Date of this Version
A research report from the University of Nebraska-Lincoln Department of Agricultural Economics and Bureau of Business Research prepared by Eric Thompson (K.H. Nelson Professor of Economics and Director, Bureau of Business Research, UNL), Brad Lubben (Extension Associate Professor and Director, North Central Extension Risk Management Education Center, Department of Agricultural Economics, UNL), and Jeff Stokes (Professor and Hanson-Clegg-Allen Endowed Chair in Agricultural Banking and Finance, Department of Agricultural Economics, UNL).
Department of Agricultural Economics, University of Nebraska-Lincoln, September 2020.
Also available at https://agecon.unl.edu/agimpact#:~:text=In%202017%2C%20the%20total%20output,representing%2021.6%25%20of%20the%20total. and https://agecon.unl.edu/research/the-2017-economic%20Impact-of-the-nebraska-agricultural-production-complex-september-2020.pdf.
Nebraska is home to a large and diverse agricultural production complex involved in growing, processing, and transporting agricultural products as well as supplying agricultural producers. Included in this complex are: crop production, livestock production, agriculture-related manufacturing, transportation, and wholesaling, and agri-tourism.
This study has been conducted to provide a benchmark assessment of the economic impact of Nebraska agriculture on the state’s economy. The impact is estimated for 2017, the year of the most recently completed Census of Agriculture. That Census provides detailed information on production, employment, and other activity in crop and livestock production.
The study relies on this Census data and the IMPLAN (IMpact analysis for PLANning) model. The IMPLAN model provides detailed information about state and local activity in manufacturing, transportation, and wholesaling, including information for the year 2017. The IMPLAN model is also able to assess how economic activity in a particular agricultural or agriculture-related industry ripples throughout the area economy. Such multiplier impacts are added to direct industry activity to yield the total economic impact. Total impacts can be estimated for multiple measures including total dollar output (business receipts), gross state product (a value-added measure), labor income, and employment numbers.
Both statewide and sub-state economic impacts are estimated for the agricultural production complex. Sub-state analysis is undertaken given the diversity of natural resource endowments, demographics, and transportation infrastructure within the state of Nebraska. The structure of the agricultural production complex varies throughout the state due to these factors.
The combined direct and multiplier impacts of the agricultural production complex account for a significant share of Nebraska’s economy. For the year 2017, total dollar output (business receipts) was $81.8 billion accounting for 33.9% of the state’s total output, as seen in Figure ES.1. In terms of gross state product (analogous to gross domestic product, the broadest measure of the U.S. economy), the amount was $25.7 billion which represents 21.6% of the state’s GSP. Even in a year like 2017 with low commodity prices and modest farm incomes, between one-fifth and one-fourth of Nebraska’s economy can be attributed to the agricultural production complex. Few other states have an economy with this degree of agricultural prominence.
The labor income and employment impacts also are significant. The labor income impact (proprietor income, wages, salaries, and benefits) of the complex was estimated to be $14.3 billion in 2017, or 19.9% of the Nebraska total. In terms of employment numbers, the complex accounted for 321,000 positions or 23.3% of Nebraska’s total wage and salary and proprietor employment. Many of these positions are full-time, although part-time and seasonal employment at farms, ranches, or other businesses also are included.
Within the state, Northeast Nebraska’s regional economy is especially influenced by agriculture. Large volumes of both crop and livestock commodities are produced in the region along with agricultural inputs and processing activity. In Northeast Nebraska, the agricultural production complex accounted for 64% of industry output in 2017 and 46% of the region’s gross regional product (value-added), while employing or supporting 48% of the region’s workforce and 45% of its labor income. Agriculture’s prominence also was quite high in the Central, North, South, and Southeast Nebraska regional economies where more than one-third of the gross regional product, labor income, and employment were agriculture-related in 2017. The agricultural product complex accounted for 23.9% of gross regional product in Northwest Nebraska and 20.7% in Southwest Nebraska. Finally, the East region of the state generated the largest regional dollar volume of agricultural activity and agriculture-related employment numbers. However, given the presence of the state’s two largest urban centers, agriculture’s portion of the East region’s broader-based economy was smaller, but still quite important.