Economics Commons^™

Accounting Assumptions And The Farm Business, Timothy Meyer

Cornhusker Economics

Farmers in Nebraska and the surrounding area have been slow to adopt accrual accounting methods. This is no surprise; the alternative, cash accounting, is simple, provides a real-time analysis of the cash position of the firm, and works well with income tax preparation. However, cash accounting has no methodology for the special timing of agricultural production or specific processes to evaluate profitability, liquidity, or solvency. Accrual accounting, GAAP (Generally Accepted Accounting Principles), and finally the FFSC (Farm Financial Standards Council) rectify these shortcomings. Adoption of GAAP, and subsequently the FFSC “tweaks” will allow farmers and ranchers in Nebraska to make …

Maryland Nutrient Management Policies, J. David Aiken

Cornhusker Economics

Nonpoint pollution control. The federal Clean Water Act (CWA) regulates point sources of water pollution (such as municipal and industrial wastewater discharges to river and streams) but not nonpoint sources (NPSs), like farm runoff. EPA has provided financial incentives to states to develop and implement NPS programs but does not regulate NPSs itself. Clean water groups have sued to force states to implement wasteload allocation under the CWA on streams not meeting water quality requirements and to require cities and idustries to clean up their wastewater discharges to improve water quality. States can elect to regulate NPSs under this total …

Does Targeting Healthy Food Labels To Populations At High Risk Of Diet-Related Diseases Increase Label Effectiveness?, Christopher Gustafson

Cornhusker Economics

The decades-long increase in obesity in the U.S. has inspired multiple policies aiming to improve individuals’ food choices, which play an important role in diet-related diseases. Early policies—which have continued to be implemented and refined—took the view that providing consumers with information would give them the tools needed to choose a healthy diet. Both nutrition facts panels, which are provided on the side or back of nearly all packaged food products in the U.S, and calorie labeling in restaurant chains with 20 or more locations seek to address a lack of information among consumers.

While nutrition information is a necessary …

The Difference Between Maximum Profit And Maximum Production, Matthew Stockton

Cornhusker Economics

Nitrogen fertilizer (N) is commonly used as a production input to increase crop yields. It is included as one of the six Testing Ag Performance Solutions (UNL TAPS) program decision choices and contributes much to productivity as well as costs. Its use however is not without controversy. The over-application of N gets into the groundwater and nearby waterways becoming a pollutant. Excessive use does little or nothing to increase revenue but can inflate costs, thereby reducing profit. For these reasons and others, using the right amount of N has become a popular and important topic among those that use and/or …

The Role Of Farm Size In Crop Insurance, Sankalp Sharma, Cory Walters

Cornhusker Economics

The role of farm size in crop insurance has been a reoccurring U.S. political issue with multiple attempts at legislation proposing to limit premium subsidies to large producers. For instance, in 2015 bill S.2244, amongst other items, proposed to cap crop insurance premium subsidies at $40,000 per year1. The most recent attempt was made by the current administration in mid-2017, where they introduced the same premium subsidy cap of $40,000 per year. The first mention of the $40,000 figure emerged from a report sanctioned by the Government Accountability Office in 2012 (GAO-14-700, 2014)2. Eventually no premium subsidy caps were included …

Potential Economic Impact Of The Goshen/Gering-Ft. Laramie Tunnel Collapse, Jessica J. Groskopf

Cornhusker Economics

Goshen and Scotts Bluff Counties reside in the High Plains and receive less than 16 inches of average annual precipitation. This low precipitation makes surface-water irrigation a critical component of modern agriculture in this area. Farmers in these counties produce irrigated alfalfa hay, corn, sugar beets, and dry edible beans, as well as other hay and crops.

Surface-water refers to water derived from melted snow that is delivered through a series of dams and canals from the mountains of Colorado and Wyoming along the North Platte River. This infrastructure, often referred to as “The North Platte Project,” was built by …

Ag Lenders Panel Provides Insight Into Beef Systems Initiative, Jay Parsons, D. D. Redfearn, Mary E. Drewnoski

Cornhusker Economics

In 2017, the University of Nebraska-Lincoln Institute of Agricultural and Natural Resources (IANR) and Nebraska Extension made a commitment to implement a multidisciplinary Beef Systems Initiative (BSI). The BSI is administered by the Center for Grassland Studies and is comprised of six projects designed to develop and support the implementation of beef production systems that optimize feed resource use, natural resource conservation, and producer success in Nebraska through improved management of perennial grasslands and systems of integrated crop-beef cattle production. In addition to the BSI, a parallel project funded by the Foundation for Food and Agriculture Research (FFAR) is studying …

Managing Farm/Ranch Transfer To Next Generation, Allan Vyhnalek

Cornhusker Economics

The first step to have the next generation come back to the farm or ranch is to get them there. The next step is to keep them there. This requires thought about how to transfer management and ownership of the operation over a period of time. Four phases of transfer have been identified and are discussed in this article.

