How a 2015 economic study revealed agriculture's $21 billion impact on the state economy
When you think of Arkansas, you might picture sprawling rice fields, dense forests, or bustling poultry operations. But beneath this pastoral surface lies a sophisticated economic engine that powers the state in ways few realize. In 2015, while most Americans were focused on national politics and stock markets, agricultural researchers in Arkansas were crunching numbers that would reveal an astonishing story of economic interdependence.
Their findings would demonstrate that agriculture—a sector often viewed as traditional or even declining—remained a formidable pillar of the state's prosperity, supporting countless jobs and pumping billions of dollars into local communities.
What these economists discovered challenged conventional wisdom about modern economies. Even in our technology-driven world, the fundamental business of growing food and fiber continues to generate surprising economic ripple effects that touch nearly every corner of the state. Through rigorous data analysis and economic modeling, they quantified precisely how agricultural production stimulates downstream processing industries, supports retail sectors, and creates paychecks for hundreds of thousands of Arkansans. This is the story of how they measured the immeasurable—and what their findings mean for the future of rural America.
When researchers from the University of Arkansas embarked on their comprehensive analysis of agriculture's economic contribution, they employed a sophisticated approach that looked beyond simple farm production numbers. Their study examined the entire agricultural value chain—from direct farm production to processing and manufacturing, and finally to the induced effects that occur when agricultural workers spend their earnings in local communities 4 .
The results were striking. As illustrated below, the agricultural sector contributed substantially to three critical economic indicators: employment, labor income, and value-added economic activity.
Jobs Supported
Value Added to Economy
of State Employment
Source: Economic Contribution of the Agricultural Sector to the Arkansas Economy in 2015 4
For every direct agricultural job, approximately three additional jobs were supported elsewhere in the economy 4 . These indirect jobs appeared in sectors ranging from transportation and manufacturing to retail and professional services.
The sector's $21.04 billion contribution to value-added represented approximately 16% of Arkansas's total economic output 4 . This percentage significantly exceeded agriculture's typical contribution to national GDP.
Understanding how economists arrive at these comprehensive figures requires a peek into their methodological toolkit. The Arkansas researchers relied on the Impact Analysis for Planning (IMPLAN) system, an economic modeling tool that tracks how money flows between industries and households 4 .
Initial economic activity generated by core agricultural industries
Business-to-business transactions throughout the supply chain
Consumer spending impacts from employee wages
This comprehensive approach captures economic relationships that might otherwise remain invisible in traditional analysis. For example, when a farmer purchases fertilizer, that transaction represents a direct effect. When the fertilizer company then pays its employees, and those employees buy groceries from a local store, the induced effects ripple throughout the economy.
A key innovation of the Arkansas study was its broad definition of agriculture. Rather than limiting their analysis to traditional farm activities, the researchers adopted an inclusive approach that encompassed multiple sub-sectors:
This expansive definition acknowledged the interconnected nature of modern agribusiness, where the value of a soybean crop isn't fully captured until it becomes animal feed, tofu, or biodiesel.
For those interested in understanding or replicating this type of economic analysis, familiarity with several key concepts and tools is essential. Agricultural economists operate at the intersection of agronomy, business, and data science, employing specialized methods to quantify what might otherwise be abstract relationships.
Models economic relationships between sectors and estimated direct, indirect, and induced effects across the state economy.
Measures additional value created at each production stage and quantified agriculture's contribution to state GDP.
Estimates jobs supported by each direct position and calculated that approximately 3 additional jobs were created for each direct farm job.
Tracks product flow from farm to consumer and identified linkages between production, processing, and distribution.
Beyond these technical tools, the researchers also needed to understand Arkansas's unique agricultural landscape. The state's diverse production—including poultry and eggs ($3.6 billion annual value), soybeans ($1.7 billion), rice ($1.1 billion), and cotton ($300 million)—created a complex web of economic interrelationships that differed significantly from agricultural economies in other regions 4 .
This specialized knowledge allowed them to accurately interpret the data and tell a compelling story about how Arkansas's farms and related businesses collectively formed an economic foundation supporting nearly one-quarter of the state's workforce.
The 2015 snapshot of Arkansas's agricultural economy reveals a sector that is anything but simple or outdated. With its 263,180 jobs supported and $21.04 billion in value-added economic activity, agriculture demonstrates an enduring capacity to generate prosperity that spreads far beyond farm gates 4 . These numbers represent real families, communities, and businesses that depend on a robust agricultural sector for their livelihood.
As we look to the future, the lessons from this study extend beyond academic interest. They inform policy decisions, guide infrastructure investments, and highlight the importance of supporting innovation throughout the agricultural value chain.
The next time you see an Arkansas farm field or forest, remember that you're looking at more than just crops and trees—you're witnessing the beginning of an economic journey that touches nearly every aspect of life in the state. Through continued research and innovation, this foundational sector will likely remain central to Arkansas's prosperity for generations to come.