Benchmarks: Arizona's Agricultural Sector

Table of Contents

Introduction
Analysis
    State Overview
    Sector Trends Statewide
    Geographical Distribution
    Arizona Agriculture and Water
    Opportunities and Challenges
End Notes
References

Introduction

This report summarizes the most recent agricultural statistics reported for Arizona and its counties, as well as, historical series in order to provide an overview of agriculture’s role in Arizona’s economy, identify trends in major agricultural sectors at the state and county levels, and bring into focus challenges and opportunities facing Arizona’s agricultural sector.

Analysis

State Overview

Of the 72.6 million acres that comprise the State of Arizona, in 1997 approximately 26.8 million acres were in farmland1 (this figure does not include acres grazed on public lands). The majority of Arizona’s 34.8 million acres of federal and state public trust lands were permitted for grazing. Statewide, 1.2 million acres were in crops2, and approximately 1 million of these were under irrigation (Figure 1). In 1994, agriculture accounted for approximately 80% of all water consumed in Arizona3.

Over the last 20 years, the real value of agricultural output in Arizona roughly doubled. However, due to rapid growth in other sectors of the State’s economy, during the same time period agriculture’s share of Gross State Product (GSP) was cut in half, falling from 3.2% in 1980 to 1.5% in 1999 (Figure 2).

It should also be noted that between 1980 and 1999, the agricultural services sector experienced a more than a 5-fold increase (Figure 2). Since 1950, while the real value of raw agricultural products has remained essentially unchanged, the real dollar value of services, packaging and conveniences paid for by consumers has seen dramatic increases. While advances in production technology have increased yields for most raw agricultural commodities by two- to three-fold, production expenses have also increased as a percentage of cash receipts. For example, it has been estimated that the actual value-added contribution by farmers for each dollar spent on food declined from 16.2 cents in 1950 to 3.3 cents in 1990. Thus, producing more of a raw commodity does not ensure that total farm value received in the aggregate will increase (Tronstad, Aradhyula, and Gonzalez, 1997).

While agriculture’s share of the State economy has declined, the composition of the agricultural sector has also changed. Given changes in transportation and communication technologies, production technologies, and in consumer consumption patterns, the opportunities for Arizona’s agricultural sector are also changing. Some of these opportunities are mentioned in the final section of this report.

In 1999, Arizona export sales of merchandise totaled $10.1 billion, with agricultural sales accounting for $333 million making Arizona the nation’s 32nd largest agricultural exporting state (Office of U.S. Trade Representative). Since 1991 export’s share of farm cash receipts in Arizona has ranged between 15 and 22 percent (U.S. Dept. of Commerce, 2001). Also in 1999, Arizona agricultural exports accounted for 6.8% of total agricultural exports for the United States (Figure 3).

Figure 1

Figure 2

Figure 3

SECTOR TRENDS STATEWIDE

According to Census 2000, Arizona’s population grew 40% over the decade of the 1990s. Rapid urbanization put increasing pressure on Arizona’s traditional agricultural sectors, particularly in the highly productive Maricopa and Pinal counties, which combined are responsible for 49% of total cash receipts in agriculture in Arizona. Farm acreage in Maricopa County was cut in half between 1982 and 1997, and in 1997 was 708,656 acres. Between 1987 and 1997 total farm acreage in Arizona declined 26%, crop acreage declined 12%, and the total number of farms declined by 20% (Figure 1). In 2000 alone, farm acreage declined by 800,000 acres and the number of farms decreased by 200 (2000 Agricultural Statistics).

Arizona agriculture has traditionally been known for the three C’s: cattle, cotton, and citrus. However, over the last 20 years all three of these sectors have experienced decline. Inventory of all cattle has declined 20% from 1980 levels, and the number beef cows is down from 258,000 head in 1980 to 195,000 in 2001. Grazing permits have been dropping due to competing land uses. In 2000, 285,000 acres were planted in cotton, down from the record high of 690,000 acres in 1953. Total acreage in cotton declined 40% and production declined 20% between 1990 and 2000. Yield per acre increased by 30%, but these increased yields were not enough to offset the decline in the real price of cotton (Davis and Tronstad, 2001). During the same time period, grapefruit production fell 77% and orange production declined 32%. Since 1980, total harvested acreage in lemons, oranges, and grapefruit has fallen 35%, 53%, and 61%, respectively. Arizona continues to rank second behind California in lemon production, but now ranks fourth in orange and grapefruit production, having fallen behind Texas.

Despite these declines in the traditional sectors, significant gains have been made in other agricultural products. In 2000, Arizona was ranked third in the nation for production of fresh market vegetables with 153,000 acres devoted to vegetables, melons, and potatoes, more than double the 61,000 acres in vegetables in 1980. With mild winters in lower elevations and cooler summertime temperatures at higher elevations, Arizona has a unique capacity for producing an impressive variety of vegetables year round. Head lettuce accounts for roughly one third of vegetable acreage in Arizona. Arizona ranks second only to California in production of head lettuce, leaf lettuce, broccoli, cauliflower, cantaloupe and honeydew melons (Arizona Agricultural Statistics, 2000). In real terms, the value of Arizona’s vegetable crop increased 120% from 1990 to 715 million dollars in 2000.

Acreage in alfalfa hay has increased 78% since 1994, and all hay production has increased 26% since 1990 to provide for Arizona’s expanding dairy sector. In response to Arizona’s expanding population, the dairy sector has grown from 85,000 in 1980 to 161,000 head in 2000.