The first phase is Testing. Before transferring management and ownership, the current owner needs to feel like the younger generation is ‘tested’ or able to effectively help with the operation. One older farmer said to me, “I think my sons want …

Accounting For Risk: Agricultural Land Leases And Natural Disasters, Jim Jansen, Jeffrey Stokes

Cornhusker Economics

According to recent findings from the USDA Agricultural and Resource Management Survey, agricultural land rent totaled $2.44 billion in Nebraska for 2018. The survey found rent as the third largest farm and ranch production expense (USDANASS 2019). Natural disasters limiting the ability of farmers or ranchers to fully utilize rented land pose a financial risk to these operators.

The 2019 floods and related natural disasters lave left many landlords and tenants across Nebraska wondering how resulting damages will influence their agricultural properties . Contractual lease arrangements may have not fully accounted for these natural disasters. This article provides guidance on …

2018 Nebraska Top Efficient Farms, Tina N. Barrett

Cornhusker Economics

A quarter doesn’t buy much these days so it’s easy to dismiss the value, but when 25 cents is what separates the cost of production per bushel of corn between two groups, the difference in net return starts to add up.

In 2018 the net farm income average of all farms included in the Nebraska Farm Business, Inc. group was $94,121. That was a surprisingly high number, but when compared to the net income of $261,059 for the group called the Top Efficient Farms, it shows there is a significant difference. The Top Efficient Farms group is a selection of …

Measuring Impacts Of Uncertainty, Irreversibility, And Loss Aversion On The Adoption Of Crop Canopy Sensors Among Nebraska Corn Producers, Brooks Ronspies

Department of Agricultural Economics: Dissertations, Theses, and Student Research

Understanding barriers to adoption of Precision Agricultural Technologies (PATs) is important to the growth of agricultural productivity, efficiency, and sustainability. This thesis proposes and evaluates a model for estimating the impact of uncertainty, irreversibility, and loss aversion on producers’ adoption of crop canopy sensors in order to explain adoption behavior that contradicts previous expectations about the conditions necessary for technology adoption. The model is evaluated using estimated statistical distributions of price and field characteristics designed to match observations of actual corn and nitrogen prices, and of conventional and crop canopy sensor based nitrogen application. Results from this model using expected …

Ag Lease Termination And Hunting Rights, J. David Aiken

Cornhusker Economics

There are many questions regarding the differences between written and unwritten agricultural land leases for cropland and for pasture. This Q&A explores some of the more important differences, focusing on lease termination requirements and the status of hunting rights on leased cropland and pasture. How are cropland leases terminated in Nebraska? That depends on the type of cropland lease. If it is a written lease, the lease terminates according to its terms. If the lease does not address how the lease is terminated, it automatically terminates without notice on the last day of the lease (no six- months notice requirement). …

Designing Single-Family Residences: A Study Of The Positive Impact Of Interior Design In Creating New Home Value, Shawn M. Falcone

Interior Design Program: Student Creative Activity

This study seeks to demonstrate that interior designers should be included as primary stakeholders in the home construction market. The market demand for new single-family homes in America is a relative constant. The primary stake and role that land developers, architects, draftsman, home builders, bankers, appraisers, real estate agents, and buyers have in the home construction market is clear. What is less clear is the role in value an interior designer has in the home construction market. This thesis examines the impact designers have on home value when their expertise is utilized in space planning (i.e.: layout, function, room utilization, …

Which Credence Production Attributes Do Consumers Prefer? The Case Of Milk, Emmanouil Petrakis

Department of Agricultural Economics: Dissertations, Theses, and Student Research

The interest of consumers for non-traditional food production attributes like antibiotics free and animal welfare have made consumer preferences more complex. These new attributes, usually non-identifiable by inspection or experience of the product are called credence attributes. The objectives of this study are to analyze consumer preferences for milk production attributes by eliciting the relative importance of these attributes for consumers, and to identify possible sources of heterogeneity related to consumer characteristics and actual purchase data. The research method used to elicit consumer preferences is Paired Comparison Method. Consumers from California and Texas were administered the online survey questionnaire in …

How Does Identifying As Gluten-Free Impact Information Choice Regarding The Gluten-Free Diet?, Pratiksha Baishya

