Agricultural forecast.

• Author: Baquet, Alan E.
• Position: Industry Overview

Agriculture continues to be Montana's largest basic industry. It accounts for over 30 percent of the state's employment, labor income, and gross sales. Approximately 64 percent of the state's 93 million acres is used for farming and ranching. The number and size of farms has remained relatively constant over the last few years. There are approximately 22,000 farms with an average size of about 2,700 acres.

Agricultural land values have shown a steady increase during the 1990s. In 1995, the average value of Montana farm land was $277 per acre. This is an increase of about 8 percent over the 1994 value. In inflation adjusted terms, the value is nearly back to the pre-drought/depression values in the early-to mid-1980s.

The state's leading agricultural county is Yellowstone County, which is also number one in livestock receipts. Chouteau County leads in the sale of crops and associated government transfer payments.

Major Commodities

Total receipts for agriculture, and the three major components of those receipts, are presented in Figure 1. Montana agriculture generates about $2 billion in cash receipts. Total receipts decreased about 5 percent from the 1994 level. Cash receipts from crop sales increased in 1995, while livestock receipts and government transfer payments both declined. In 1995, livestock accounted for 40 percent of total cash receipts; grain sales accounted for 51 percent; and the remaining 9 percent was made up of government transfer payments. As can be seen in Figure 1, there have been significant fluctuations in total gross receipts from year to year; however, the long-term trend in inflation-adjusted receipts is mostly stable.

Receipts, prices, and production levels for Montana's livestock sector are presented in Figure 2. 1995 is the third consecutive year for declines in livestock receipts, which reflects the ongoing downturn in livestock prices as this phase of the cattle cycle continues. Average livestock prices received by Montana ranchers declined by 16 percent from 1994 levels. In inflation-adjusted terms, this is the lowest price received over the last 42 years. Cattle numbers in the state have increased significantly since the early 1950s and account for the increase in total receipts from livestock shown in Figure 2.

Montana cattle producers express some concern about the impacts of international trade agreements on livestock prices, particularly the North American Free Trade Agreement (NAFTA), which has allowed...