State of Montana Website Montana State Parks Website
  Home » Doing Business » Reference Information » Montana Challenge » Research Reports » The Agriculture Chapter
The Agriculture Chapter
Agriculture

The Agriculture Chapter (The Changing Role of Agriculture in Montana's Economy: 1965 - 2005 302 KB)

Agriculture, along with mining and forestry, has been the cornerstone of Montana's economy from the very beginnings of the state's history as a part of the United States. Between 1864 and 1889, when Montana was still a territory, cattle were an important driving force in the advent of settlers, especially in the late 1860s and 1870s. The development of the railroads in the 1880s then created new opportunities for wheat and small grains farming as well as cattle and sheep operations. Throughout the 20th century, ranching and farming remained the mainstay of local economies in many Montana counties, although with a changing emphasis in the mix of commodities and the relative importance of the agricultural sector in the state's economy. In addition, changes in the mix of land, labor, machinery and equipment used to produce agricultural commodities have resulted in increases in the size of farms and ranches for which agriculture is the principle source of family incomes. These shifts in agricultural resource uses have contributed to population declines in many counties in eastern Montana, where local communities have not benefit from growth in other sectors of their economies.

Within the state as a whole, historically agriculture has been critical to the economic wellbeing of almost all Montana residents. When agricultural incomes have been high, state and local government tax revenues have generally been healthy and provided funds for expanded public services, including education, roads, and other forms of infrastructure. Moreover, consumer expenditures and purchases of agricultural business services have generally been higher when agricultural incomes have been high, increasing economic activity throughout the service sectors of the state's economy. In contrast, during hard agricultural times, government tax revenues have generally been anemic, restricting the ability of state and local government to supply public services and causing consumer expenditures and agricultural business service activities to fall, leading to harder economic times for the entire state. Although agriculture's relative importance in the state-wide economy has moderated over the past forty years, it continues to be important for the state as a whole and the major determinant of the economic performance of many highly rural counties.

In the context of Montana's environment and the state's natural resource base, agriculture has an equally important role. Decisions by ranchers and farmers about land use often have important consequences for the state's ecology and wild life. For example, participation by farmers in the federal Conservation Reserve program (CRP) since 1985, when the program was created, substantially increased the availability of nesting habitat for upland game birds (pheasants and sharptail grouse) and prairie nesting ducks. These large tracts of grassland habitat have made a major contribution to increased populations of these species. Mule deer have benefited in some locations, coyotes have replaced red fox as the major carnivore and nest success rates are much higher for ground nesting birds as a result of this change. Another important issue has involved the interface between the use of land for agricultural production and access to public lands and streams for hunting, fishing and other recreational activities. The patchwork nature of public lands means that, in some cases, access can only be obtained by crossing private lands, creating the potential for conflict between agricultural producers and users seeking to use public lands for other purposes.

This chapter examines the changes that have taken place in Montana agriculture over the past forty years and their implications for land use and the state's economy. The chapter is organized as follows. We begin by providing an overview of agriculture in Montana and describe how agriculture and its role in the state's economy have evolved over the past forty years. Next we examine the changing structure of farm and ranches in terms of their size, the way in which agricultural producers organize their businesses and economic lives, and the extent to which farming has remained a family business. We then examine how land use by farmers and ranchers has changed, the forces that have induced those changes, and their effects on farm and ranch incomes and land use. These vectors for change include the role of markets and commodity prices, economy-wide forces such as rising real wages in the non-agriculture sector that have encouraged labor saving technical innovation in agriculture, federal agricultural commodity programs, federal environmental policies, and international trade agreements. We then consider what the future may hold for Montana' agriculture, land use and economy in light of potential developments in the forces for change for Montana agriculture. Finally, the wheat and livestock sectors of Montana's agricultural industry are major sources of farm and ranch incomes. The evolution of these two sectors over the past forty years is therefore described in two Appendices to this chapter.