturing, trade, and transportation sectors. Exporting grain also requires data processing, financial, legal, managerial, and administrative services.

In 2022, U.S. agricultural exports worth $197.4 billion generated an additional $214.6 billion in economic activity, totaling $412 billion. The services, trade, and transportation sectors benefited the most, with $73.6 billion in additional activity, while on-farm exports supported an extra $70.4 billion in business activity.

Exports are critical to the prosperity of American farmers and ranchers. Hungry customers around the world consistently demonstrate a high level of demand for their products, and U.S. farmers and ranchers benefit greatly from export earnings. The financial stability exports help provide is crucial for businesses across all sectors, as it fosters a favorable economic environment characterized by low inflation, stable interest rates, and increased investor confidence.

Agriculture Exports by State

The agricultural landscape of the U.S. is as diverse as it is expansive, with each state adding its unique offerings to both export markets and its local economies. California is the leading state in export value, with tree nuts reigning as its premier export. Other significant contributors include Iowa, Illinois, Minnesota, and Nebraska, each renowned for their soybean exports. Dairy is the chief agricultural export for Idaho, New Mexico, Wisconsin, and New York, while pork is king in North Carolina.

Sustainability and the Future of Agriculture

Focusing on sustainability and precision agriculture is essential for ensuring the competitiveness of the U.S. in agricultural production and exports. Precision agriculture technologies could increase U.S. crop production by 4% and reduce input costs by 7%, which would generate nearly $13 billion in net farm income annually. These technological innovations not only improve the profitability of farms but also position the U.S. as a leader in cutting-edge agricultural practices.

By continuing to adopt sustainable practices, American farmers are reducing environmental impact, conserving natural resources, enhancing soil health, and sequestering carbon, leading to more resilient and productive farming systems. Conservation practices, which are a key component of sustainable agriculture, have led to a 58% reduction in soil erosion on cropland since 1982. This both preserves soil health and enhances long-term agricultural productivity.

By prioritizing sustainability and regenerative and precision agriculture, the U.S. can meet the growing global demand for high-quality, sustainably produced food - strengthening its competitive edge in international markets and securing long-term economic growth in the agricultural sector.

The 2024 Farm Bill

Agriculture provides a robust economic value to the American economy and Main Street businesses, which is why the U.S. Chamber of Commerce supports the passage of the 2024 Farm Bill.

This bill promotes global food security, exports, and trade of U.S. products and services, strengthening U.S. businesses and economic prosperity. It incentivizes the development of climate-smart and resilient agriculture through voluntary practices and conservation programs.

It also provides funding for rural development programs to support affordable electricity, water infrastructure, and broadband access. The bill also continues support for farm safety nets and risk management tools while catalyzing technology innovation to increase sustainable production and environmental stewardship. The Chamber believes that a robust Farm Bill is fundamental to driving economic prosperity and resilience across the nation.

Conclusion

The U.S. Chamber is dedicated to collaborating with stakeholders across the agricultural sector, including industry leaders, community organizations, and policymakers at all levels, to advance the growth and sustainability of American agriculture. This includes our strong support for the Farm Bill, which plays a crucial role in shaping agricultural policy and ensuring the vitality of farming communities and Main Street economies.

For more information on our initiatives and how we are supporting the agricultural industry, please contact Chuck Chaitovitz at [email protected] or Makinizi Hoover at [email protected].

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