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May 2025

Agriculture a Key Driver in the North Dakota Economy

Dean Bangsund is an economist in the NDSU Dept. of Agribusiness and Applied Economics. He specializes in Impact Assessment, and has over 25 years of experience conducting applied economic research.

Dr. Nancy Hodur is the director of the Center for Social Research at NDSU and has over 25 years of professional experience in applied research, public policy, and outreach education. In this article, Dean Bangsund and Nancy Hodur share some of the findings of a recent research study that brings insight into the economic contribution of the North Dakota agriculture industry.

The definition of agriculture continues to begin with crop and livestock production, but the modern portrait of the industry now includes activities extending beyond the farming and ranching, and includes handling, transportation, and processing of commodities. In North Dakota, agriculture includes ethanol production, oil seed crushing, grain milling, corn milling, baking, meat processing, and food-grade packaging for various commodities. The entire supply chain for production agriculture, such as chemical, fertilizer, and farm machinery manufacturing, also are considered part of the industry.

Agriculture has long been recognized as a key economic driver of the North Dakota economy. And understanding the full breadth of North Dakota’s agriculture industry has been a high priority to industry leaders for some time. Therefore, economic contribution studies are helpful to eliminate old definitions and present the industry in a more comprehensive and integrated framework.

Economic contribution studies also address limitations of existing economic data in assigning attribution of economic output in other economic sectors. For example, all of the insurance and interest payments made by farmers and ranchers are embedded in Finance and Insurance Sectors, rather than in the Agriculture Sector; the attribution of agriculture’s share of that economic output does not exist in current government data.

Historically, economic assessments have only described pieces of the agriculture industry in North Dakota, rather than providing a comprehensive assessment. In 2022, industry leaders came together to sponsor a comprehensive assessment study of the agriculture industry in North Dakota. In 2023, Dean Bangsund and Dr. Nancy Hodur, researchers at the North Dakota State University, completed a comprehensive assessment of the industry by updating the economic effects from crop and livestock production and combining those with values from previous assessments for other segments of the industry. While that effort was illuminating and helpful in framing a comprehensive portrait of the industry, not all segments of the industry were based on activities from the same period. In 2024-2025, Bangsund and Hodur, again conducted a comprehensive assessment of the agriculture industry in North Dakota, but this 2025 study addressed the previous limitations noted.

Address Growth in the Industry

The recently released 2025 study is the second comprehensive assessment of the agriculture industry in North Dakota, but the first to assess all segments of the industry over the same period. Recent expansions of value-added processing and machinery manufacturing are now captured in the current study.

A recent example of how the industry has expanded can be observed with oil seed crushing, specifically two new soybean crushing plants were built and now operating the state. These facilities represent an expansion of value-added output for the industry.

Key Economic Metrics

Total Output. Total output is a measure of gross business volume. Direct effects represent the first round of business activity for a number of industry segments, and includes payments for labor, services, and goods used to produce a product or service. Secondary effects represent the economic activity created by businesses and households as a result of the direct or first round effects.

The North Dakota agriculture industry contributed $41.3 billion to the state’s economy. Direct output from the industry was $26 billion with secondary output of $15.3 billion. The agriculture industry represented 25 percent of North Dakota’s total output of $162 billion for all economic sectors.

Value-Added. Not to be confused with value-added processing, value-added is a metric used to describe an industry’s contribution to gross state product. Value-added measures labor income, payment of taxes and government fees, and residual economic output after all inputs are subtracted from gross output. Gross state product and gross domestic product are preferred measures of economic size for many state and federal agencies.

The agriculture industry contributed $18.2 billion to the state’s gross state product. Crop production accounted for the largest industry segment, accounting for 59 percent of the industry’s contribution to gross state product with commodity processing accounting for an additional 18 percent. Overall, the agriculture industry accounts for 21 percent of the state’s total gross state product.

Employment. Employment is a popular measure of economic size and is frequently reported by various state and federal agencies to gauge economic health of an economy.

Agriculture supports substantial levels of employment and labor income in the state. On average, the industry supported direct employment of 46,620 jobs and secondary employment of 76,740 jobs for total employment of 123,360 jobs. The 123,360 jobs supported by the agriculture industry represent 21 percent of statewide employment. Fifty-nine percent of agriculture industry employment was supported by crop production.

Production agriculture is somewhat unique in that self-employment represents a sizeable share of overall employment. To illustrate, employment is divided into wage and salary employment and self-employed (e.g., sole proprietors). While agriculture supports more wage and salary jobs overall, 80,920 wage and salary jobs compared to 42,450 self-employed jobs, it is the share of total state employment that is noteworthy. Agriculture supports 17.7 percent of the state’s total wage and salary employment and 30.2 percent of the state’s total self-employment.

Labor income. The financial compensation for workers and sole proprietors in the industry is another frequently used measure.

The North Dakota agriculture industry averaged $5.2 billion in direct compensation and $4.8 billion in secondary labor compensation for a total of $10 billion in labor compensation. Average overall labor compensation was 23 percent of the state’s total labor compensation. Again, crop production was the largest contributor to overall industry labor income. Sixty-four percent of labor income was a result of commodity production and another 14 percent was supported by commodity processing.

Leading Components of the Agriculture Industry

Among all economic metrics, crop production is the single largest component of the agriculture industry representing nearly 60 percent of the industry output and 12 to 15 percent of the state’s economy, depending on the metric considered. Commodity processing is the second largest industry segment representing 27 percent of total industry output and 7 percent of total statewide output. Livestock production accounts for about 8 percent of industry output and commodity handling and transportation combined for about 5 percent of industry output and about 2 percent of total statewide output.

Summary

Intuitively, it is widely known and accepted that agriculture is a significant and important part of the North Dakota’s economy. This study clearly demonstrates how important agriculture is to the state. Across three key economic metrics — total output, value-added, and employment — the agriculture industry represents about 20 to 25 percent of the North Dakota economy. In addition to demonstrating and quantifying the economic contribution of agriculture to the state’s economy, the study documents recent growth in several segments of the industry.

Explore the NEW 2025 North Dakota Agriculture Industry Economic Contribution Analysis