Agriculture 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, according to a new report by University of Nebraska–Lincoln researchers.
It's also a resilient industry. Even during years when farm and ranch incomes are low, other aspects of the agricultural production complex, including ag-related manufacturing, transportation, wholesaling and agritourism, tend to remain strong.
These are among the findings of the 2017 Economic Impact of the Nebraska Agricultural Production Complex report, which the Department of Agricultural Economics released last fall. Ag economists Brad Lubben and Jeffrey Stokes authored the report, along with Eric Thompson of the Bureau of Business Research.
The study was conducted to provide a benchmark assessment of the economic impact of Nebraska agriculture on the state's economy. The researchers chose to use data from 2017 because it was the year of the most recent Census of Agriculture, which is administered every five years by the U.S. Department of Agriculture. It also happened to be the lowest income year for farmers and ranchers of the decade.
COVID is hurting prices, especially for some commodities. But it doesn't mean the ag sector shut down. The sector still is critical to Nebraska's overall income.
In 2017, the total output of Nebraska's agricultural production complex was $81.8 billion, accounting for 33.9% of the state's total output. The state's agricultural sector contributed $25.7 billion to Nebraska's gross state product, representing 21.6% of the total. Even in a year like 2017 with low commodity prices and modest farm incomes, between one-fifth and one-fourth of Nebraska's economy was attributed to the agricultural production complex.
"Few other states have an economy with this degree of agricultural prominence," said Mike Boehm, Harlan Vice Chancellor for the Institute of Agriculture and Natural Resources at Nebraska and vice president of agriculture and natural resources for the University of Nebraska system. "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."Agriculture is also a huge driver of employment in Nebraska. Workers engaged in agricultural jobs during 2017 earned an estimated $14.3 billion, including income, wages, salaries and benefits, accounting for 19.9% of all income earned by the Nebraska workforce that year. In total, 321,000 workers — 23.3% of the state's workforce — were employed in a position connected to Nebraska's ag industry that year.
Even though commodity prices were relatively low in 2017, producers still hired workers, bought and repaired equipment and made other business decisions that kept most aspects of Nebraska's agricultural production complex strong. This, Lubben said, shows that farmers and ranchers tend to make investment decisions based on long-term trends, rather than based on a single good or bad season.
It also may explain why Nebraska has been more insulated from the impacts of COVID-19 than many other states, Thompson said.
"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."
Lubben said Nebraska saw a similar effect during the recession of 2008-09. For the most part, he said, commodity prices and international trade markets were strong during that time.
"During the downturn, the ag economy buffered Nebraska from the worst impacts felt by the general economy," Lubben said.
Lubben, Thompson and Stokes expect continued growth for Nebraska's agricultural production complex. Growing middle classes in China, India and elsewhere are creating new export markets. In addition, advances in technology could lead to growth in agricultural industries including food processing, ag-based manufacturing and biotechnology and transportation.
"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."