Webinar: The Economic Impact of Nebraska Agriculture
With Dr. Eric Thompson, Bureau of Business Research, UNL, and Dr. Brad Lubben and Dr. Jeffrey Stokes, both of the Department of Agricultural Economics.
Nebraska’s total net farm income is a little over 5% of the state’s total personal income on average. Those percentages rank Nebraska third highest of the 50 states and the highest percentage for any state with a population over 1 million.
This study is a joint collaborative effort of the Department of Agricultural Economics and the Bureau of Business Research within the Department of Economics and funded internally by the Institute of Agricultural and Natural Resources (IANR) of the University of Nebraska–Lincoln. It draws on substantial expertise in key issues affecting agriculture such as irrigation, natural resources, the agricultural equipment industry, and community economic development.
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[00:00:25.860]Larry Van Tassell: Good afternoon. I'm Larry Van Tassel. Head of the Department of Agricultural Economics. Thanks for joining us today.
[00:00:33.540]Larry Van Tassell: This is part of a series of webinars produced by our extension farm and ranch management team that typically runs every Thursday at noon. You can find recordings of these sessions a schedule of upcoming webinars and other email@example.com
[00:00:53.670]Larry Van Tassell: One resource that we would like to highlight is the Nebraska rural response hotline in times of stress, knowing when when to reach out is essential.
[00:01:05.520]Larry Van Tassell: The Nebraska rural response hotline can provide mental health counseling information regarding legal assistance financial clinics mediation and more
[00:01:17.850]Larry Van Tassell: The hotlines toll free number is 1-800-464-0258. In addition, a wealth of resources related to stress and wellness can be found at rural wellness.us l.edu
[00:01:37.080]Larry Van Tassell: During today's presentation, please use the chat box or Q AMP. A located at the bottom of your screen to ask questions we will address those at the end of the presentation as time allows.
[00:01:50.010]Larry Van Tassell: Agricultural remains a critical component of Nebraska's economy, accounting for nearly 34% of business sales 22% of the gross state product and nearly a quarter of the state's jobs all this according to a new report released by you and else today.
[00:02:10.380]Larry Van Tassell: It's also a resilient industry, even during years when farm and ranch incomes are low. Other s aspects of the agricultural production complex, including ag related manufacturing transportation and wholesaling and agritourism 10 to remain strong. These are among the findings of the
[00:02:34.350]Larry Van Tassell: economic impact of the Nebraska agricultural production complex which he which the University of Nebraska Lincoln's Department of Agriculture agricultural economics released today.
[00:02:47.730]Larry Van Tassell: And economist Brad movement and Jeffrey Stokes authored the report, along with Eric Thompson of you and L's bureau for business research.
[00:02:57.900]Larry Van Tassell: The study was conducted to provide a benchmark assessment of the economic impact of Nebraska agriculture on the state's economy doctors Lubin Stokes, and Thompson, join us today to discuss this report, I'll turn it over to them.
[00:03:18.150]Brad Lubben: Larry, thank you very much for that introduction and for the opportunity.
[00:03:22.170]Brad Lubben: To to share this information with you today.
[00:03:29.010]Brad Lubben: Will share the presentation and
[00:03:40.470]Brad Lubben: There we go.
[00:03:42.210]Brad Lubben: As Larry introduced
[00:03:45.150]Brad Lubben: Dr. Jeff Stokes, and department, my colleague in the economics department and Dr. Eric Thompson in the Bureau business research we're co authors of this paper.
[00:03:54.930]Brad Lubben: To discuss the economic impact of the Nebraska agricultural production complex. We want to describe for you very briefly what we intend to do over the next
[00:04:05.820]Brad Lubben: 40 minutes or so, plus time for questions later. But we want to introduce the, the report to you, we want to talk about the production complex. We want to share the results of the research and the conclusions the implications that we find in the study.
[00:04:22.110]Brad Lubben: When we talk about the agricultural production complex, we can recognize even before we dug into the study the relative importance of the ag sector to Nebraska.
[00:04:32.910]Brad Lubben: If you look at national statistics or national economic data from the Bureau of Economic Analysis their data focused explicitly on
[00:04:42.840]Brad Lubben: The farm sector would find Nebraska ranked third of any state, with a population over 1 million but third of any state in terms of the significance of where the share of the economy related agriculture, so we know Nebraska is a leading agricultural state.
[00:05:00.900]Brad Lubben: We have also seen previous studies in this nature, dating back to the 1970s, former colleagues or predecessor faculty members here at the university have
[00:05:13.470]Brad Lubben: Engaged in studies over those many times to assess the current economic picture for Nebraska agriculture and the impact on the broader economy.
[00:05:23.160]Brad Lubben: Most recently, a study in 2012 that was based on 2010 production data found that the significant impact of Nebraska agriculture.
[00:05:35.730]Brad Lubben: This study was and is intended as an update to that study the collaboration between agriculture economics bureau of business research within the College of Business to put this together ideas.
[00:05:49.590]Brad Lubben: Vice Chancellor Mike beam at the Institute of ag and natural resources that provided the primary leadership and direction to to get this study underway.
[00:05:58.980]Brad Lubben: What we have done in terms of updating the 2010 data or the 2010 study that was last published in 2012 was to update that study, but to do so, based on the 2017 year because that is the year of the most recent census of agriculture.
