Agriculture in Nebraska accounts for about 33% of the state’s economy, making it the third-largest agriculture sector percentage-wise in states with populations over 1 million people.
On Oct. 1, three UNL faculty members released a new report about the effects of agriculture on Nebraska titled “The 2017 Economic Impact of the Nebraska Agricultural Production Complex.” Researchers include Brad Lubben, Ph.D., associate professor of agricultural economics and extension policy specialist, Jeffrey R. Stokes, Ph.D., endowed chair in agricultural banking and finance for the Department of Agricultural Economics and Eric Thompson, Ph.D., associate professor of economics and director of the UNL Bureau of Business Research.
“Ag today produces more than it did 10 years ago or 20 years ago, and it will produce even more 10 or 20 years from now,” Lubben said. “It’s not withering. It’s only getting bigger.”
The report is a follow-up to Thompson’s previous study, which was published in 2012, based on the 2010 Census of Agriculture. Lubben, Stokes and Thompson gave an analysis of the report at a Zoom event as a part of the Department of Agricultural Economics’ 2020 Farm and Ranch Management webinar series.
According to Lubben, the study used data from the U.S Department of Agriculture’s most recent Census of Agriculture in 2017. The department conducts these censuses every five years. 2017 also happened to be the lowest-income year for farmers and ranchers in the past decade which the authors found to be significant.
While data related to COVID-19 wasn’t in the study, Thompson said he believes Nebraska has been less impacted by the pandemic economically than other states because its strong agriculture sector serves as a cushion.
“COVID is hurting prices, especially for some commodities,” he said. “But it doesn’t mean the ag sector shut down. The sector still is critical to Nebraska’s overall income.”
The total output of agriculture production in the state has increased since the 2012 report, and the researchers believe it will continue to grow in the future.
The report revealed that 34% of business sales, 22% of the state’s gross product or total value of goods and services produced and about 25% of Nebraska’s jobs are connected to its agriculture. In comparison, in 2010, 41% of business sales, 27% of the state’s gross product and about 24% of its jobs were attributed to agriculture. Agricultural production in Nebraska involves crop production, livestock production, agriculture-related manufacturing, agriculture-related wholesaling and transportation and agri-tourism.
Crops created $14.4 billion in output, $4.6 billion in value-added to the gross state product, $2.6 million in labor income and 88,900 jobs in Nebraska. Irrigated corn and soybean were the source of about 50% of the crop production impact.
“As you might expect, irrigated corn and soybeans accounted for about half of that crop impact,” Thompson said. “So, irrigation is a pretty important part of our statewide crop impact.”
Livestock production included $17.2 billion in output, $5.6 billion in value-added to the gross state product, $3.1 million in labor income and 87,100 jobs for the state. Similar to 2010, cattle contributed to 80% of the economic impact.
Agriculture-related manufacturing was the source of $42.8 billion in output, $11.2 billion in value-added to the gross state product, $5.9 million in labor income and 104,400 jobs to the state’s economy.
“A lot of the value-added opportunities created by Nebraska agriculture actually occur in these related sectors rather than in agricultural production itself,” Thompson said. “Actually ag-related manufacturing, the impacts of that on the state economy tend to exceed combined impact of crop and livestock production with the exception of employment.”
Agriculture-related wholesaling and transportation accounted for $7.2 billion in output, $4.4 billion in value-added to the gross state product, $2.7 billion in labor income and 42,300 jobs with trucking being the source of 40% of the impact.
Thompson also said the economic multiplier effect, which is when sales and income earned in one sector are spent in other parts of the economy, allows for the agriculture sector to further contribute to the state’s overall economy.
“The workers and the entrepreneurs in agriculture production industry complex — farmers, ranchers, workers, entrepreneurs who run other ag-related businesses — they have their take-home pay or their income, and they spend that throughout the economy as all of our households spend our income,” Thompson said.
Mike Boehm, vice chancellor for the Institute of Agriculture and Natural Resources at UNL and vice president of agriculture and natural resources for the University of Nebraska system said he believes agriculture will continue to lead Nebraska’s economy in the years to come.
“Few other states have an economy with this degree of agricultural prominence,” he said. “Even as our cities grow and our economy diversifies, agriculture remains critically important to the economic prosperity of Nebraska, and it will long into the future.”