Contribution of Grain Production to the Washington Economy T. Randall Fortenbery Professor and Grain Commission Endowed Chair, School of Economic Sciences, Washington State University Table 2 Potential Impacts of Tax Policy Change on Wheat Farming No Tax ChangeImplement B&O Value of Washington Wheat Production$997,004,000$992,178,501 Induced Output (earned from spending for personal activity)$232,842,308$231,715,351 Indirect Output (earned from business to business transactions)$754,950,372$717,391,688 This assumes producers reduce production in response to higher costs) TOTAL ECONOMIC OUTPUT$1,984,796,680$1,941,285,540 CHANGE IN ECONOMIC OUTPUT (UPPER BOUND)-$43,511,140 Change in Value of Farm Output-$4,825,499 Change in Induced Output-$1,126,957 Change in Indirect Output-$37,558,684 CHANGE IN ECONOMIC OUTPUT (LOWER BOUND)-$5,952,456 Change in Value of Farm Output-$4,825,499 Change in Induced Output-$1,126,957 Table 1 Contribution of Wheat Production to the Washington State Economy – 2010 Value of Washington Wheat Production$997,004,000 Indirect Output (earned from business to business transactions)$754,950,372 Induced Output (earned from spending for personal activity)$232,842,308 TOTAL ECONOMIC OUTPUT$1,984,796,680 Direct Employment (all grain farms)18,274 Indirect Employment (from business to business transactions)5343 Induced Employment (from personal activity)1751 TOTAL EMPLOYMENT25,814 Grain production and processing are important contributors to the overall economic well-being of the State of Washington. While benefits are substantial for the state as a whole, they are particularly important to rural areas of Eastern Washington. This summary highlights some of the more important contributions of grain producers to the State of Washington. In 2009, the value of Washington grain production totaled over $666 million dollars. Just under 90 percent, $594 million, was accounted for by wheat. Based on both increased production and higher average prices, Washington’s 2010 wheat crop alone was worth over $997 million. In addition, businesses supporting wheat producers in 2010 earned $755 million dollars as a result of providing inputs and services to grain famers. Thus, for every dollar of farm generated revenue, there was another $0.76 earned by those businesses providing support to grain farmers. In addition to providing income to other businesses through business to business transactions, income earned through wheat farming is spent on personal products and services (for example, meals away from home, attending a movie, etc.). The value of off- farm purchases by Washington grain producers and their employees was about $233 million in In other words, every dollar earned in grain farming produced an additional 23 cents in earnings to

TABLE 3 Potential Impacts of Sales Tax Policy Change Implement New Sales Tax on Seed, Fertilizer, and Pesticides Total Washington Wheat Acres 20102,330,000 Costs per Acre Subject to Tax$75.00 Tax per Acre at 6.5 Percent$4.88 TOTAL TAX LIABILITY$11,358,750 TABLE 4 Potential Impacts of Fuel Tax Policy Change Implement New Sales Tax on Off-Road Diesel Fuel Total Washington Wheat Acres 20102,330,000 Average Gallons of Diesel Fuel Used per Acre7.35 Fuel Tax per Acre at 37.5 cents per gallon$2.76 TOTAL TAX LIABILITY$6,422,063 businesses providing services and goods to farm families and employees. All total then, every dollar from wheat farming resulted in another 99 cents in economic activity throughout the state, much of in the communities where the grain producers operate. Washington grain production provided the equivalent of 18,720 full time on-farm jobs in In addition, the business to business activity of grain famers resulted in an additional 5343 jobs in business servicing grain farms. This is about 5.3 off farm jobs created by agribusiness for every $1 million in Washington grain production. Another 1.8 jobs per $1 million in grain production value, or 1751 jobs, resulted from businesses providing personal goods and services to grain farmers and employees. Thus, over 25 jobs result from each $1 million earned in grain farm revenue. This means that in 2010, Washington grain production supported 7094 jobs in addition to the nearly 19,000 directly related to grain production. Another way to interpret the employment data is that for every job directly related to grain production in the State of Washington, another 0.39 jobs are created either to facilitate business to business transactions, or to provide the privately demanded goods and services of grain producers.