Farm analysis shows drought pain, irrigation gain

2013-05-18T23:00:00Z Farm analysis shows drought pain, irrigation gainBy ART HOVEY / Lincoln Journal Star

In good times and bad, the farm economy leaves its imprint on the faces of the 115 farmers and ranchers in Nebraska Farm Business Inc.

As the recently released annual analysis from the Lincoln-based organization shows, 2012 was both good and bad to its members.

Some were left smiling. Others wondered what hit them.

“We’ve had really wide-spread prosperity over the last five or six years,” Executive Director Tina Barrett said, “and this is the first year in quite awhile that we had a big gap between those who made money and those who didn’t.”

Drought, irrigation access and lack of irrigation access are big parts of that story both in Nebraska and beyond, Barrett said.

“As I talk to my counterparts around the Midwest, that’s the one thing we had that they didn’t,” she said of irrigation.

On the other hand, the struggling livestock sector was a real drag.

The net effect was net farm income of $750,000 or more for the top 15 percent of analyzed farms in Nebraska and negative income numbers for the bottom 15 percent.

Without crop insurance, the financial damage inflicted on water-challenged producers by a drought of historic proportion would have been much worse, Barrett said.

“It’s huge. And even the dryland (unirrigated) guys, without crop insurance, it would have been a real disaster,” she said. “But even with crop insurance, we still saw some farms with negative numbers.”

Drought was not the only measure of changing times for crop and livestock producers under the Nebraska Farm Business microscope in 2012.

There are also pivotal numbers in the almost 90 pages in the Whole State Averages Book that have nothing to do with the weather, including these: 

* Prices for seed and fertilizer have risen rapidly from 10 years ago. The 2003 average cost of seed was $26,297. The comparable figure for 2012 was $71,935. On the fertilizer front, the average cost rose from $25,210 in 2003 to $105,211 in 2012.

* Average farm and non-farm debt load in 2012, despite surging crop prices, topped $900,000, more than twice the 2003 level.

* The corn cost per bushel in 2012 hit $4.45. As recently as October 2010, according to the Lincoln office of the National Agricultural Statistics Service, the average corn price received by Nebraska farmers was $4.22. Just three years ago, in May 2010, it was $3.51.

Barrett looks at all those numbers with some concern.

Considering the $4.45 corn cost per bushel and shifts in supply and demand, “we could be looking at prices that are negative really easily this year.”

On the debt load, “it’s been kind of a steady increase. It just hasn’t stopped.”

Some of the increase reflects favorable tax incentives to buy equipment, she said. Nonetheless, “my fear is that there will be more and more payments to make each year. And if prosperity kind of falls off, it will be hard to make those payments.”

Not all is doom and gloom. Average net farm income in 2012 was the second highest on record.

“From a positive standpoint, net farm income being where it’s at and where it’s been for the last five years is a great thing,” Barrett said.

On the flip side, “I think the cost of production, the total cost to produce an acre of corn or beans -- the risk is so high.”

Reach Art Hovey at 402-473-7223 or at

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