The Impact of Livestock Production A Case Study of Three Missouri Counties

Two seemingly contradictory economic developments are taking place in Missouri. The number of cropland acres harvested is declining while the total value of agricultural products sold is increasing.

The number of acres of cropland in a county normally remains constant or declines. New land can come into production only if pasture, hay or forest land is converted. Conversion is uncommon because most productive land has already been identified and is being used to grow crops. Increasing revenue from a constant or declining number of acres requires that the receipts per acre increase. Fluctuating crop prices can cause temporary increases in receipts. However, to sustain increased revenues per acre requires changing to higher valued crops such as horticulture crops. Widespread adoption of horticulture crops is unlikely given a number of productive and economic factors.

From where, then, is the increase in the value of agricultural products coming? It comes from livestock sales! The number of hogs sold in the state has almost doubled and the number of poultry has increased by almost seven times over the last 15 years. If agricultural receipts are going to rise, or continue to rise, the most likely driver will be increasing livestock production. An analysis of county agricultural receipts, and property and sales tax receipts indicates that increases in livestock production from 1987 to 2002 account for most of the economic growth. Of the 50 counties that had increased agricultural receipts, only two, Mississippi and Pemiscot, did not have significant increases in livestock receipts. Livestock production is the most obvious way to increase agricultural revenues in Missouri.

An analysis of county agricultural receipts, and property and sales tax receipts indicates that increases in livestock production from 1987 to 2002 account for most of the economic growth. Of the 50 counties that had increased agricultural receipts, only two, Mississippi and Pemiscot, did not have significant increases in livestock receipts. Livestock production is the most obvious way to increase agricultural revenues in Missouri.

The following is a comparison of three Missouri counties, two of which experienced a dramatic change in agricultural commodities produced. In 1987, Carroll, Pettis and Vernon counties each had between 1,000 and 1,250 farms on 375,000 to 405,000 acres of land. Each county produced a relatively diverse set of agricultural products, including crops and livestock. Figure 1 shows the similarities among the counties in acreage of land farmed and the market value of agricultural products sold in each county in 1987.

The population in each of the three counties decreased from the 1980 census to the 1990 census, 3 percent in Pettis, 4 percent in Vernon and 11 percent in Carroll. However, between 1990 and 2000, Pettis and Vernon counties experienced an increase in population of 11 percent and 7 percent, respectively. During the same 10 years Carroll County population continued to decrease but at a slower rate of 4 percent.

Between 1992 and 1997 Pettis County experienced a huge influx in the number of poultry in the county. The number of hogs in Vernon County increased by almost 13 times during this same time period. With the increase in animal agriculture in Pettis and Vernon counties, the number of acres of cropland harvest did not change significantly from 1987 to 2002. The number of farms in the three counties has remained relatively stable as Pettis County has lost 3 percent of farms while Carroll County gained 7 percent and Vernon County gained 12 percent.

Figure 1. Market value of crops and livestock sold and acres of farmland in 1987. Source: Census of Agriculture

The number of head of livestock sold in the three counties changed significantly from 1987 to 2002. The number of cattle sold increased by almost 8 percent in Pettis, 9 percent in Vernon and 16 percent in Carroll over the 15 years. The number of hogs sold decreased by 43 percent in Carroll and increased by 26 percent in Pettis and 3,496 percent in Vernon. The were only about 34,000 head of hogs sold in Vernon County in 1987 and by 2002 there were over 1.2 million head sold. There was a similar situation with poultry production in Pettis County. In 1987 none of the three case study counties reported poultry production. By 2002 Pettis County sold over 19.2 million birds while Carroll and Vernon counties reported no significant poultry sales.

The most apparent change besides the total number of animals was in the market value of agricultural products sold (Figure 2). The market value of crops in Carroll County has continued to increase at a relatively steady pace while the value of livestock sold is declining. However, in Pettis and Vernon counties, the value of crops sold remained relatively stable from 1987 to 2002. During this same period, the value of livestock sold more than doubled in Pettis County and almost tripled in Vernon County. The total value of agricultural products sold in these two counties has increased considerably due primarily to increases in livestock production.

Figure 2. Market value of agricultural products sold 1987-2002. Source: Census of Agriculture

Increases in agricultural production impact the local economy. This can be observed in local sales tax collections. Sales tax receipts change due to changes in tax rates or volume of products and services sold. To observe increases in economic activity (products and services sold), tax receipts assuming a 1 percent sales tax are used. Figure 3 shows changes in local sales tax receipts assuming a sales tax of 1 percent. The local sales tax collections have increased by about 100 percent in both Pettis and Vernon counties while increasing only 50 percent in Carroll County. The impact on tax receipts may also be understated due to current sales tax exemptions on livestock sales, purchase of animal feeds and medications and use of farm machinery.

Figure 3. Percent change in local sales tax receipts. Note: Assumes a sales tax rate of 1%. Source: Economic and Policy Research Center, University of Missouri-Columbia

Conclusion:
With a finite land base, increases in crop production will occur from technological advances. These changes have been occurring at a steady yet measured pace. Producers looking for options to add additional income and value to production in order to be able to generate additional income are likely to find that animal production offers the greatest opportunities.

Animal agriculture added a considerable amount of value to agricultural products sold in Pettis and Vernon counties. The difference in market value of agricultural products is significant between the counties with increases in confined animal operation and the county with no increase in animal agriculture. The value of crop production is increasing in Carroll County but at a much lower rate than is seen by the two counties with increased animal production.

Comparison of Agricultural Industries in Three Missouri Counties 1987-2002.