Despite declines in major sectors, during the last 30 years there has been no noticeable downward trend in net real farm income in Arizona, although there has been significant volatility (Figure 4). There is evidence that farms over 1,000 acres have been able to increase average cash incomes in the face of declining commodity prices through economies of scale. Between 1992 and 1997 the average cash incomes of these large farms more than doubled (Davis and Tronstad, 2001).

Figure 4

GEOGRAPHICAL DISTRIBUTION

Cash receipts, for both livestock and crops, are greatest in the combined Maricopa-Pinal region (Figure 5). This region contains 68% of harvested acres in cotton, 40% of all hay, 40% of citrus, and 24% of vegetables. Yuma County is the single largest producer of crops, responsible for 68% of total vegetable acreage, 60% of citrus, and 44% of wheat. Vegetables are also an important crop in La Paz and Cochise counties (Figure 6). Apache, Coconino, Santa Cruz, Gila, Greenlee, Navajo, Santa Cruz and Yavapai, are all primarily cattle producers with crops playing only a small role. Sheep are also important in Apache, Coconino, and Navajo counties.

Although the increasingly urbanized Maricopa-Pinal area is the largest producer of livestock and crops in Arizona, agriculture represents a relatively small portion of that area’s economy. However, agriculture is much more significant to the economies of Yuma, La Paz, Graham and Cochise. As the authors of “Arizona’s Traditional Economy” suggest, agriculture is still central to the economic viability of certain towns such as Wilcox and other areas in rural Arizona, and livestock production continues to be important in local economies in parts of Yavapai, Navajo, Coconino and Apache counties.

Figure 5

Figure 6

ARIZONA AGRICULTURE AND WATER

According to the 1997 Census of Agriculture, 43 million acres of agricultural land were irrigated in the American West, and these lands produced 72% percent of crop sales on only 27% of total harvested crop acreage” (Gollehon and Quinby, 2000). In 1990, agricultural irrigation accounted for 82% of Arizona’s consumptive use of freshwater, 36% of this water was surface water from the Bureau of Reclamation, 25% was surface water from private sources, and 39% was from groundwater (Anderson, 1997, p.69). The amount of water required varies greatly by crop and area, as does the income generated. Figures 7 and 8 provide some examples.

Figure 7

Figure 8

OPPORTUNITIES AND CHALLENGES

Challenges faced by Arizona agriculture:

• The value of agricultural output is greatest in the increasingly urbanized counties of Maricopa, Pinal, and Yuma, and it is necessary to consider the health concerns of urban residents. The application of herbicides and defoliants, dust control, odor, and water quality and use are all facing increased regulation.
  
• Given the large portion of Arizona’s water resources currently devoted to agriculture and the rapid growth in other sectors of the State’s economy, it should be expected that agriculture will face increasing competition for water resources.
  
• Competing land use issues have become more important. Agriculture must now compete with recreation, wildlife preservation, and urban expansion.
  
• Increasing regulation of agricultural practice could make it more difficult for commodity producers to compete in global commodity markets.
  
• Due to volatility in farm income, Arizona agriculture is very sensitive to changes in federal farm policies.

Opportunities for Arizona agriculture:

• Consumers are exhibiting an increased propensity to consume quality and convenience foods. Other shifts in consumption patterns include increasing consumption of fresh vegetables and tropical fruits; reductions in beef consumption, with increases in white meat. Concerns regarding sanitation, pesticides, herbicides, and environmental issues have also significantly impacted food consumption patterns (Tronstad, Aradhyula, and Gonzalez, 1997). These shifts in food markets and consumption patterns could be advantageous to Arizona’s expanding fresh vegetable sector and provide increased opportunity to the agricultural services industry.
  
• Producers have the opportunity to capture more value added from agricultural products through customizing products to meet the needs of specific markets and targeting consumer preferences. Davis and Tronstad point out some notable examples in Arizona including the remarkably successful Ervin’s Natural Beef company which targets consumers wishing to eat tender, organically grown, grass fed beef and/or to support the company’s practice of good environmental stewardship. The Eurofresh company in Safford is committed to providing flavorful, nutritional and pesticide-free hydroponic tomatoes year round.
  
• The availability of geographic information systems (GIS) can provide data to help foster more efficient management strategies for pesticide, fertilizer, and water use. Producers may also be able to use this detailed information to more efficiently customize crop characteristics. This technology may also help in combating disease outbreaks.

End Notes

1 “Land in farms” consists primarily of agricultural land used for crops, pasture or grazing. This figure includes acres in Conservation Reserve and Wetlands Reserve Programs. “Land in farms” as an operating unit includes land owned and operated as well as land rented from others. All grazing land, except land used under government permits on a per-head basis, was included provided it was part of a farm or ranch. For details see Appendix A, p. A-8 of 1997 Census of Agriculture, Arizona, State and County Data, Vol. 1, Geographic Area Series, Part 3. For the definition of “Farms” by North American Industrial Classification see p. A-6 of same document.

2 “Total cropland” includes land from which crops were harvested or hay was cut; orchards, citrus groves, vineyards, nurseries, and greenhouses; cropland used only for pasture or grazing; land in cover crops; and idle cropland. For details see Appendix A, p. A-10 of 1997 Census of Agriculture, Arizona, State and County Data, Vol. 1, Geographic Area Series, Part 3.

3 Arizona Department of Water Resources, 1994 estimate. Although agriculture is the main user of water in Arizona, this portion is expected to decline as municipal and industrial uses continue to increase. University of Arizona Arizona Statewide Economic Study 2002 2

References

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