Economic Tidbits

Snapshots of COVID-19 Impacts

Preliminary estimates released by the Food and Agricultural Policy Research Institute (FAPRI) at the University of Missouri showed U.S. net farm income will decline $20 billion in 2020, or 17 percent compared to 2019, primarily due to COVID-19 impacts.

The estimates suggested crop receipts nationwide will be off $12 billion, while livestock receipts could fall $20 billion. Nebraska agriculture will not be immune from the negative fallout from COVID-19.

Snapshots of potential revenue losses in Nebraska resulting from the COVID-19 outbreak are offered below. The estimates represent the potential differences in revenues given price changes since the beginning of the year and early April. The estimates do not account for any financial assistance which might be received through the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), farm program payments, or other means of financial assistance. Market volatility and daily events mean prices are ever-changing. Thus, the estimates are not meant to be an accurate accounting. Instead, they are intended to offer a sense of the magnitude of the potential impacts to Nebraska. If markets improve between now and the end of the year, the losses will not be as formidable. Finally, the estimates are not all-inclusive as other sectors of Nebraska agriculture acutely affected by the outbreak are not included.

Using data provided by the Nebraska Corn Board on when crops are marketed, last year’s crop production numbers, assumptions concerning this year’s crop production, and the differences in cash bids between January and early April, potential revenue losses to corn and soybean producers could be $1.2 billion. The losses equate to 14 percent of the state’s corn and soybean receipts in 2018.

Beef Cattle
Borrowing per head loss figures from an analysis of the potential impacts to the beef industry from COVID-19 for the National Cattlemen Beef Association and applying them to Nebraska cattle numbers gives estimates of potential revenue losses of $823 million. The losses equate to 10 percent of the state’s cattle receipts in 2018.

An analysis performed for the National Pork Producers Council found hog producers could lose an estimated $37/head. Using this figure and applying it to the March 1 hog inventory for Nebraska gives a potential loss estimate of $124 million. The loss equates to 15 percent of the state’s pork receipts in 2018.

In contrast to other commodities, cash wheat prices between January and early April increased. Nebraska farmers planted 920,000 acres of wheat last fall. Assuming average yields results in a potential gain to wheat producers on this year’ crop of $4.1 million. The estimated gain equates to 2 percent of the state’s wheat receipts in 2018.

It has been estimated Nebraska’s ethanol industry is currently operating at 41 percent capacity. Based on these assumptions and 2017 ethanol and by-product sales, the potential loss in sales to the state’s ethanol industry could exceed $2 billion.

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