[00:06:18.630]Brad Lubben: By digging into that specific year and digging into the census data, we could get more in depth detail of the production sector for Nebraska agriculture and get more detail across the, across the state in the various regions. So we've utilized census agriculture data from 2017 we've
[00:06:40.620]Brad Lubben: Compiled at and and tried to complete that as appropriate with other data from the National Statistics Service. And then we've utilized the implant model.
[00:06:50.970]Brad Lubben: For the input output economic modeling to fundamentally demonstrate the impact of agriculture and a broader impacts on the agricultural sector and, and the rest of the economy.
[00:07:04.680]Brad Lubben: Now to set the stage for the economic impact of Nebraska agriculture, let me reference a national framework or a national perspective.
[00:07:14.190]Brad Lubben: Using data from the USDA Economic Research Service and using their definition that did very overtime, but their definition.
[00:07:23.310]Brad Lubben: Of what a farming dependent county looked like that is a county that was dependent upon farm income as a significant share of that counties total income or depending upon payroll.
[00:07:36.690]Brad Lubben: The jobs in farming if we were doing the study seven decades ago, you would see a wide swath of the country where the counties were fundamentally dependent upon agriculture.
[00:07:52.380]Brad Lubben: By
[00:07:54.570]Brad Lubben: That data looks very, very different.
[00:07:57.900]Brad Lubben: The vast majority of counties that were historically dependent upon agriculture or no longer so
[00:08:04.320]Brad Lubben: That's not to say that agriculture is necessarily shrunk in those counties, but that the general economy and the non economy, particularly have grown and so eggs share of the total economy has gotten smaller
[00:08:16.980]Brad Lubben: Even our analysis in Nebraska. If you look at the previous studies previously quoted perhaps one in three or than one in five or rather, one in three and then one in four. And so the size of the egg economy as a share of the total economy has has declined over time.
[00:08:35.670]Brad Lubben: But compare that 1950 map to the 2015 map and even as the ag sector has become a smaller share of the nation's economy.
[00:08:45.660]Brad Lubben: The ag sector is still a very critical share of the great points from the high plains of Texas to the northern plains and the Dakotas, and Montana and right here in Nebraska.
[00:08:57.840]Brad Lubben: A predominant share of the counties that are fundamentally reliant upon agriculture as a major driver and and maybe principally the number one driver of the local economy. That's the framework ran in terms of the importance of the agricultural sector.
[00:09:16.110]Brad Lubben: We can also look at recent trends and know that while agriculture is growing. We're also coping with a downturn and that does impact this analysis of the economic impact of the ag sector.
[00:09:30.120]Brad Lubben: Dating back now 50 years of data here since 1970 through the last.on the on the chart is
[00:09:39.750]Brad Lubben: Projections or recorded income you see the value of a production. The state has grown from perhaps 2 billion to more than $20 billion peaking early this decade this past decade in 2011 12 and 13 but falling back to roughly 22 to $23 billion.
[00:10:01.650]Brad Lubben: That's total value of ag output recognize. However, that's not the same thing as value added to the economy given purchased inputs and given other factors and production.
[00:10:12.780]Brad Lubben: net value added has grown from around a billion dollars or less to to more than $5 billion peaking again in the record yourself back more than $10 billion falling back substantially but rebounding again since 2017
[00:10:32.310]Brad Lubben: And then net farm income. The bottom line there in blue is that's value added minus the, the relative returns to the, what we call the factors of production interest paid
[00:10:46.140]Brad Lubben: unpaid labor and management returns to land and so you have three different measures well farm income sort of be the bottom line major shows the 2017 was in fact the lowest income level of the past decade.
[00:11:01.740]Brad Lubben: And thus our estimates might be very conservative in terms of the direct impact of farm income on the economy.
[00:11:10.080]Brad Lubben: We still see the total production and value added are still higher than where they've been. And so we still have a growing sector, we just have
[00:11:20.220]Brad Lubben: Some challenging economic conditions, a President that do impact the analysis.
[00:11:26.640]Brad Lubben: That's the setup to describe the economic environment that Nebraska agriculture is operating in but also to remind us of the importance of the ag sector to the general economy.
[00:11:38.070]Brad Lubben: The study itself focuses exclusively on those estimates and details the impact of the ag sector and other related sectors of the economy. So I'm happy to hand the the microphone in the control over here to Eric and so please. Eric, go ahead and and grab control and
[00:12:01.140]Brad Lubben: Let's move forward.
[00:12:04.410]Eric Thompson: Thanks bread.
[00:12:07.170]Brad Lubben: And I did see you notice we have a hand raised. Maybe a question or reminder, please ask any questions in the Q AMP a box for the moment. And then, and then we'll take those when we have time.
[00:12:20.010]Brad Lubben: And let me first start to mute myself and then
[00:12:29.310]Eric Thompson: Well, I appreciate the opportunity to give you all a bit of background about our study
[00:12:35.610]Eric Thompson: And at a very high level, try to tell you what it is we did and what it is we found
[00:12:43.290]Eric Thompson: I won't get into the very specific details, but just give you a general idea.
[00:12:50.430]Eric Thompson: What we found, and of course those details are available in the record itself.
[00:12:56.970]Eric Thompson: Before going through the whole process. I thought it'd be useful just to tell you the bottom line here and this of course was mentioned in the introduction, as well.
[00:13:07.650]Eric Thompson: If you look at the economic impact of Nebraska's agricultural production complex. It accounts for about a third of the state's output or business receipts.
