Economic Contribution of the Soybean Industry to the North Dakota Economy

Abstract

The purpose of this study was to measure the economic contribution of the soybean industry to the North Dakota economy. Expenditures and returns from soybean production, grain handling, and transportation were estimated to calculate the direct economic impacts from soybean activities. Secondary economic impacts were estimated using the North Dakota Input- Output Model. Soybean production in North Dakota has trended upward over the past three decades. Increases in acreage were relatively modest in the 1980s, but by the mid 1990s acreage was beginning to rapidly expand. In 1990, North Dakota had about 500,000 acres of soybeans. By 2000, acreage had increased to 1.9 million acres. By 2009, soybean acreage in the state was approaching 4 million acres. Direct impacts (expenditures and returns) from soybean production averaged $312 per acre or$1.1 billion annually from 2007 through 2009. Average direct impacts from handling soybeans at North Dakota elevators were estimated at $27.5 million annually. Transportation of soybeans to market destinations was estimated to generate$49.8 million in annual direct impacts to the state. Total direct impacts from soybean production, grain handling, and transportation were estimated at $1.2 billion annually. Total annual economic impacts (direct and secondary effects) from soybean production, grain handling, and transportation were estimated at$3 billion, $75.9 million, and$129 million, respectively. The total annual economic impact from all soybean activities was estimated at $3.2 billion. Soybean industry activities supported 11,400 full-time secondary jobs in North Dakota. Soybean activities were also responsible for$85 million in combined property tax, sales tax, individual income tax, and corporate income tax revenues. Based on comparison to economic impact estimates from the 1996 through 1998 period, the economic contribution of the soybean industry in North Dakota increased by $2.4 billion or by 306 percent in real terms. Much of the increase in the gross business volume of the industry has come from a three-fold increase in soybean production combined with higher crop prices, handling margins, and transportation rates