Agricultural Services
Overview
The job recovery following the 1990-91 recession was fueled by growth in the service-producing industries. Among these service-producing industries is agricultural services, one of the fastest growing sectors in the United States. Between 1969 and 1997, agricultural services employment increased by 11.6 percent annually. Only the business services (average annual growth of 15.7 percent) and museums, botanical and zoological gardens (average annual growth of 15.1 percent) industries grew at a faster pace during this time period.
While employment in agricultural services has increased dramatically over the years, its growth has been a mirror image of declining farm employment. Rate of production growth, however, has been robust in both sectors.
U.S. Employment in Farms and Agricultural
Services, 1969-1997
Source: U.S. Bureau of Economic Analysis
For more detail of above graphic
Agricultural services sector is comprised of a wide array of services sold to farm-oriented enterprises and to non-farm final consumers. Those farm-oriented services are essentially intermediate activities, providing inputs for agricultural production. These service activities take on various forms; for example, an agricultural service occurs when a firm provides soil preparation services for a farming enterprise, when a company performs crop planting, cultivating and harvesting services, when a veterinary provides services for livestock, or when a firm provides temporary labor on a contract basis to farms during production or harvesting, or even providing management expertise for farming enterprises. Although these examples hint at the variety of services captured by the industry, they do not convey the sheer number of activities performed by "non-farm" agricultural services. Such services include veterinary services for pets and other animal specialties (e.g., non-livestock), landscape architectural and planning services, lawn and garden services, and ornamental shrub and tree services.
Definition of Agricultural
services
This industry report uses industry definitions and concepts that underlie the U.S. government's Standard Industrial Classification (SIC) system. In the SIC system, agricultural services (SIC 07) is a major industry, one of five such industries that form the agriculture, forestry, and fishing sector. According to the Standard Industrial Classification, there are six separate agricultural services subsectors and 14 market segments defined by broad service categories. Each of the 111,430 agricultural services establishments operating in the United States in 1997 was placed in one of these six industry subsectors:
- Soil preparation services (SIC 071), including
plowing, application of fertilizer, seed bed preparation and other services
for improving the soil for crop planting;
- Crop services (SIC 072), including crop planting, cultivating and protecting (e.g., aerial dusting and spraying, cultivation services, disease control of crops, entomological services, irrigation system operation systems, orchard cultivation services, seeding crops, pruning of orchard trees and vines, and weed control); crop harvesting by machine; crop preparation services for market (e.g., sorting, grading and packing of fruits and vegetables, grain cleaning and fumigation, drying of corn, fruits and vegetables); and cotton ginning;
- Veterinary services (SIC 074), including animal hospitals, veterinarians and veterinary services for livestock, and animal hospitals, veterinarians and veterinary services for pets;
- Animal services, except veterinary (SIC 075), including livestock services (e.g., artificial insemination services, livestock breeding, milk testing, cattle spraying, vaccinating livestock, sheep dipping and shearing, and custom slaughtering) and animal specialty services (e.g., animal shelters, boarding horses, kennels, dog pounds, breeding of non-livestock animals, showing of pets, horse training);
- Farm labor and management services (SIC 076), including farm labor contractors and crew leaders, and farm management services; and
- Landscape and horticultural services (SIC 078), including landscape counseling and planning (e.g., landscape architects, horticultural advisory services), lawn and garden services (e.g., garden planting, lawn care and mowing services, sod laying, turf installation), and ornamental shrub and tree services (e.g., arborist services, ornamental tree planting and pruning, tree planting and pruning, utility line tree trimming services).
Agricultural services have a growing presence in both the national and Washington State economies. In 1969, 0.5 percent of the nation’s total employment were employed in agricultural services industries. For Washington, agricultural services only 0.4 percent of the state’s 1969 total employment. By 1997, agricultural services’ share of total national employment had grown to 1.2 percent; while in Washington, its share of total employment had tripled to 1.5 percent.
Current Status
In 1998, the Washington agricultural services industry employed 24,165 workers; representing about one-fourth of the state’s workforce in natural resources. Growth in the number of agricultural services establishments in Washington has been steady; between 1981 and 1998, the average annual growth in establishments has been 6.8 percent, with "non-farm" agricultural services capturing the lion’s share (97 percent) of the industry’s growth.
