July 14, 2014

‘Now is the time to act’ for Nebraska’s livestock industry


Nebraska Aims to Expand Livestock Industry after “Golden Triangle” Study

golden triangle report coverA recent study conducted by the University of Nebraska-Lincoln showcases that Nebraska farmers and ranchers may not be operating to their full potential. Although agriculture is still the primary driver of the state’s economy, the study shows that there is room for growth.

The study, which was headed by Bruce Johnson, professor emeritus in UNL's Department of Agricultural Economics, and Eric Thompson, UNL economics professor, aimed to get a current baseline for the state’s agriculture economy as well as provide several scenarios for expansion. The study, titled “Nebraska Animal Agriculture: Economic Impacts of Cattle, Hog, Dairy, and Poultry Industry Changes,” was jointly funded by the Nebraska corn and soybean checkoffs.

Kelly Brunkhorst, transitioning executive director for the Nebraska Corn Board said the idea for this project stemmed from concerns about Nebraska’s livestock industry. “As we spoke with our counterparts in surrounding states, we realized that outside of our beef industry, we were not witnessing the expansion of livestock they were developing. We felt we need to detail the advantages that Nebraskans could be enjoying if they understood the economics.”

The study, nicknamed the “Golden Triangle Study,” highlights the fact that Nebraska is well positioned for growth due to the strong interactive nature of its crop, livestock and biofuels industries, which each make up points of the Golden Triangle.

Now is the time to act

The results of the report were highlighted with pungent potential, but clearly presented the reality that now is the time for Nebraska to act. However, expansion doesn’t rest solely on the shoulders of those in the agriculture industry. Livestock expansion in the state will depend heavily on community stakeholders at the local levels. The scenarios depicted in the report have the potential to affect jobs, earnings, communities and households, as well as an enhanced quality of life for all Nebraskans with the value-added economic activity.

The authors of the study note that this report analyzes livestock expansion scenarios, providing a set of economic performance measures to sub-state regions and county-level economies. These measures will allow economic considerations to be incorporated into stakeholders' decision-making processes. 

cows eating cornA need to capture more added-value in state

While nearby states have seen significant growth in livestock production in the last 10 years, Nebraska has not kept pace, particularly in the cases of hog and dairy production. One of the key insights of the study lies in the fact that Nebraska still exports a high percentage of its crops – more than one-third of its corn crop, more than 80 percent of its soybean crop, and more than one-half its distiller’s grains production. More value for these products would be captured if they flowed into in-state, value-added processing.

In light of these trends, Johnson's team analyzed several livestock-expansion scenarios that industry leaders consider quite possible, taking into account the economic multiplier effects that ripple through the state's economy from agriculture, especially in rural areas.

Expansion scenarios

The report envisions the following expansion scenarios and estimates both direct and indirect economic impacts.

  • A 25 percent expansion of hog finishing volume in Nebraska; scattered across three regions of the state and 15 counties. About 270 on-farm units, each with a 2,400-head capacity and a twice-per-year turnover rate added.
    • Total economic impact: 2,676 new jobs; $6.1 million in local tax revenue.
  • More than a doubling of the state's current dairy herd numbers of 60,000, divided across three regions of the state and 18 counties. A total of 24 new dairy operations, each with a 2,500-head capacity and two new milk processing plants added.
    • Total economic impact: 3,128 new jobs; nearly $6.2 million in local tax revenue.
  • A 10 percent increase in fed cattle production in the state, with expansion distributed geographically in similar proportion to current patterns of production.
    • Economic impact: 11,661 new jobs; $16 million in local tax revenue
  • A tripling of poultry (egg-laying) production in the state.
    • Economic impact: 1,640 new jobs; $9.8 million in local tax revenue.

The authors summarized the report by saying, "In closing, the economic challenges posed, as well as the associated economic opportunities afforded, are simply too weighty in Nebraska's economic future to ignore. It is time to act."

The full report can be found at here.

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