Nebraska Economy Stumbles in First Quarter . . .

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The Bureau of Economic Analysis (BEA) at the U.S. Department of Commerce reported Nebraska’s gross domestic product (GDP) shrunk 4 percent in the first quarter of 2017 compared to the fourth quarter of 2016.  Nebraska had the worst first quarter economic performance of any state. The BEA attributed the dismal economic performance to the slumping agricultural sector.  Other plains states, also dominated by agriculture, saw their economies shrink in the first quarter as well.  Iowa’s economy contracted 3.2 percent; South Dakota’s fell 3.8 percent; and Kansas fell 0.7 percent.  Texas saw the greatest first quarter growth at 3.9 over the fourth quarter.  The country as a whole saw real GDP increase 1.2 percent in the first quarter, and the BEA’s first estimates real GDP growth for the second quarter at 2.6 percent.

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Not all the news on the economic front was bad for Nebraska. Governor Ricketts and the Nebraska Dept. of Labor announced Nebraska’s monthly increase in non-farm employment in June was 0.6 percent, the third highest in the nation.  Nebraska’s non-farm employment in June reached 1.031 million jobs.  Also, the Bureau of Business Research at the University of Nebraska-Lincoln reported that its most recent leading economic indicator predicts rapid economic growth later this year.  The indicator is a composite of economic factors like building permits for single-family homes, airline passenger counts, manufacturing hours, and the value of the dollar.  All components of the indicator rose in June, resulting in an increase in the economic indicator of 2.75 percent, suggesting a rapidly growing Nebraska economy at the end of the year.

Nebraska’s agricultural economy will continue to struggle in 2017.  The most recent projection indicates 2017 net farm income will fall 16 percent, the fourth consecutive year net farm income will have fallen.  Thus, agriculture will continue to dampen the state’s economic growth.  The first quarter numbers are surely evidence of this fact.  However, it appears the non-farm economy is picking up steam, offsetting the agriculture slump which should help the state post modest economic growth soon.

 

Jay RempeJay Rempe is the senior economist for Nebraska Farm Bureau. Rempe’s background in agricultural economics, years of experience in advocating at the state capitol, and firm grasp of issues allow him to quantify the fiscal impact of a regulatory proposal, and provide in-depth examination of key issues affecting Nebraska’s farmers and ranchers.

Precision Technology and Profitability . . .

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Research by Mike Castle, Brad Lubben, Joe Luck and Taro Mieno of the University of Nebraska-Lincoln shows the adoption of precision technology on farms is associated with profitability, but the researchers couldn’t definitively answer whether precision technology adoption led to increased profitability.  The researchers sought to answer the question of whether the adoption of technology drives increased profitability, or whether increased profitability drives technology adoption.  Using survey data gathered from members of the Nebraska Farm Business, Inc. (NFBI), estimates of adoption rates for various precision technologies since the 1990s were developed.  Technologies examined included global positioning system (GPS) guidance, automated section control, telematics, yield monitors, site-specific soil sampling, variable rate application of inputs, and crop imagery.

Figure 1 shows the adoption rates of various technologies by NFBI producers.  The researchers found yield monitors (YM), grid soil sampling (GSS), GPS-based guidance and auto-steer (AS) have been widely adopted with 70 percent or more of the NFBI members surveyed saying they have adopted the technology.   Over one-half of the NFBI members surveyed said they use GPS-based automatic section control (ASC) and variable-rate application of fertilizers and seed.  Only small percentages of producers have adopted the remaining technologies.  The adoption rates for NFBI producers are substantially higher than those reported in a USDA ARMS survey.  The researchers attribute the higher adoption rates to the fact producers in the NFBI program are more concentrated in crop production and are likely to be more progressive and management-oriented than average crop producers.

 

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Source:  Precision Agriculture Adoption and Profitability, Cornhusker Economics, June 21, 2017

The researchers’ initial analysis found the adoption of technology was associated with higher net farm income. However, association alone does not prove causation.  A more in-depth analysis showed positive effects on net farm income of technology adoption, but the results were not conclusive enough to determine definitively whether the adoption of precision technology had a positive effect on net farm income.  The analysis also showed the profitability of technology adoption increases over time as producers’ experiences with the technologies mature.

The research concluded the overall economic impact of technology adoption remains unclear.  Clearly more research is warranted to study the economics surrounding the use of precision technology.   Experience in the field would suggest there are benefits of technology, or their adoption would not rise over time.  Further research will help illuminate these benefits.  For more information on the research, Click Here.

 

Jay RempeJay Rempe is the senior economist for Nebraska Farm Bureau. Rempe’s background in agricultural economics, years of experience in advocating at the state capitol, and firm grasp of issues allow him to quantify the fiscal impact of a regulatory proposal, and provide in-depth examination of key issues affecting Nebraska’s farmers and ranchers.

Nebraska County Export Values . . .

 

Economic Tidbits logoInternational trade and foreign markets are critical to Nebraska agriculture.  To get a sense of which Nebraska counties are most reliant on international trade, the Nebraska Department of Agriculture has created a map showing export values by county for select commodities (see below).  Commodities included are beef and beef products, corn, dairy products, distillers grains, ethanol, pork and pork products, pulses, sorghum, soybeans and soybean products and wheat.  The map was created using 2015 Nebraska cash receipts data and attributing shares to counties based on county production data.  Platte County topped the state with export values of $245 million.  Custer, Holt, Boone and Cuming Counties fall in the next tier with export values between $125-$150 million.  Most counties in Nebraska generate at least $25 million in export values, which no doubt contributes significantly to their local economies.

The top counties stand to gain the most from increased access to foreign markets.  Free trade agreements with Mexico, Canada, Korea, Colombia and others, while benefitting all counties, have been particularly beneficial to these counties.  An analysis last year of the benefits of the TransPacific Partnership (TPP) by Nebraska Farm Bureau showed many of these same counties would have benefited from the $378 million in increased receipts Nebraska was projected to receive under the agreement.  The map clearly demonstrates it is in the interest of Nebraska agriculture to continue to press for more open international markets in agricultural products.
county exports

 

Jay Rempe is the senior economist for Nebraska Farm Bureau. Rempe’s background in agricultural economics, years of experience in advocating at the state capitol, and firm grasp of issues allow him to quantify the fiscal impact of a regulatory proposal, and provide in-depth examination of key issues affecting Nebraska’s farmers and ranchers.