[00:13:20.640]Eric Thompson: However, if we use value added, which is kind of analogous to gross domestic product or in a state gross state product we see it accounts for just shy of 22%
[00:13:33.750]Eric Thompson: About just shy of 20% of labor income here in Nebraska and just over 23% of employment in the state. So let me tell you now how we arrived at these estimates.
[00:13:49.050]Eric Thompson: First of all, I want to tell you the components of the agricultural production complex that we looked at, of course, we
[00:13:55.530]Eric Thompson: Featured and started with crop production and livestock production, but we also looked at agriculture related industry. So if you look at some of the
[00:14:06.390]Eric Thompson: Other important industries in the state like transportation like manufacturing a significant share of those industries.
[00:14:13.860]Eric Thompson: Are closely aligned with the agricultural sector, which is why we include them in the agricultural production complex. So we're going to look at the impact of agricultural related manufacturing
[00:14:25.080]Eric Thompson: As well as the share of the state's wholesaling and transportation activity that are ag related. There's also an ag tourism sector, which we included in the report so smaller sector, I won't focus on it today, but there's information about that in the report as well.
[00:14:46.980]Eric Thompson: Now, and doing our analysis.
[00:14:51.570]Eric Thompson: We're going to look at the economic activity within the agricultural production complex those five sectors, I described on the previous slide.
[00:15:03.420]Eric Thompson: But then we're going to move beyond that and consider the multiplier impact which occurs as the sales and income earned within that agricultural production complex spill over to the broader Nebraska economy so
[00:15:20.940]Eric Thompson: Generally speaking, what does that mean well, it means that businesses that are in the act production complex purchase some supplies and services from businesses outside of the complex and that obviously supports activity at those businesses.
[00:15:39.780]Eric Thompson: Just as importantly, if you look at the workers and the entrepreneurs in the agricultural production complex farmers, ranchers workers.
[00:15:49.590]Eric Thompson: Entrepreneurs around other ag related businesses.
[00:15:54.180]Eric Thompson: They have, they have their take home pay or their or their income.
[00:15:58.830]Eric Thompson: And they spend that throughout the economy as all of our household spend, spend, our income. So that really has a broad based effect on the state's economy supporting businesses from retail firms to
[00:16:13.320]Eric Thompson: Insurance companies to health care providers. We think of everything that a family spends its income on. So we're going to capture the direct economic activity in the agricultural production complex, but also this spill over
[00:16:29.820]Eric Thompson: Now we use something called the implant model to estimate these multiplier impacts the implant model reflects the structure of Nebraska is economy.
[00:16:39.240]Eric Thompson: And whether it's likely that people will make the purchases. I just described the spillover purchases in the state or from an out of state provider.
[00:16:50.460]Eric Thompson: Once we calculate the multiplier impact, add it to the direct impact activity of the ag production complex itself and it'll yield a total economic impact and then it's that total economic impact that we compare with the size of the state economy.
[00:17:10.380]Eric Thompson: So let's focus on the economic activity within the agricultural production complex. So this first slide deals with crop and livestock production in 2017 this data came from the census of agriculture.
[00:17:26.280]Eric Thompson: And what was found was that the value of the cover crops. We included 14 crops all the major crops grown in Nebraska included most of the crop production we found a total value of $9.3 billion in production.
[00:17:45.480]Eric Thompson: And those crops covered at 19 million acres
[00:17:49.920]Eric Thompson: I would surprise, no one to learn that actually a majority of that value of production was from the production of corn.
[00:18:00.180]Eric Thompson: But we did. We did examine 14 crops, obviously, including soybeans, we
[00:18:06.690]Eric Thompson: dry beans sugar beets. Hey, and alfalfa.
[00:18:11.400]Eric Thompson: Sorghum and so forth.
[00:18:14.190]Eric Thompson: Now we also looked at the total value of covered livestock production and, you know, again, all the major types of livestock livestock production were included
[00:18:23.610]Eric Thompson: And again, it would not be a big surprise to know that the lion's share of that total value was in cattle production as you see there
[00:18:33.000]Eric Thompson: Now, what about those ag related industries, manufacturing, on the one hand and wholesale and transportation, on the other.
[00:18:41.220]Eric Thompson: Well, the total value of agricultural related manufacturing activity in 2017 we got this information from that him plan model I described earlier.
[00:18:52.740]Eric Thompson: Was 32.6 billion. So we looked at ag related industries in food processing, such as animal slaughtering
[00:19:02.010]Eric Thompson: And there's obviously other many other components of food processing. We also look at ethanol production and we also looked at major industries that are key suppliers to the major manufacturing industries that are key suppliers to agriculture, such as farm machinery and equipment.
[00:19:21.210]Eric Thompson: Supplying agriculture here in Nebraska, but also around the country in the world.
[00:19:26.250]Eric Thompson: And you can see there are some of the larger sectors and each one of those categories. We also looked at ag related wholesale and transportation activity. Obviously, some of the activity of CO ops and related businesses are captured here.
[00:19:42.450]Eric Thompson: Trucking and rail are the primary transportation industries we focused on
[00:19:47.580]Eric Thompson: And we found that the truck transportation related to agriculture at a total value of production of about 2.1 billion in 2017 so a significant chunk of Nebraska's truck transportation sales is related to Nebraska agriculture.
[00:20:08.610]Eric Thompson: Okay, so what did we find again focusing on our statewide economic impacts.
[00:20:14.430]Eric Thompson: Well for crop production statewide. We found a statewide economic impact, including the multiplier impact of 14.4 billion in terms of output which is business sales.
