Wednesday, November 4, 2015

Reviewing the 2012 Agricultural Census for the Uintah Basin

Scott Smith, Regional Economist

The 2012 Census of Agriculture is just that — a census. It is an attempt to count an entire population and generally does not use sampling or statistical techniques to make conclusions about the population. It is conducted every five years and includes all farm operators regardless of whether farming is their primary or secondary occupation. Operators and hired laborers are combined for a total count. There can be a maximum of three operators per farm, but labor hired on a contract basis is not covered.
Uintah Basin agriculture is centered on the production of livestock and associated feedstock. Practically all the agricultural land in Daggett County is devoted to the livestock industry. The relevant proportions in both Duchesne and Uintah counties are around 90 percent. 2012 net cash income per farm for Daggett County was $15,650. The analogous figures for Duchesne and Uintah counties were $8,630 and $3,995, respectively. The vast majority of farms have annual total sales less than $250,000.
Uintah Basin’s 2012 agricultural employment was 4,965 jobs according to the census. The state’s unemployment insurance data suggests that a very small number of these jobs generate the income or possess the duration to be considered “full time” employment in the urban sense. Further data indicates that most farmers and ranchers are sole proprietors (regardless of how they are organized for tax purposes). Finally, a comparison of the other sources and the census figures show that most individuals involved in agriculture have their primary job in other sectors of the economy.
The size and composition of the agricultural workforce has changed markedly over time. In 2002, there were 4,950 Uintah Basin agricultural jobs, of which 42 percent was hired labor. In 2007, the total workforce decreased by 17 percent to 4,121, and the share of hired laborers fell to only 25 percent in the same period. By 2012, agricultural jobs increased 20 percent to 4,945, yet the hired labor share fell further to 23 percent.
The reason for this can be gleaned from expense data. In 2002, the labor cost per worker (as defined by dividing annual labor expense by the hired workforce) was $650. In 2007, the cost had risen 76 percent to $1,140. In 2012, this number had increased again by 56 percent to $1,140. In contrast, inflation increased by 15 percent and 9 percent as of the 2007 and 2012 censuses, respectively. It is interesting to note that the share of hired labor fell only slightly from 2007 to 2012, in spite of a substantial increase in cost. The decrease was most likely mitigated by a robust increase in income per operator. In general, faced with higher real (inflation adjusted) labor costs, Uintah Basin operators substituted away from hired labor to their own labor or made investments in capital goods.
The number and character of operators has displayed an interesting combination of volatility and adherence to the trend. The number of Uintah Basin operators was 1,868 in 2002 (the statistics refer to “principal” operator and therefore will not agree with other totals). The number increased by 2 percent to 1,908 in 2007, and then increased 23 percent to 2,340 as of the 2012 count. Similarly, in 2007, the proportion of operators who relied on other sources of income shot up to 66 percent from 53 percent in 2002. The share remained at 66 percent in the 2012 census.

Analysts speculate that the changes are partially in response to fluctuations in farm income. In 2002, net cash income per operator was more than $5,851. Income per operator declined by 21 percent to $4,613 in 2007. The analogous figure for 2012 is $5,950 per operator. The decline in income per operator in 2007 made it necessary for some operators to seek other sources of income. Superficially, the gain in share of operators with other sources of income shown in 2012 is perplexing. Given the increased utilization of increasingly expensive hired labor, one should expect to see more operators revert back to “full time.” A possible explanation for this phenomenon could be comparative advantage. Even though hired labor was more expensive, operators’ other jobs were paying so handsomely that those operators were better off paying hired labor rather than doing the work themselves. In light of the commodity boon this makes sense — oil field jobs pay substantially more than agricultural jobs.