Minnesota’s Animal Agriculture Industry Report - By Governor Tim Pawlenty’s Advisory Task Force - Animal agriculture is a vital part of Minnesota’s economy. In 2001 (the most recent year for which data were available), cash receipts from livestock production totaled nearly $4.3 billion - roughly 53 percent of the state’s overall agricultural sales.

Executive Summary

The full economic impact of Minnesota’s livestock production exceeds $10.7 billion when indirect and induced outputs are considered. In addition to being a major economic driver, livestock production is a major employer. The industry is credited with supporting nearly 100,000 jobs (directly providing nearly 28,000 jobs and creating business activity that supports 70,000 more). Animal agriculture also generates significant demand for Minnesota’s largest agricultural crops through animals’ consumption of feed grains. Minnesota livestock annually consume roughly 20 percent of Minnesota’s corn and soybean crops. This local demand adds value to the crops - it is estimated that animal agriculture adds more than $2 billion to the value of Minnesota crops.

Unlike some states dominated by one species or business model, Minnesota’s animal agriculture industry is diversified in terms of livestock species, farm size, and business model. This diversity is important because it gives the industry resiliency and flexibility. The Governor’s Livestock Advisory Task Force recognizes the value and importance of all livestock operations and seeks to preserve and expand opportunities for all of them. As such, the recommendations included in the task force report are designed to have relevance for all Minnesota livestock operations regardless of size, location, business structure or livestock species.

Statement of NeedWhile Minnesota’s livestock industry is a major economic force, its future is uncertain. As input costs have increased and commodity prices have remained relatively static, profit margins for farmers have shrunk. This has driven some farmers out of business, while others have chosen to farm part-time and work off the farm to supplement their farm income. Some have chosen to switch to alternative farming methods such as organics, which offer potentially higher per-unit returns in exchange for higher production costs.

For others, the answer has been to try to increase the number of acres or animals to offset the declining per-unit returns. As profit margins dwindle and business costs and family costs increase, farmers find they need to modernize and increase their efficiency simply to generate a livable income. However, attempts to expand or improve their facilities are sometimes met with resistance by those who are opposed to these changes.

The state’s dairy sector, once the crown jewel of Minnesota agriculture, is leaving the state at an alarming rate. In the last 10 years, Minnesota lost 173,000 dairy cows, 21 dairy processing plants and hundreds of millions of dollars in related economic activity. This loss is underscored by the recent decision by Associated Milk Producers Inc. (AMPI) to close its dairy processing facility in Glencoe, Minnesota. While the short-term status of the pork, poultry and beef sectors appears more stable, there are concerns about their long-term competitive ability as well.

To address this problem, Governor Tim Pawlenty announced the formation of the Livestock Advisory Task Force (LTF) in November 2003. Governor Pawlenty directed the task force to evaluate the status of Minnesota’s animal agriculture industry and make recommendations to support its retention and growth in Minnesota.The 14-member task force included representatives from the state’s livestock industry, as well as agricultural finance, producer organizations, academia, and state government.

Task force members met throughout the winter and spring of 2004, listening to presentations from local government officials, agricultural officials from other states, university officials and others. These presentations and the task force discussions that followed were designed to gather information and perspectives about the status of Minnesota’s animal agriculture industry and about potential initiatives to improve its long-term prospects. The result is the list of recommendations in this report. In addition to the recommendations for Governor Pawlenty, this report provides background information about Minnesota’s animal agriculture industry and the economic and social trends driving its continuing evolution. This information is included to provide readers with some of the same information the task force used when developing the recommendations.

To read the full report, please click here (60 Page PDF)

Source: Minnesota Governors Office - July 2004