By Treasurer Tom Briese
At their October meeting, the Nebraska Economic Forecasting Board projected less than robust state revenue growth for the current fiscal year and the next biennium. In fact, receipts are expected to grow only $15 million from FY ‘25-’26 to FY ‘26-’27. And that comes on the heels of an update projecting a $141 million decline in the forecasted revenues for the current fiscal year.
One can make the case that these projections of state revenues are conservative. An analysis of historical data suggests that more optimistic projections could be justified. But in assessing the state’s fiscal outlook, a conservative approach is a sound approach, and I applaud the work of the Forecasting Board, the Department of Revenue, and the Legislative Fiscal Office for their work.
Against this backdrop, a recent headline pronouncing “Nebraska Farm Income Projected to Tumble” takes on special significance. According to a report from the Food and Agricultural Policy Research Institute at the University of Missouri, the trajectory of Nebraska agricultural receipts is downward. Working with economists at the University of Nebraska Lincoln’s Center for Agricultural Profitability, including Dr. Brad Lubben, the report notes a projected 17% reduction in Nebraska farm income for 2024, while U.S. farm income is expected to decline by only 6.2%.
In the Center’s Fall 2024 Nebraska Farm Income Update, it is noted that livestock receipts log an increase for ‘24, while crop receipts and indemnity payments decline significantly. This suggests the bulk of the farm income decline will come at the expense of our crop farmers. In the report, Dr. Lubben also notes a further decline in farm income is on the horizon for the ‘25 growing season.
An examination of some numbers for our corn and soybean farmers helps to illustrate the issue facing our producers. Depending on several variables, including yield and cropping practices, among other items, UNL has estimated the cost to produce a bushel of corn in 2025 as ranging from $4.00 to $5.00 per bushel, only slightly changed from ‘24. The cost for a bushel of soybeans generally ranges from $10 to $12 per bushel. At the same time, USDA projects corn prices to average $4 per bushel over the next three years, while soybean prices are expected to drop from $10.80 for the current marking year to $10 per bushel for the following two years.
The above numbers suggest profitability for our row crop producers could be elusive for the foreseeable future. In fact, many farms likely will be operating in the red. And throw in an ominous drought map, and some would conclude the situation is dire. At the very least, it creates a cascade of financial headwinds and economic uncertainty for both those farming families who rely on agriculture for their livelihood and for our mainstreet businesses who rely on those same families to keep their businesses afloat. And yes, it puts downward pressure on the revenue projections of the state itself.
What can be done to shore up the state’s finances, and at the same time help our ag producers and small business owners across Nebraska? There are a variety of steps that can be taken, but near the top of the list must be passage of a new federal farm bill. Price support levels in the current bill, passed in 2018, do not reflect the realities of today’s row crop margins. To address this, a substantial increase in the reference prices is warranted, along with other tweaks. But note this support would not arrive until fall of ‘26.
Immediate support could come from HR 10045, dubbed the FARM Act, introduced in Congress by Rep. Trent Kelly (R-Miss.), and co-sponsored by Congressman Don Bacon. The Farm Act is intended to compensate ag producers for 60% of their economic loss in the production of their 2024 crops. Back of the envelope math suggests the FARM Act, as introduced, could inject $1-$1.5 billion dollars into Nebraska’s ag sector within 90 days of passage. Those kinds of dollars could take some pressure off our producers and help shore up the outlook for our mainstreet businesses. And perhaps most importantly, the flow of those dollars rippling through our economy will create a substantial amount of revenue for state government, keeping Nebraska’s fiscal health on a sound footing.