[00:20:26.280]Eric Thompson: 4.6 billion in terms of value added and then you can see the income and employment there as well and you as you might expect, irrigated corn and soybeans accounted for about half of that crop impact so irrigation is a pretty important part of our statewide crop impact.
[00:20:46.920]Eric Thompson: And actually, before I go on, just focus in the back of your mind and that 4.6 billion and value added on the crop sector.
[00:20:54.540]Eric Thompson: Now let's look at the livestock sector, a 17 and once you include the multiplier impact of $17.2 billion economic impact.
[00:21:04.200]Eric Thompson: About 5.4 billion in value added. So if we add up the value added from crops and livestock. It adds up to about $10 billion in 2010 the total impact, including the multiplier.
[00:21:18.060]Eric Thompson: You can see the labor income and employment impacts there as well, obviously the lion's share again of that was due to cap.
[00:21:27.360]Eric Thompson: Now let's look at the ag related manufacturing sector. So this is not the entire manufacturing sector in Nebraska, just the parts of it that are closely linked to agriculture.
[00:21:37.830]Eric Thompson: You see 42.8 billion and output and 11.2 billion and value added. You may recall that crop and livestock value added impact added up to about 10 billion.
[00:21:49.770]Eric Thompson: In the ag related manufacturing is 11.2 billion. So a lot of the value added opportunities created by Nebraska agriculture actually occur in these related sectors, rather than an agricultural production itself.
[00:22:04.950]Eric Thompson: You see the the labor income impact and the jobs and actually ag related manufacturing the impacts of that on the state economy tend to exceed the combined impact of PRI crop and livestock production, with the exception of employment.
[00:22:21.600]Eric Thompson: So in addition to their own impacts crop and livestock production are supporting a broader impact in sectors like manufacturing
[00:22:32.010]Eric Thompson: There's also, as I mentioned, an ag related wholesale and transportation industry. You see the economic impact there with a value added about 4.4 billion 2.7 million should be billion, forgive me. That's a typo and labor income and 42,000 jobs trucking accounts for about 40% of this impact.
[00:22:57.810]Eric Thompson: So we're to add it all up and we added in the agritourism in there as well. You'll see about an $82 billion impact on output.
[00:23:08.640]Eric Thompson: In 2017 if you focus on growth state product. Again, that's kind of analogous to gross domestic product, how we measure the size of the US economy. We had a $25.7 billion impact in 2017 labor income about 14 billion and more than 300,000 jobs in our state.
[00:23:35.100]Eric Thompson: So those are the main findings at the statewide level. I'll just speak a few moments about some of our regional impacts. You can see the agricultural regions of Nebraska here.
[00:23:45.120]Eric Thompson: Three regions in the east of the state central Nebraska region, encompassing the tri cities in central Nebraska, but the South and North regions and then the to the perhaps the Northwest North region is a bit Western and character as well. But the two western regions northwest and Southwest
[00:24:07.710]Eric Thompson: So,
[00:24:09.660]Eric Thompson: Agriculture is quite important as, as we know, throughout the state of Nebraska, but there are some there is some variation in agricultural production in these eight regions.
[00:24:23.160]Eric Thompson: So corn and cattle are obviously a focus of the ag AG economy in all eight regions, but what are, what are some of the variations in our estimation well
[00:24:32.370]Eric Thompson: Eastern and Central Nebraska. In addition, the corn and cattle also focus in a big way on soybean and hawk production and now increasingly poultry production as well.
[00:24:44.340]Eric Thompson: That South region below the tri Cities area, perhaps, similar to the east and the central that is a little less invested in hog production and somewhat more focused on wheat production that North region which is broadly broadly encompasses the sand hill but Nebraska.
[00:25:05.730]Eric Thompson: Also focuses on alfalfa and other types of a production and the Northwest and Southwest regions, arguably, are some of the most diverse agricultural production regions in the state.
[00:25:19.470]Eric Thompson: They maybe have a little less soybeans than eastern parts and central parts of the state, but a greater emphasis on week sugar be and driving production. So this a variation in the crop and livestock focuses of the different regions.
[00:25:35.400]Eric Thompson: Perhaps explains in part why the economic impact is a little different in the regions of Nebraska as well.
[00:25:43.320]Eric Thompson: So focusing on that value added measure, which I think is the best focus, since it's analogous to grow snap gross domestic product, which we use to the study, the size of the national economy.
[00:25:55.410]Eric Thompson: You can see here that variation. So regions in the east, such as the Northeast Nebraska region or the southeast Nebraska region over 40% of the gross regional product that's the regional Analogy, analogy for growth state product.
[00:26:15.330]Eric Thompson: The agricultural production complex with its multiplier impacts accounts for over 40% of the economy there and nearly as much in the North region just shy of 40%
[00:26:27.570]Eric Thompson: High in the 30% we find the south and central regions and then we see somewhat lower percentages in the northwest and southwest of the state.
[00:26:36.240]Eric Thompson: And in the east of the state. Now the East encompasses the Omaha and Lincoln areas as well as grand parts of Grand Island.
[00:26:47.400]Eric Thompson: So that's really the largest share of the overall Nebraska economy, we don't have it. It's in the report that that the total output of the agricultural production complex is actually the greatest in eastern Nebraska, but as a share of the economy. It's about 11%
[00:27:07.740]Eric Thompson: Now, if you were just looking at that gross state product.
[00:27:13.350]Eric Thompson: Figure, there is a similar pattern for labor income and employment, if you consider the share of labor income and employment, due to the agricultural production complex in the different regions of the state.