Number of Establishments in Washington
Agricultural Services, 1981-1998
Source: Washington Employment Security Department
For more detail of above graphic
The current employment picture of agricultural services is nearly three-fold larger than it was in the early 1980s. Between 1981 and 1998, farm-related agricultural services added over 5,700 workers, an average annual growth rate of 8.7 percent; non-farm related agricultural services added nearly 10,000 workers for an average annual growth rate of 12.8 percent.
Key factors that affect the demand for agricultural services include the strength of the U.S. agriculture sector and the general economy. Farm-related agricultural services are tied directly to the economic well-being to the farm sector. The economic well-being of the farm sector can be measured by any number of factors including farm income, cash receipts, asset values (real estate and non-real estate), debt and debt-to-asset ratios. Other factors have played an important role in the robust growth of farm-related agricultural services. Similar to the vigorous growth in business services, "outsourcing" has become increasingly commonplace from soil preparation and planting to cultivating and harvesting. Technological advances within and outside agriculture have facilitated demand for agricultural services. Furthermore, the mode of operations for agricultural firms has dramatically changed in recent decades. The drive for improved productivity and increased competitiveness has resulted in the dramatic growth in the use of temporary and contract workers.
With respect to non-farm agricultural services, personal disposable income and general economic performance are the key demand factors. With rising disposable incomes and technological advances, consumers have increased their demand for lawn and garden services, ornamental shrub and tree services, and veterinary and animal services.
Employment in Washington
Agricultural Services Industry, 1981-1998
Source: Washington Employment Security Department
For more detail of above graphic
Agricultural services in Washington is largely composed of small companies that provide various farm-related and non-farm related services. One of the subsectors (landscape and horticultural services) accounts for over 60 percent of the total 3,514 establishments, and average just over 4 employees per establishment. By contrast, the farm labor and management services subsector averages 129 employees per establishment, while animal services (except veterinary) averages around 3 employees per establishment. Over 54 percent of all agricultural services workers are found in establishments with less than 20 employees. More than three-fourths of all employees in this industry are in small businesses with less than 100 employees.
Size of Establishments of
Washington Agricultural Services Industry, 1998
Source: Washington Employment Security Department
For more detail of above graphic
Average covered wages for agricultural service workers was $17,267 in 1998, nearly 50 percent below the statewide nonfarm average of $33,922. In 1998, agricultural services employees’ wages and salaries ranked twelve among seventeen services industries, and substantially lower than the statewide services industry annual average at $35,996. With the exception of crop services, all other agricultural services subsectors lost ground in real (i.e., without inflation) wages and salaries between 1981 and 1998. In contrast, total services workers in Washington enjoyed a real increase of 60 percent in their wages and salaries.
The distribution of hourly wages for agricultural services is dissimilar to the state, with a pronounced disposition toward lower hourly wages. Nearly two-thirds of all workers in the agricultural services industry earn $10 or less per hour, compared with 30 percent of all nonfarm workers in the state. In contrast, only 7 percent of agricultural services workers earn $20 or more, compared with 28 percent of all state nonfarm workers.
Table 1
Real Average Wages for Washington
Covered Agricultural Services
Workers, 1981-1998 (1998 dollars)
Sources: Washington Employment Security Department,
U.S. Bureau of Economic Analysis
| Sector | 1981 |
1983 |
1985 |
1987 |
1989 |
1991 |
1993 |
1995 |
1997 |
1998 |
| Soil preparation services | ||||||||||
|
$20,892 |
$16,775 |
$34,751 |
$26,557 |
$24,152 |
$23,135 |
$24,029 |
$21,155 |
$23,207 |
$19,970 |
| Crop services | ||||||||||
|
|
$16,602 |
$15,510 |
$13,923 |
$14,677 |
$14,591 |
$14,496 |
$14,346 |
$15,356 |
$17,000 |
$17,924 |
| Veterinary services | ||||||||||
|
|
$18,001 |
$16,043 |
$13,649 |
$13,967 |
$14,267 |
$15,006 |
$15,623 |
$16,391 |
$17,178 |
$18,019 |
| Animal services, ex. Vet. | ||||||||||
|
|
$13,261 |
$12,225 |
