South Dakota, Wyoming, Colorado, New Hampshire and North Dakota are the top five agribusiness-friendly states in America, according to a new report issued by Colorado State University agricultural economists.

CSU professors Greg Perry and James Pritchett developed the Agribusiness Friendliness Index to describe the economic climate for agriculture, which is impacted by climate, local and state government policies, geography and other factors more than other business sectors.

The index is based on 38 variables, representing regulatory policy, tax policy, government efficiency, impact of key government services, and the overall state business climate. It follows the methodology of other key indexes like the State Business Tax Climate Index.

First study of its kind

Perry and Pritchett believe this is the first study of its kind, focusing exclusively on the agricultural sector.

“The Agribusiness Friendliness Index illustrates the different ways government influences the economic climate of agriculture and its allied businesses,” Perry said. “State governments play a particular role in fostering agribusiness opportunities and influencing cost structures with policies that include regulation, taxes and government services.”

Pritchett agreed.

“Businesses are acutely aware of the role that state government plays in their success - a business-friendly environment will encourage these enterprises to locate or expand operations while unfriendly polices shrink business and may even cause relocation,” he said.

Perry and Pritchett divided agricultural activities into four separate categories and then examined specific variables in each of those areas. The team evaluated how each state fared in those categories and used that information to calculate an overall score.

Four categories

• Agricultural inputs (e.g., fertilizer, chemical, equipment, seed dealers)
• Crop, fruit and vegetable production
• Meat and livestock products
• First level agricultural processing

States fared differently across all four categories depending on their base agricultural industry. For example, states in the upper Great Plains scored higher in the meats and livestock products category. States with the highest scores for agricultural processing were split between the Great Plains and New England.

To read the report, or view each state’s indexes, visit the national website

Colorado ranks third

Colorado’s positive economic growth earned it third place on the index. Agribusinesses in the state enjoy a number of favorable policies that contribute to a relatively high third place ranking in the overall index. Job churning (representing the percent of new jobs created relative to the state’s overall job base) is very high, reflecting good economic growth and vitality. Coloradoans live healthy, active lives, which contributes to the high ranking on the Well-Being Index. There are no additional ambient air quality standards above those set by the federal government. Colorado has right to farm laws and favorable worker’s compensation rates. State government is efficient with its tax revenues, there are no estate taxes and schools are well above average. Negatives include relatively high state sales taxes and the ease by which ballot initiatives can be used to create laws.

For more information about Colorado's indexes, visit Colorado's website.