[00:27:25.830]Eric Thompson: However, employment shares tend to be a little larger and labor income shares or even grow state product shares, there's several reasons for that. Obviously, there were lower farm incomes in 2017 as Brad discussed early on.
[00:27:41.400]Eric Thompson: So that's going to affect labor income shares as well as value added shares, but less so employment.
[00:27:49.560]Eric Thompson: The other thing is there are some proprietors that operate relatively small operations fewer acres or small herds of animals so that the jobs still get counted as jobs, even if
[00:28:01.590]Eric Thompson: The output and income isn't as great. So those are the two reasons. You see, somewhat larger share in employment and labor income and value added.
[00:28:12.630]Eric Thompson: So here's our results for labor income again nearly over 40% in the northeast region.
[00:28:19.530]Eric Thompson: And in the 30s and the north south and southeast regions and in the central region that a significant share of the labor income earned and these economies is due to the agricultural production complex in the 20s in Northwest and Southwest regions and around 10% in the east.
[00:28:39.390]Eric Thompson: We look at it in terms of employment, I told you these were all larger general and and actually up over half the employment in the north.
[00:28:46.980]Eric Thompson: sand hills region and Nebraska is due to the egg production complex or its multiplier nearly half in the northeast and IN THE HIGH 30s in the south southeast and central regions.
[00:29:01.440]Eric Thompson: So those were our main findings in terms of numbers. I'm going to pass it off now to Dr. Jeff Stokes, to summarize our findings.
[00:29:14.220]J. R. Stokes: Thanks, Eric.
[00:29:17.010]J. R. Stokes: I have easy job. I think if we sort of take a look at this at the at the 500 foot level.
[00:29:24.270]J. R. Stokes: It's pretty clear that we have some bulleted items here but but overall, that, you know, agriculture has been and I think continues to be and will likely be into the future pretty important for the state first one there just talks about those spillovers that Eric sort of
[00:29:41.550]J. R. Stokes: Introduced and they are significant for the economy as far as AG impacts on the Nebraska economy. They are consistent, we do see some volatility when it comes to farm income. But when you look at ag related manufacturing transportation, etc.
[00:30:00.570]J. R. Stokes: It tends to be the case that that we see a lot a little more stability there and consistency there, regardless of what's happening with the farm incomes.
[00:30:10.830]J. R. Stokes: I'd like to think of these next two is sort of upstream and downstream but farm income and productivity are critical to the production sector but productivity and production also vital to the to the broader sector, whether that's regionally or within the state itself.
[00:30:29.280]J. R. Stokes: Important components for future success we, you know, our charge really wasn't to delve too deeply into, you know, making some sort of a statement here are suggesting policy, but
[00:30:39.540]J. R. Stokes: It's pretty clear that that AG being as important as it is for the state that anything along the lines of research and development or any policy discussions.
[00:30:49.530]J. R. Stokes: That might happen to the extent that they they take agriculture into Agon Nebraska into consideration. I think probably those those mean good things for the state as a whole.
[00:31:02.280]J. R. Stokes: So, you know, overall it, you know, again, if I could just sum the all of those bullets up and you know that if you look at the past studies, you look at the study we did
[00:31:13.980]J. R. Stokes: And looking into the future, when we do this again in a few years I we see some small changes here and there but AG is just continues to be pretty important for the State of Nebraska.
[00:31:25.890]J. R. Stokes: That's kind of what we do here. So I guess with that we, looks like we have some questions and maybe we could turn it over to guess, Larry.
[00:31:34.890]Larry Van Tassell: Alright. Thanks. Great presentation, guys.
[00:31:38.190]Larry Van Tassell: So Erica, besides the aggregate data, is it possible to get this information at the township size level or if not the county level.
[00:31:51.000]Eric Thompson: Yes.
[00:31:52.560]Eric Thompson: Not from our report. So we you know we had to
[00:31:57.360]Eric Thompson: We had to scope out our report and plan to produce information at the regional and state level. But ultimately, we built up our analysis based on county data aggregating it to the
[00:32:11.280]Eric Thompson: regional and state level.
[00:32:14.760]Eric Thompson: Using whether it was the implant data for
[00:32:19.470]Eric Thompson: Manufacturing transportation and wholesaling or whether it was the census of agriculture data for crop and livestock activity. So it is technically possible to do that.
[00:32:33.000]All right, good.
[00:32:35.190]Larry Van Tassell: Also was any information gathered about new businesses in agriculture technology and other new businesses that either provide services to Agriculture producers or are involved in processing agricultural products for consumer consumption.
[00:32:58.020]Brad Lubben: Let me take the first stab at that, and we can discuss the implications
[00:33:03.600]Brad Lubben: As noted we base this on data as of 2017 census of agriculture data. So we have production data.
[00:33:14.940]Brad Lubben: Receipts
[00:33:17.190]Brad Lubben: Employment etc that that comes from that, from that period. It doesn't reflect the most recent
[00:33:25.140]Brad Lubben: new growth in animal agriculture in Nebraska particular and poultry sector expansion. It doesn't reflect that that's happened in the last few years.
[00:33:35.010]Brad Lubben: And presumably, and hopefully the next census and the next opportunity to study this will show a substantial increase in activity and
[00:33:46.830]Brad Lubben: And significant contributions to the continent. So, so, the most recent developments of the last two to three years, don't really show up in this analysis yet.
