Welcome to Agriculture Economic Tidbits, a weekly e-newsletter (emailed Mondays) for farmer and rancher members of Nebraska Farm Bureau. Agriculture Economics Tidbits will provide you with timely tidbits of economic information and policy analysis focused on Nebraska’s largest industry, agriculture, and its key players, Nebraska’s farmers and ranchers. The newsletter will break down global and national economic trends and what they mean for Nebraska agriculture, stay abreast of latest market movements, and provide the latest results from Farm Bureau research on current policy issues like property taxes, school funding, farm programs and international trade—all with the goal of helping you maintain a viable farming or ranching operation.
The USDA National Agricultural Statistics Service reported farm and ranch operators in Kansas, Nebraska, North Dakota, and South Dakota employed 30,000 workers in April, down 6 percent from the previous year. However, the average wage paid this year, $15.58 per hour, was 6 percent greater than the average wage paid last year. Farm workers were paid an average of $16.13 per hour while livestock workers were paid $12.42 per hour.
“Veblen argued that consumption is not merely about satisfying needs, but is also used to signal status and prestige. The priciest cars may offer more nifty features and a smoother ride than a cheaper marque, but the vast difference is price is not primarily down to such advantages. Rather, the buyer is paying such cars’ value as a status symbol, which derives from the fact that very few people can afford one . . . These luxury items defy normal economic logic. In the mass market, productivity boosting innovations that allow firms to sell better products at lower prices are a route to success. For producers of conspicuous-consumption items, such cost-cutting does not conquer the market but destroys it.” Free exchange: enough is never enough, The Economist, June 8th, 2019.
When people think of the USDA, thoughts of farm or conservation programs usually come to mind first. It’s sometimes overlooked that the USDA administers fifteen food and nutrition assistance program which for over two-thirds of its annual spending.
“The curious mind embraces science; the gifted and sensitive, the arts; the practical, business; the leftover becomes an economist.” Nassim Nicholas Taleb
Agriculture producers’ sentiment regarding the agricultural economy as measured by the Purdue University/CME Group Ag Economy Barometer plummeted over the past two months. The latest nationwide survey of 400 agricultural producers yielded a barometer reading of 101, 14 points below the previous month and the lowest reading since October 2016, the month before the election of President Trump.
An analysis by Jayson Lusk, head of the Department of Agricultural Economics at Purdue University, found that consumer spending on beef has declined over time. Using data from the Consumer Expenditure Survey from the Bureau of Labor Statistics on household spending,
Nebraska’s per capita real gross domestic product (GDP) in 2018 equaled $58,141 and ranked 16th highest amongst the 50 states according to an analysis by SSTI of Bureau of Economic Analysis data. SSTI is a national nonprofit organization which offers information on the economy.
“Capitalists believe that market signals, not political appointees with political agendas, give satisfactory encouragement for reasonable commercial behaviors.” George Will, Protectionism a poison, not cure. Lincoln Journal Star. 5.30.19.
No doubt expletives have been voiced by folks involved in Nebraska agriculture regarding this year’s weather. Weather is a constant influence on production agriculture, but this year is one for the record books. Farmers’ struggles in getting crops planted have been well documented. Last week’s NASS crop progress report (as of May 26) indicated 81 percent of the state’s corn acres and 56 percent of the state’s soybean acres were planted.
For the first time in 20 years, property taxes levied on agricultural land statewide declined year-to-year. Taxes levied in 2018, $1.183 billion, were 1.5 percent or $17.5 million less than that levied in 2017. The decline marks the first time since 1998 that taxes on agricultural land have declined and only the fourth time over the past 38 years (1986, 1987, 1990, & 1998).
President Trump has been quoted as stating the federal government is collecting “hundreds of billions of dollars” in tariff revenue. The website Shopify defines a tariff as “a tax imposed by a government on goods and services imported from other countries to increase the price and make imports less desirable . . .” Tariffs are imposed by the federal government and the tax revenues flow to the federal treasury.
“We should never lose sight of the fact that the job of the market is to disseminate the information at hand and attempt to come up with a price that reflects what happens on a global scale.” Dan Hueber, thehueberreport, May 31, 2019.
Monday’s crop progress reports showed 70 percent of Nebraska’s estimated corn acres and 40 percent of the estimated soybean acres were planted as of May 20. In comparison, the 5-year planting progress averages are 86 percent for corn and 54 percent for soybeans. In March the USDA estimated 9.7 million acres of corn would be planted and 5.4 million acres of soybeans in Nebraska.
In Nebraska, for crop insurance purposes, the final planting date for corn in all counties is May 25 and the final planting date for soybeans is June 10. Farmers may be eligible for a prevented planting payment if acres have not been planted due to an insured cause of loss by the final planting date. Prevented planting will provide coverage equal to 55 percent of the original production guarantee in the crop insurance policy.
A recent Agricultural Economic Insights blog highlighted the impacts of delayed planting on national average yields. The article noted that there were only four years since 1980 in which the corn planting progress nationally was less than the progress made this year at a similar time in the planting season (week of May 13).
U.S. gross domestic product (GDP) grew 3.2 percent in the first quarter, higher than most economists expected. The growth marks 38 consecutive quarters of growth. Bob Young, President of Agricultural Prospects and former economist with American Farm Bureau, likens the recent GDP report to knowing what your blood pressure was this morning, “it provides no real information as to how your spouse’s actions will affect those numbers tomorrow.” Peeking underneath the surface in the recent report, Young worries “there’s a dark cast to these seemingly bright numbers.”
The 2017 Census of Agriculture provides another reminder of Nebraska’s high property tax on agricultural property. Figure 1 shows the average property taxes paid per farm as reported in the census. Nebraska ranks second nationally in taxes paid per farm, only behind California. Average property taxes paid per Nebraska farm and ranch operation was $16,107 in 2017.
Domestic production increases and foreign demand drove U.S. beef and pork exports higher in 2018 according to the USDA Economic Research Service. Beef exports increased 10.3 percent last year, the third consecutive year of increases. The growth was driven most notably by increases in exports to South Korea, 35 percent larger than that shipped in 2017.
“Despite a voluminous and often fervent literature on "income distribution," the cold fact is that most income is not distributed: It is earned.” Thomas Sowell
Agricultural exports in 2017 were worth more than $130 million for Cuming, Platte, Holt, Custer, and Dawson counties, the top Nebraska counties in terms of export value. This and other findings are part of a Nebraska Farm Bureau report on the value of agricultural exports to the state’s agricultural producers and counties. This year marks the second iteration of the report and includes comparisons of export data from 2016 and 2017. Commodities included in the analysis were corn, soybeans, soybean meal, beef, hides and skins, pork, wheat, ethanol and distillers’ grains.
Farms in Nebraska in 2017 numbered 46,332, down from 49,969 in 2012 according to the USDA Census of Agriculture. The USDA counts any farm which sells agricultural products of $1,000 or more as a farm. The number of farms in 2017 was the lowest reported over the past 20 years, with the only upswing occurring in 2012. Changes in the number of farms between each census are watched closely, while changes in producers often gets overlooked.