The idea that agriculture in New Mexico is small-time business with field hand jobs is being scrutinized by agricultural economists at NMSU, who are using a new economic impact modeling program to ascertain the industry's full impact.
Nick Ashcroft, economic development specialist, and John Fowler, agricultural economics professor, constructed a computer model that reflects the 15 major crop and livestock commodities produced in New Mexico, quantifying the effects of industry expansion and contraction.
The model tracks farm sales and related industries. From 1991 to 1993-baseline years used for analysis-sales from farms and ranches averaged $1.32 billion. At the same time, total services to farmers averaged $207 million annually. Finances, insurance and real estate businesses related to agriculture were worth $202 million. Wholesalers racked up another $125 million in agricultural business.
Total direct value of industry derived from New Mexico farming and ranching, including services and processing, was close to $3.8 billion annually. Indirect economic activity stemming from the industry created another $2 billion for the economy. Over this time period, the industry accounted for almost 47,000 jobs, 82 percent of which were off the farm or ranch and many of them well-paid. The total economic impact accounted for almost 10 percent of the state's $60 billion economy.
All of this was in the early days of the dairy boom in the state. Since then, the dairy industry (including culled cows used for meat) has become the largest agricultural production sector in the state. Dairy sales alone in 1996 accounted for more than one-half billion dollars. Dairy processing is clearly the largest agricultural product processing sector. The boom is probably not over, says Jim Libbin, NMSU professor of agricultural economics.
"There is plenty of room for growth in the dairy industry in places like Tucumcari and Clovis, and there is almost no dairy industry in the Estancia Valley," he says. "Since dairies are relocating to the plains states, they can certainly relocate in the Clayton area."
And the dairy industry is in a growth mode nationally for practically all of its products, except fluid milk, Libbin says. That is why cheese plants have been a growing part of the New Mexico landscape. Dairy processing accounts for a total economic impact of more than $500 million in business annually.
Steady, rather than dramatic growth, is the mark of agriculture in the state when viewed as a whole. Corporate decisions in other states often make or break many businesses in New Mexico, as the building of the Intel plant and the closing of Levi Strauss and L'eggs plants in New Mexico attest. Agriculture has the advantage of being geographically tied to the state's resources. The industry is renewable and diversified enough to be stable.
From 1982 to 1992, farm and ranch sales grew steadily from about $1 billion to $1.5 billion, while oil and gas revenues lurched wildly between heady highs and depressing lows and back again.
Stability in agriculture obscures wrenching change within the sector due to prices in a given commodity, changes in public policies, changes in weather or shifts in technology or consumer tastes. At the same time Libbin sees growth for New Mexico agriculture, he doesn't see any dramatic expansion of agricultural lands.
"We're pretty much limited in acreage by access to water," he says. Shifts in what is grown will be likely, however, with increases in alfalfa and corn silage-fueled by the demand of dairies-and more high-value vegetables. Libbin conducted a study that showed onions to be New Mexico's most profitable crop in the long-term. His report was followed by a banner year for onion producers.
"One of the things I'm excited about is that for the past year or two a processor has been buying New Mexico onions," he says. New Mexicans also are beginning to smell garlic in the air around farm fields, and a major spice plant in Doña Ana County started a new high-value industry.
Pecans continue to grow in acreage as transplanting technology allows large trees to be thinned from orchards and moved to new fields.
Competition looks stiff for New Mexico grains, cotton and some cattle enterprises. Dryland grain enterprises in the High Plains are vulnerable to dry years, and the drought could accelerate the transition of dryland farms to grass and grazing land that was started by the Conservation Reserve Program, Libbin says.
Cotton producers in the state depended on high premiums for their long-staple upland cottons developed at NMSU. But the premium has shrunk 60 percent, the boll weevil has invaded the state, and Monsanto is developing new cotton varieties that may allow growers in other states to capture New Mexico's markets.
Beef cattle feedlots are on the decline in the state, and the range livestock industry faces constant pressure to relinquish use of National Forest and Bureau of Land Management lands. The livestock industry still dwarfs crop enterprises and is the most evenly spread through-out the state.
More than that, says Fowler, head of NMSU's Range Improvement Task Force, the livestock industry forms the core of the economy for rural communities across New Mexico. Agriculture in Union County-overwhelmingly in livestock-accounts for about $167 million in economic activity and 23 percent of total personal income.
Agricultural business may not be making headlines, but it is making a living for enough people in New Mexico that it would be a tough industry to live without.