[00:33:59.580]Brad Lubben: both good and bad. We've, we've also had trade conflicts and now the coven 19 pandemic that has challenged us here in 2020 this database on 2017 proceeds all of that all of those shocks.
[00:34:18.660]Larry Van Tassell: Alright for comparison purposes. What are the other industries or sectors that have large, large share or impact on total state output.
[00:34:32.610]Eric Thompson: Well, Nebraska has, I would argue, three of in addition to agriculture three primary industries or main industries one I would call insurance and finance so
[00:34:51.060]Eric Thompson: Obviously there's a very large insurance carrier industry in Nebraska based in Omaha and Lincoln that has a substantial impact on our state economy. And there's also related finance industries.
[00:35:05.280]Eric Thompson: large banks and so forth and not not all of those are ag related obviously other segments of both finance and the insurance industry in Nebraska are very, very, very much related to agriculture throughout the state, including in its cities.
[00:35:22.590]Eric Thompson: In a I would say a second or a third one AG insurance and finance a third one would be transportation. So the raska
[00:35:33.750]Eric Thompson: If you compare it to other states typically has almost two people working in transportation per capita relative to the national average, who are very
[00:35:45.750]Eric Thompson: Transportation intensive economy that's obviously partly related to agriculture as we just talked about. But we're also the headquarters for for leading transportation companies are but
[00:35:57.420]Eric Thompson: Headquarters for three one and rail and two in trucking and then also have a major employment centers for a second real real real company.
[00:36:06.660]Eric Thompson: Plus is the highly entrepreneurial trucking industry in our state. So that's another key sector is significantly related to AG, but there's obviously those headquarters and other other specialties.
[00:36:19.380]Eric Thompson: And then lastly manufacturing. Well, about half perhaps somewhat more than half of our manufacturing industry is tied very closely AG. There's a whole other part of the industry that isn't and just like in any state that non AG manufacturing sector is important to our economy as well.
[00:36:39.810]Larry Van Tassell: Right. Great. Another attendee asks, Does the size of the average farming operation vary across the state. And does it affect the economic impact of the regions.
[00:37:00.360]Brad Lubben: So I want to get the question disappeared. Lori, sorry.
[00:37:02.880]Larry Van Tassell: Okay, sorry.
[00:37:04.050]Larry Van Tassell: This is
[00:37:06.030]Larry Van Tassell: This the size of the average farming operation query across the state.
[00:37:11.160]Larry Van Tassell: And does it affect the economic impact of the regions. Right, right.
[00:37:18.810]Brad Lubben: Again, let me start and Jeff. Let me ask you to to plan a response here too, but
[00:37:25.320]Brad Lubben: You know, certainly, we think that the size of our operations vary across the state.
[00:37:30.600]Brad Lubben: There's a level of land use intensity from more intensive cropping operations and and intensive livestock operations in the east.
[00:37:39.810]Brad Lubben: To more extensive or less intensive cropping and livestock enterprises, the further west we go so that affects farm size that affects sort of the local structure. Eric describe the regional differences in
[00:37:57.480]Brad Lubben: In employment or in jobs, there are more jobs as a share of the economy up in the North region, the same region. So you're talking about large cattle operations in the sand hills.
[00:38:12.030]Brad Lubben: But those operations reflect a bigger share of the overall economy up there as well. You talk about operations and needs that may be
[00:38:22.290]Brad Lubben: A little bit smaller. In terms of scale but but a more mix of enterprises one other factor to consider in trying to calculate any sort of average there as well. There's roughly 46,000 or so farm operations in the state.
[00:38:41.820]Brad Lubben: Currently, according to NASA data, but only a fraction of those. And in fact, a relatively small fraction of those are major contributors to the total agricultural output of the state.
[00:38:57.030]Brad Lubben: So,
[00:38:58.980]Brad Lubben: The same rules that generally hold nationally also hold in Nebraska.
[00:39:04.650]Brad Lubben: A large percentage of operations are small, but a very large percentage of total output comes from a relatively small number of large operations.
[00:39:15.420]Brad Lubben: That's not quite as much in Nebraska. Is it is nationally but it's certainly still still true there and and so the statistical definition of the average size of a farm is somewhat of a misnomer in that in that discussion.
[00:39:31.470]Larry Van Tassell: Anything that under that Eric
[00:39:35.400]J. R. Stokes: I guess from from my standpoint, not to cut you off air, but it wasn't clear whether how we were talking about size, whether that was in terms of acreage or in terms of
[00:39:47.760]J. R. Stokes: Income or or assets.
[00:39:51.210]J. R. Stokes: But I think, you know, Brad. Some that out pretty well. I'm not sure how we would shake out on the on the income.
[00:39:57.510]J. R. Stokes: But as far as size goes we you know we tend to we tend to get larger.
[00:40:02.550]J. R. Stokes: Acreage is, you know, as we move further west as that as that agriculture sort of shifts from row crop production over to to ranches, but I don't know exactly where we'd be at in terms of income if we made that that comparison.
[00:40:19.650]Eric Thompson: I don't have anything to add closer
[00:40:24.480]Larry Van Tassell: X contribution to the economy is a bit less compared to 2010 viewers. Is that due to downturn and farm income due to greater growth in the rest of the economy, or both.
