Nebraska sees decline in agriculture due to crop prices and drought

LINCOLN, Neb. (KOLN) -The latest report from the U.S. Department of Agriculture shows an economic downturn for agriculture in Nebraska.

Major crops like corn, beans and even alfalfa hay are seeing a decrease in production. A number of factors are at play; drought this summer hurt production yields and inflation means the crops cost a lot to plant. All of this adds up to economic stress for the drivers of a major sector of Nebraska’s economy.

The USDA forecasts Nebraska’s corn production to come in 8% down from last year. Soybeans are expected to be 13% down and alfalfa hay is 35% down.

“What was planted was within the realms of what you would see in a given year,” said Jay Rempe, senior economist, NEFB.

This year’s crop was one of the most expensive to produce.

“Diesel costs are a lot higher, fertilizer costs are a lot higher, chemical costs, seed costs, all across the board they’re up quite a bit this year,” Rempe said. “There is a lot of money wrapped up in this crop this year. Any kind of pullback in terms of production makes that break-even point just a little harder to achieve.”

Volatility in the global market, like the Russian invasion of Ukraine, means prices have gone up for some products, like corn.

“Those commodities now are probably valued a little higher because of the uncertainty created by that situation, but at the same time it’s increased uncertainty,” Rempe said. “If you can imagine trying to manage producing a crop, and at the same time trying to figure out how to market it with prices running up and down, it just makes it that much more difficult.”

It’s more than just crop yield that’s taking a hit. The decline in production of alfalfa hay, which is used to feed cattle, is hitting the cow/calf industry in the state too.

“We’re the largest beef producing state in the nation,” Rempe said. “We’re already seeing our calf producers liquidate some of their herd, selling some of their cows because they can’t afford the feed or don’t have the capacity to feed them.”

Most crops in Nebraska are sold outside the state, so less product to sell means less money coming into the state.

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