January 28, 2015

A rocky or joyous road ahead in the ag economy?

Nebraska has always boasted that the State’s economy is strong because of agriculture. And it’s true.

The combination in the agricultural production complex involves crop and livestock production, agriculture-related manufacturing, agriculture-related transportation and wholesaling, agriculture-related research and education and agri-tourism. The jobs directly and indirectly involved in these production systems are great and have been growing in the past few years.

However, what does the agricultural economy look like for 2015?

In the latest long-term forecast released by the Bureau of Business Research at the University of Nebraska-Lincoln, Nebraska is depicted as a haven of steady growth in an uncertain world. Though the national economy likely will fluctuate, most Nebraskans can expect modest but steady economic growth during the next three years, economic forecasters say.

However, the state's grain farmers likely will see declining income as the agriculture sector rebalances from a record $8.4 billion income in 2013. Farm income dropped more than 36 percent in 2014, to about $5.3 billion, and is expected to continue to decline another 7 percent in 2015, leveling off at about $4.8 billion to $4.9 billion in 2016 and 2017.

On the other side, livestock producers recently have benefited from lower feed costs and record prices for their animals because of shortages caused by drought. Lower livestock prices will contribute to a 7 percent decline in farm income in 2015, thought the sector should stabilize at about $5 billion annual income in 2016 and 2017.

The state as a whole is predicted to add more than 32,000 jobs through 2017 -- a 1.1 percent annual increase. Many of the new jobs will come in the construction industry, with the forecasters predicting an upswing in new home construction, commercial construction and road construction – which do affect agriculture.

Nonfarm income is expected to grow by an average annual rate of about 3.9 percent, nearly double the rate of inflation. Recovery will be less robust in Nebraska, in part because declining farm income will limit rural job growth, but also because the state's small population creates less need and capacity for quick job growth. (Remember, Nebraska is one of the 10 states with ridiculously low unemployment.)

So where do you see Nebraska’s ag economy headed? Will it be a rocky road for grain farmers as prices remain low and supply high? Where will new markets lead us?

This is just one of the goals of the Nebraska Corn Board. We are committed to serving our industry in market development, research, education and promotion. We see the challenges that Nebraska corn farmers face. And we want to build more markets and expand on current ones to create more demand for our high quality corn and co-products. Learn more about what we are doing at NebraskaCorn.org.

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