LINCOLN — Nebraska’s agricultural sector — which accounts for about a quarter of the state’s gross domestic product — faces a major question moving forward: Can markets and foreign trade rebound enough to offset the expected decline in federal coronavirus aid, aid that is expected to provide 35% to 50% of farm income this year?
That was one of the conclusions of a joint study released Wednesday that was undertaken by the Nebraska Farm Bureau and the Platte Institute, a think tank based in Omaha.
“There’s a great deal of uncertainty surrounding Nebraska’s agriculture sector and what the future holds,” said Jay Rempe of the Farm Bureau and one of the co-authors of the report. “Right now, there are a lot more questions than answers.”
Rempe and co-author Sarah Curry of the Platte Institute said that the state’s farmers and ranchers were already hurting before COVID-19 arrived, with farm income declining from record levels of more than $7 billion in 2011 and 2013 to just under $4 billion last year. Through June, Nebraska had the second-highest number of farm bankruptcies, trailing only Wisconsin.
But the coronavirus delivered a “one-two punch,” they said, beginning with a dramatic shift in the food chain, from producing primarily for delivery to restaurants and hotels, to supplying grocery stores.
Corn producers also took a hit because, with people staying at home, demand for corn-based ethanol plummeted, which depressed the price for corn and closed some ethanol plants.
The second punch came after the pandemic swept into the nation’s meatpacking plants, shutting some plants and slowing the slaughtering capacity at others. Livestock prices tanked, yet producers had to increase spending on feed to hold hogs and cattle longer until packinghouses could process them.
In June, the Nebraska Farm Bureau estimated that Nebraska’s ag economy could face nearly $3.7 billion in losses in 2020 due to COVID-19 if economic conditions did not improve.
But Rempe, in a conference call with reporters on Wednesday, said he’s seen some improvement, thanks to increased purchases of soybeans from China and aid payments made to farmers to help them weather the economic blows.
For instance, farms, ranches and feedlots got about 19% of the $3.4 billion in federal Paycheck Protection Program loans issued in Nebraska, helping save 22,000 jobs, the report said. The U.S. Department of Agriculture sent out $16 billion in Coronavirus Food Assistance Program checks to impacted farmers and ranchers, of which $679 million, through Sept. 8, went to Nebraska. Last week, an additional $13 billion in direct payments to ag producers was announced by the Trump administration.
Rempe said that a “large variable” in agriculture’s future is the length and magnitude of the economic damage caused by COVID-19. Will the world economy and foreign trade, as well as farm prices, rebound to offset that? he asked.