[00:40:40.560]Eric Thompson: Since I also worked on a 2010 study. I'll take the first shot at answering that. So yes, you've identified two of the reasons. And there's actually a third reason
[00:40:51.450]Eric Thompson: So it is true that
[00:40:54.450]Eric Thompson: With incomes lower
[00:40:58.110]Eric Thompson: farm incomes lower that impacted certainly those GS gross state product and labor income shares
[00:41:07.170]Eric Thompson: On the other hand, because we were able to use the census of agriculture, we did a better job counting proprietors than we did in the 2010 study so
[00:41:16.440]Eric Thompson: The employment numbers actually benefited this time.
[00:41:20.700]Eric Thompson: One of the reasons is those lower farming comes the second reason is
[00:41:25.410]Eric Thompson: While the while the output and impact of the agricultural complex certainly grew between 2010 and 2017 it did the other parts of the economy did grow a bit faster.
[00:41:38.250]Eric Thompson: And then there. There's actually a third reason which is in the 2010 study we included a public sector component to the agricultural production complex people at universities or others in the public sector that work.
[00:41:52.680]Eric Thompson: You know that full their full time job is related to agriculture and rural development and we did not include that component, this time so that also reduce the impact somewhat that we were we're focused entirely on the private sector businesses, this time.
[00:42:12.540]Larry Van Tassell: Well what trends, have you seen over the past decade in the data analyzed.
[00:42:24.660]Brad Lubben: I think I'd say maybe Eric described it well on the in the sense of two of the trends that that have affected the share calculated today versus or in 2017 verses 2010
[00:42:36.450]Brad Lubben: farm incomes have gone downhill, at least farmer total farm receipts have gone downhill since early in the decade and that does affect the director value of ag output and and farm income.
[00:42:51.720]Brad Lubben: But we do continue to see
[00:42:54.630]Brad Lubben: Growing
[00:42:58.260]Brad Lubben: Economic activity outside of the sector. And so that's, you know, the argument or the rationale for the for the coin and share
[00:43:06.720]Brad Lubben: The slide that I shared earlier in the beginning would say even though farm incomes bottomed out in 2017
[00:43:14.970]Brad Lubben: Total egg production is still higher than what it was at the beginning of the decade. So the sector is still growing. It's just
[00:43:23.880]Brad Lubben: Faced with not just growing revenues, but also growing expenses and it's a larger sector, it just still has continued challenges at the moment.
[00:43:35.550]Larry Van Tassell: Right, good.
[00:43:38.340]Larry Van Tassell: Has there been any research on the relationship between Nebraska's agricultural community economy and the state's general economy.
[00:43:47.310]Larry Van Tassell: That is, do they tend to rise and fall together or do they follow different trends, that is to say when other businesses are weak does agriculture make up the difference.
[00:44:05.880]Eric Thompson: I don't know, I haven't done research on that. But perhaps have made observations over time.
[00:44:14.460]Eric Thompson: And I don't want to generalize too much, but I do think it's fair. We talked about this right Brad and Jeff that during the last two recessions our agricultural economy.
[00:44:26.670]Eric Thompson: Has really been one reason why Nebraska's economy is held up better than the national economy overall are some of the other states.
[00:44:36.900]Eric Thompson: State economies around the country and I don't want to say it's the only reason but it's one of them. So in the Great Recession and
[00:44:47.190]Eric Thompson: Agriculture was actually
[00:44:49.710]Eric Thompson: Thriving during a general period of economic slowdown. I think in the current recession.
[00:44:56.880]Eric Thompson: Or it's been more that agriculture, while impacted wasn't as severely impacted as some of the other segments of the economy and the fact that the fact that Nebraska's economy was relatively specialized in ag and food production helped
[00:45:14.730]Eric Thompson: Is one of the reasons our state economy wasn't impacted quite as harshly as other state economies around the country, but I'm not, I'm not able to generalize that i don't i don't know that agriculture.
[00:45:28.260]Eric Thompson: In strong years for the overall economy does poorly, necessarily, but I do. So I can't comment on the whole business cycle, but it did, it did seem to help us in the last two recessions.
[00:45:41.580]Larry Van Tassell: We're not sure if you can answer this or not but
[00:45:45.150]Larry Van Tassell: What if what was the contribution to the state of the manufacturing sector that excluded. What you included as the ag related manufacturing
[00:46:01.470]Eric Thompson: I didn't look at that, particularly
[00:46:06.660]Eric Thompson: I don't want to say for sure, but based on past impressions. I've formed, I would say it's a bit smaller than the ag manufacturing impact, but of in the same neighborhood of impact. We do have a large nine egg manufacturing sector in the state nag related. Excuse me.
[00:46:28.050]Larry Van Tassell: What proportion of each of the important
[00:46:31.650]Larry Van Tassell: Words proportion of each of the important portions of the economy consist of service sectors which usually don't contribute much to the property tax base.
[00:46:52.710]Eric Thompson: Well, and sometimes manufacturing doesn't either. Because you know a lot of manufacturers or
[00:47:00.870]Eric Thompson: have participated in the bed in the incentive programs and so forth that often often
[00:47:08.160]Eric Thompson: Include the
[00:47:10.230]Eric Thompson: Tax benefits related to the property tax.
[00:47:14.340]Eric Thompson: Yeah, I haven't looked closely at the degree to which the insurance industry recent recently the insurance industry or the trucking industry contribute to the tech space but
[00:47:26.820]Eric Thompson: service industries do tend to have less real property per unit of output. So certainly, the rail industry is one transportation industry does contribute quite a bit to the property tax base in certain parts of the state.
[00:47:45.450]Larry Van Tassell: So did the total value figures that were presented today. Take into consideration export sales.