$12,090 |
$12,476 |
$12,175 |
$12,366 |
$12,500 |
$11,853 |
$12,437 |
$12,825 |
| Farm labor & mgmt. srvs. | ||||||||||
|
$11,089 |
$5,596 |
$5,278 |
$5,177 |
$9,810 |
$11,940 |
$12,784 |
$10,820 |
$9,994 |
$8,556 |
| Landscape & hort.. srvs. | ||||||||||
|
|
$20,751 |
$18,990 |
$17,613 |
$17,896 |
$17,335 |
$17,615 |
$18,001 |
$18,500 |
$19,301 |
$20,101 |
| Total, agricultural srvs. | ||||||||||
|
$17,873 |
$16,213 |
$14,961 |
$15,316 |
$15,189 |
$15,588 |
$15,834 |
$16,295 |
$17,030 |
$17,267 |
| State services (inc. ag. srvs.) | ||||||||||
|
$22,525 |
$21,216 |
$20,583 |
$21,493 |
$21,592 |
$23,948 |
$24,908 |
$26,490 |
$30,653 |
$35,996 |
| Statewide nonfarm | ||||||||||
|
$28,783 |
$27,789 |
$27,313 |
$27,304 |
$27,167 |
$27,928 |
$28,575 |
$29,046 |
$31,504 |
$33,922 |
Hourly Wages for Washington
Agricultural Services Workers, 1997
Source: Washington Employment Security Department
For more detail of above graphic
The labor force in the agricultural service sector is dominated by agricultural workers and laborers. About three-fourths of all workers are in these two occupation groupings. Common agricultural service occupations within this group are agricultural graders and sorters, gardeners and groundskeepers, lawn maintenance workers, and farm workers, machinists, and equipment operators. Professional and technical and clerical occupations are also important in agricultural service. Although the majority of agricultural service workers are within the agricultural workers and laborer grouping, a sizable share of the subsector’s employees are classified as professional and technical workers (e.g., veterinarians, veterinarian technicians, landscape architects, agricultural and food technicians).
Table 2
Occupational Profile of
Agricultural Services Workers in Washington,
1998 and 2008
Source: Washington Employment Security Department
Estimated 1998 |
Projected 2008 |
|||
| Agricultural services, SIC 07 | Estimated Employment |
Percent of Total Employment |
Projected Employment |
Percent of Total Employment |
| Managerial & Administrative | 1,377 |
8.3% |
1,620 |
8.3% |
| Professional, Paraprofessional & Technical | 2,406 |
14.5% |
2,794 |
14.4% |
| Sales & Related Occupations | 263 |
1.6% |
307 |
1.6% |
| Clerical & Administrative Support | 2,534 |
15.2% |
2,707 |
13.9% |
| Service Occupations | 128 |
0.8% |
122 |
0.6% |
| Agriculture, Forestry & Fishing | 5,580 |
33.6% |
6,618 |
34.0% |
| Production, Operating & Maintenance | 373 |
2.2% |
442 |
2.3% |
| Operators, Helpers & Laborers | 3,067 |
18.4% |
3,732 |
19.2% |
| Undefined Occupations | 904 |
5.4% |
1,114 |
5.7% |
| TOTAL | 16,632 |
100.0% |
19,456 |
100.0% |
| Contribution of Agricultural Services Industry to the Washington State Economy | ||||
Does the agricultural services industry merely serve local markets or is there a significant proportion of the state’s agricultural services sold in non-local markets. The observation that a state’s employment concentrates in a particular agricultural service industry (that is, that there is surplus labor employed in producing a service), suggests that the state produces more than it needs and therefore exports the surplus. The most commonly used measure for agricultural service export has been a simple index of employment concentration which looks at an industry’s share of total employment in a state. This share is put into index form by dividing by the industry’s share of total employment in the nation. An index number greater than 1 suggests that the state produces a surplus in the business service which is exported elsewhere. Accordingly, an index number of 1 would indicate little or no trade while an index number less than 1 would suggest that the state imports the service.
Index of Specialization: Washington Agricultural
Services, 1969-1997
Source: U.S. Bureau of Economic Analysis,
Full-Part Time Employment Series
For more detail of above graphic
For agricultural services, the index of employment concentration indicates that this sector does play a role in export trade in Washington. Unfortunately, no report has actually documented the amount of agricultural services produced for export markets.
Outlook
In recent years, agricultural services has been among the fastest growing sectors of the state’s economy, and this growth is expected to continue in the future, albeit at a slower pace. Agricultural services employment will grow by an average of 3.2 percent per year between 1995 and 2005. Beyond 2005, agricultural services employment is expected to slow significantly to an annual rate of 1.3 percent until 2020.
Wage & Salary Employment Forecast for
Washington Agricultural Services, 1995-2020
Sources: Washington Office of Financial
Management,
Washington Employment Security Department
