Nebraska Agriculture Packs Economic Punch
Nebraska’s agricultural production complex powers 22 percent of the state’s gross domestic product (GDP) (a measure equivalent to GDP at the national level), evidence that agriculture packs a powerful economic punch. The finding comes from a University of Nebraska-Lincoln (UNL) Dept. of Agricultural Economics and Bureau of Business Research study of the economic impact of the Nebraska agricultural production complex.
The study uses data from 2017 and includes five agricultural sectors: crop production; livestock production; ag-related manufacturing; ag-related wholesale & transportation; and ag tourism. The study captures the direct economic impact of each sector as well as the multiplier effects they have on the remainder of the economy through purchases of supplies and inputs and purchases of goods and services by owners and employees with income generated in these sectors.
Figure 1 details the economic impacts of agriculture using four measurements according to the study. The measurements are akin to the different means of measuring a batter’s effectiveness in baseball like batting average, on-base percentage, slugging percentage, total bases, etc. The measurements are different means of quantifying economic impact. The agricultural production complex accounts for $82 billion, or 34 percent, of the state’s total output. It accounts for 23 percent of employment, or 321,000 jobs, and 20 percent of the labor income. The jobs include those in restaurants, retail stores, banks, and other sectors created due to purchases by agricultural businesses or persons earning income from agriculture.
Figure 1. Nebraska’s Agricultural Complex as Percent of State’s Economy in 2017
Source: The 2017 Economic Impact of the Nebraska Agricultural Production Complex, Dr. Eric Thompson, Dr. Brad Lubben, and Dr. Jeff Stokes, University of Nebraska-Lincoln Dept. of Agricultural Economics and Bureau of Business Research, October 2020.
The study also examines the economic impacts across eight regions of the state. Figure 2 shows the agricultural production complex share of regional gross product in each region. Agriculture’s economic contributions range from 11 percent in the East (Omaha/Lincoln region) to 46 percent in the Northeast. Interestingly, the largest total dollar impact is found in the East region at $9.54 billion. However, because this region also accounts for the largest share of the state’s overall economy, agriculture’s share is lessened. Much of the impact in the East region is due a large agriculture-related manufacturing sector, but the economic impact of the crop production sector in the East is also larger than any other region.
Figure 2. Value-Added Impact as a Share of Regional Gross Product
Source: The 2017 Economic Impact of the Nebraska Agricultural Production Complex, Dr. Eric Thompson, Dr. Brad Lubben, and Dr. Jeff Stokes, University of Nebraska-Lincoln Dept. of Agricultural Economics and Bureau of Business Research, October 2020.
In summary, the study notes, “Total impacts reflect that the agricultural production complex is a basic industry which spills over significantly into the rest of the state’s economy. In fact, the economic multiplier calculated in this analysis suggest that these spillover effects result in direct economic effects being more than doubled for gross state product and labor income, and nearly double for employment.” In other words, the agricultural production complex packs a punch. To read the report, go to: https://agecon.unl.edu/agimpact.