[00:47:58.380]Brad Lubben: I think we can say in terms of
[00:48:02.130]Brad Lubben: The value of direct value of crop and livestock production that is based on Census of ag reported numbers for production and receipts and so that does reflect the value generated by exports that doesn't calculate the share that was
[00:48:20.100]Brad Lubben: Sent to the export market but it reflects the value of exports, the contribution to farm income.
[00:48:28.440]Eric Thompson: Likewise for agriculture related manufacturing
[00:48:33.840]Larry Van Tassell: All right.
[00:48:35.550]Larry Van Tassell: I'm assuming the data here is pre coven What conclusions can we draw about Nebraska has the ability to stave off more severe consequences from the pandemic due to our strong number of essential workers in an industry that will always be needed.
[00:49:00.480]Brad Lubben: We've been having conversations about this very question. I think Jeff has the answer.
[00:49:08.880]Brad Lubben: But you're on mute jack
[00:49:11.880]J. R. Stokes: If I'm on mute. That makes my answers better
[00:49:15.120]J. R. Stokes: Um, yeah, I don't know that I had the answer. I had the question this morning but
[00:49:20.580]J. R. Stokes: Definitely the data, our pre coven and the discussion this morning was about, you know, Nebraska, being
[00:49:29.250]J. R. Stokes: Obviously important in in terms of the essential because we do produce and manufacturer, a lot of food here.
[00:49:37.200]J. R. Stokes: And I think also the, the importance of the some of the transfer payments. And I think, you know,
[00:49:44.400]J. R. Stokes: Brad had some some insights on that this morning. I don't want to
[00:49:48.090]J. R. Stokes: Steal all your thunder here, but obviously those are important things for for propping up incomes and what might otherwise be a sort of an off year or at least a hiccup in a year. So I don't know if you have anything to add to that brand.
[00:50:03.720]Brad Lubben: Well, yes, and in the current environment you're right it's it's been noted how agriculture didn't shut down.
[00:50:10.650]Brad Lubben: Like some sectors were forced into shutting down in some sectors essentially shut down due to lack of demand.
[00:50:17.940]Brad Lubben: Agriculture didn't shut down and remained open as an essential industry facing challenges and pressure along the way. So agriculture didn't shut down, but it dealt with smaller commodity values.
[00:50:33.270]Brad Lubben: As we saw losses and in demand for crops and livestock and disruptions in supply chains.
[00:50:40.170]Brad Lubben: There has been substantial Federal assistance provided to help backstop those losses.
[00:50:46.680]Brad Lubben: To the tune that the federal assistance.
[00:50:50.730]Brad Lubben: In excess of $30 billion in nationally
[00:50:56.430]Brad Lubben: Is a significant driver of
[00:51:02.010]Brad Lubben: The bottom line for net farm income in 2020
[00:51:05.790]Brad Lubben: Speaking nationally and expecting a similar number here statewide
[00:51:10.950]Brad Lubben: Similar share so so the industry didn't shut down. It helped drive the Nebraska economy through the pandemic. It did deal with shocks and economic losses as a result. But they're also have been
[00:51:27.060]Brad Lubben: Assistance programs and payment cell producers through that shock.
[00:51:32.700]Brad Lubben: Looking ahead, the question remains, how quickly can and when and how quickly can we fully recover and and for agriculture. What does that mean in terms of slowing down or weaning off of the, the, the amount of assistance that's happened over the last couple years.
[00:51:59.460]Larry Van Tassell: Right there was a another question that asked about the economic tracker on the website opportunity insights.org
[00:52:09.960]Larry Van Tassell: That talks about supporting recovery from coven 19 I personally am not familiar with that website would have to do a little more
[00:52:18.240]Larry Van Tassell: Examination of it to determine if we could develop such that kind of a system for Nebraska a grad or anybody, Jeff. Eric, I don't know if you're familiar with that website have anything to add, add or not.
[00:52:31.800]J. R. Stokes: But what was it again learning
[00:52:34.080]Larry Van Tassell: Opportunity insights.org
[00:52:39.060]Brad Lubben: Yeah, I think it's something we can take a look at. And maybe there are lessons instead of a study every five or 10 years maybe there's, you know, increased opportunities to to try and
[00:52:53.790]Brad Lubben: identify trends in real time, but
[00:52:58.890]Brad Lubben: Just kind of comprehensive look at the sector really only can happen periodically.
[00:53:05.250]Brad Lubben: And then you stick with those those models are parameters and can judge movements over time.
[00:53:12.750]Brad Lubben: Okay.
[00:53:15.090]Larry Van Tassell: Well, thank you, gentlemen, for a great, great work there. It was a it's been enjoyable webinar today. And a lot of great insight.
[00:53:24.210]Larry Van Tassell: thank everybody else for enjoying us with us today reminder that a recording of the webinar will be posted at farm you and al.edu
[00:53:34.140]Larry Van Tassell: Where you can also register for other upcoming webinars as a reminder, check farm.eu and al.edu for a schedule of what have more webinars in this series, focusing on farm and ranch management issues relevant to Nebraskans
[00:53:50.850]Larry Van Tassell: The series continues next Thursday at noon. When we look at recent property tax reform in Nebraska.
[00:53:58.320]Larry Van Tassell: As a reminder, you will be receiving a short 32nd survey in your email, and we would really appreciate your feedback on today's webinar and your input on future sessions. Thanks again for enjoy for joining with us and have a good afternoon.
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