Economic impact goes beyond farmers  

March 5, 2010

H&N photo by Jill Aho -  Service technicians, from left, James Osterholt, Con McAuliffe, Brent DuBois and Mike Cox have been working three days a week at Floyd A. Boyd in Merrill because there isn’t much to do. Farmers aren’t repairing equipment until they know whether there will be water this year.

     Uncertainty about water supplies combined with the recession’s continuing effect on farmers could mean a difficult year ahead for the local economy.

   “We’re in a very tough position,” said Willie Riggs, OSU extension agricultural economist and director. “We’ve already lost businesses. You’ve got a population directly and indirectly tied to agriculture. This community is a natural resource community.”

   The effect of a poor year for agriculture impacts the local economy the most, but Riggs said it goes beyond the immediate area.       

   State tax collections will be hurt, and there could be an even greater demand for social services.

   “Agriculture is the second largest revenue generator in the county behind wood products,” Riggs said. “Producers are feeling the effects of the recession themselves. Inputs are up and prices are down.”

   By the numbers

   The total value of agricultural products sold in Klamath County dropped $59 million from 2008 to 2009, from $300 million to $241 million, with low prices for alfalfa and other hay products the major factor.

   The recession took its toll on all sectors of agriculture, with livestock sales losing $18 million, according to information gathered by Oregon State University. Crops took the biggest hit, losing $41 million in sales.

   “As a whole, agriculture in Klamath County didn’t necessarily sell less products, but the market value of the products was less,” Riggs said. If each dollar in sales was circulated twice, the potential   loss to the local economy could be close to $120 million, he said. In 2001, crop sales plummeted when farmers did not have water supplies. The total crop sales that year were about $40 million.

   Credit crunch

   Credit also is difficult to come by, and producers need credit to   farm. Operating loans allow them to put crops in the ground and pay the loan back with the proceeds of what they sell.

   “If you can get credit, it’s expensive,” Riggs said.

   The economic effects of a year with reduced agricultural production will carry over to everyone from farm implement businesses to gas station attendants, Riggs said. There’s a nervous feeling among producers, he said.

   “Nobody wants to pit neighbor against neighbor," he said.  "Everybody's try to figure out not only how to survive as a whole, but as an individual."

Jobs in agriculture in the region     

   In 2009, Klamath County averaged 1,500 on-farm agriculture jobs, according to Oregon Employment Department figures. This includes only large farms that pay unemployment insurance, said Regional Economist Dallas Fridley.

   According to the California Economic Development Department, farm-related employment provided 2,447 jobs in Modoc County and 612 jobs in Siskiyou County in 2009.