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.
“Annual inflation is reckoned to be 1.7m per cent (the government no longer publishes the numbers), which means that bolivar savings worth $10,000 at the start of the year dwindle to 59 cents by the end.” The battle for Venezuela, The Economist, February 2nd, 2019.
As the Legislature contemplates property tax and income tax relief in 2019, it might help to explore the history of tax relief efforts enacted since 2007. In that year, the Legislature passed LB 367 which established the Property Tax Credit Program, broadened income tax brackets, eliminated the marriage penalty and changed the standard deduction for income taxes. At the time, the package was estimated to provide $185 million in property and income tax relief per year--$110 million in property tax relief and $76 million in income tax relief.
An economic analysis of five complete beef production systems conducted by researchers at the University of Nebraska found calves born in June netted the greatest profit per calf (Table 2). The researchers attributed the greater profit for June-born calves to “greater age at weaning resulting in heavier weights into the feedyard.” The researchers also found that a semi-confined system, one with confinement of pairs in a dry lot during the summer and grazing corn in the winter can be competitive with pasture-based systems, but a year-round confinement system is not competitive with other systems.
U.S. farm sector debt is growing and is projected to hit a record-high of $409.5 billion in 2018, up 4.2 percent from 2017. Real-estate debt in 2018 is projected at $250.9 billion, and non-real estate debt is projected at $158.6 billion, both record highs. Dr. John Newton, Chief Economist for American Farm Bureau, recently examined farm sector debt figures, who holds the debt, and how that has changed in an AFBF Market Intel piece. It can be found at: https://www.fb.org/market-intel/.
“In 2018, for the first time, Brazil exported more than $100 billion worth of farm products. The total, up 6% from 2017, was driven mainly by soybeans, beef, and cellulose pulp, with China as the No. 1 market.” CNA cited in the Van Trump Report, February 1, 2019.
The second year of competition for the University of Nebraska-Lincoln Testing Ag Performance Solutions (TAPS) program is in the books and surprise, the most profitable team in the corn competition was a group of employees with the Nebraska Dept. of Environmental Quality (DEQ). Teams participating made decisions on six parameters in producing and marketing corn: irrigation management; nitrogen management; hybrid selection; seeding rate; grain marketing; and, crop insurance. The decisions were applied to test plots at the North Platte extension center. Twenty-eight teams made up of producers, university personnel, state agency personnel, and private agricultural businesses competed with 20 teams managing corn plots and 8 teams managing sorghum plots. Awards were given for most profitable, most efficient, and highest yield.
Property taxes on agricultural land in 2017 equaled 51 percent of Nebraska farmers and ranchers’ net farm income for the year. That’s one of the findings of an investigation undertaken by Dr. Dave Aiken of the University of Nebraska-Lincoln. Using USDA Economic Research Service data, Aiken calculated the percentage of net farm income that went to pay taxes on agricultural land for Nebraska and the U.S. as a whole for each year from 1950 to 2017. Aiken found, “that the percentage of net farm income that Nebraska farmers and ranchers paid for property taxes over this period was 46% higher than the comparable figures for US farmers and ranchers.” Aiken concludes, “Nebraska farmers and ranchers carry a property tax load almost one and a half times as great as US farmers and ranchers in general.”
Passage of the U.S., Mexico, Canada Agreement (USMCA) negotiated between the three countries last year is a top policy priority for U.S. agriculture in 2019. The agreement continues most of the NAFTA provisions relating to agriculture, but also adds new provisions to provide greater market opportunities for dairy and poultry and address non-tariff disruptions in trade between the three countries. Last year, a Purdue University study commissioned by the Farm Foundation examined the benefits to U.S. agriculture under different scenarios related to USMCA and the retaliatory tariffs currently in effect. A summary of the study noted:
“Median [U.S.] household income reached $61,372 in 2017, which is higher than comparable countries like Canada, Germany, France, Britain and Denmark, and exceeded only by a handful of tiny rich nations sitting on oil (Norway) or numbered bank accounts (Switzerland and Lichtenstein). U.S. median household size, meanwhile, has declined, so individual wealth has increased even more than the income numbers reﬂect.” Mona Charen, Creators Syndicate, printed in the Omaha World Herald, 1/28/19.
The beef sector has been largely unphased by the ongoing U.S. trade disputes with other countries. Fortunately, trade quarrels with the largest U.S. beef customers, South Korea and Japan, have been avoided. According to the U.S. Meat Export Federation (USMEF), through October of last year, the value of overall U.S. beef exports was up 19 percent compared to the previous year. Exports to Japan were up 15 percent and those to South Korea were up 50 percent. Japan was the largest U.S. customer, purchasing nearly $1.5 billion in U.S. beef. For Nebraska, the nation’s largest beef exporter, these exports have helped offset the less than stellar export performance of other agricultural commodities.
Net farm income in Nebraska in 2017 was 64 percent less than that reported for 2013, an astonishing decline. But, how does the experience of Nebraska producers stack up against producers in other states? David Widmar answered this question by examining changing farm incomes across states in a recent Agricultural Economic Insights blog post. Widmar compared average net farm income in each state for 2016-2017 with the average net farm income for 2011-2013, the boom era. The map below plots Widmar’s findings.
“We must accept finite disappointment, but never lose infinite hope.” Martin Luther King, Jr.