Department of Agricultural Economics: Dissertations, Theses, and Student Research

The market for gluten-free products is a multi-billion-dollar industry in the United States and has seen tremendous growth in the recent years. The retail sales of gluten-free foods in the United States almost tripled between 2011 and 2015, although rates of diagnosed gluten-related health problems have not risen. In addition to people who suffer from Celiac Disease, Wheat Allergy and Non-Celiac Gluten Sensitivity, there is a category or people known as PWAG (people who avoid gluten) who seem to have significantly contributed to this boom in the market for gluten-free foods. With more people choosing to adopt the gluten-free diet, …

The Value Of Grazed Corn Residue For Crop And Cattle Producers, Jay Parsons, D. D. Redfearn, Mary E. Drewnoski

Cornhusker Economics

The Western Corn Belt has historically been corn and wheat cropping systems with cattle integrated on nearby grasslands. Recent agricultural production data ranked Nebraska, South Dakota, Kansas, and North Dakota in the top 10 states for both corn and beef cattle production in the United States. In 2017, these four states had about 20% of the beef cow inventory in the United States with Nebraska alone having 1.9 million beef cows (USDA National Agricultural Statistics Service, 2018). Forage-based livestock production is a fundamental component of these agricultural economies. However, a large quantity of grasslands in this region were converted into …

Nebraska Monthly Economic Indicators: July 24, 2019, Eric Thompson

Leading Economic Indicator Reports

The Leading Economic Indicator – Nebraska (LEI-N) 1 fell by 0.29% during June of 2019. The decline in the LEI-N, which is designed to predict economic activity six months into the future, implies slowing economic growth in Nebraska towards the end of 2019. The leading indicator declined due to an increase in initial claims for unemployment insurance and a drop in both airport passenger enplanements and manufacturing hours. In addition, business expectations, which had been strong throughout the year, moderated during June. Respondents to the June Survey of Nebraska Business reported plans for only a modest increase in employment at …

2019 Nebraska Property Tax Issues, J. David Aiken

Cornhusker Economics

Nebraska property taxes are the tenth highest in the United States, sales taxes are the ninth lowest, and both income taxes and total state taxes are in the middle. Property taxes account for 38% of total state and local tax collections in Nebraska, the highest of any tax. Sales taxes are 29% of total tax collections, and income taxes are 26%. If property taxes, sales taxes and income taxes were equalized as sources of state and local revenue, property taxes would need to be reduced over $600 million.

Sixty percent of property taxes go to K-12 education funding. Nebraska state …

The World Is In Better Shape Than Most People Think, E. Wesley F. Peterson

Cornhusker Economics

Steven Pinker (2018, page 40) reports that “… large majorities in eleven developed countries said ‘the world is getting worse’ and in most of the last forty years a solid majority of Americans have said the country is ‘heading in the wrong direction.’” Recent polls conducted by the Pew Research Center show that Americans are pessimistic about the future (Gramlich, 2019) and that around the world many people are dissatisfied with the way democracy works in their countries (Wike et al., 2019). According to Twenge (2019), the level of happiness in the United States has been trending down for the …

The Economic Evaluation Of Input Use Prescription Maps: Are You Paying To Make Less Profit?, Taro Mieno, Grant Gardner

Cornhusker Economics

Technological advances in data collection and analysis engines have made variable rate input use application much more common. Producers typically purchase software that produces site-specific prescription maps or purchase maps from consultants. The process of generating prescriptions maps is typically black-box, i.e. the process is unknown. Does using these purchased maps lead to more profits for producers?

This article discusses a method of verifying the economic profitability of site-specific prescription maps using an on-farm field experiment and statistical and economic analysis. A 76-acre field in Crawford County, Ohio is used for the study.

The maps on the following page are …

Nebraska Business And Consumer Confidence Indexes: July 3, 2019, Eric Thompson

Leading Economic Indicator Reports

Business confidence fell sharply in Nebraska during June 2019 and consumer confidence dropped modestly. The Consumer Confidence Index – Nebraska (CCI-N) fell to 104.4 in June, above the neutral value of 100 but below the May value of 105.3. The Business Confidence Index – Nebraska (BCI-N) fell to 100.3 in June, at the neutral level and down 13 percent from 113.2 in May. When asked about the most important issue facing their business, 35 percent of respondents chose customer demand while 21 mentioned the quality and availability of labor, 16 percent mentioned competition from other businesses and 9 percent flooding …

Cover Crop Utilization Across Nebraska And Implications For Cropland Lease Arrangements In 2019, Jim Jansen, Jeffrey Stokes, Jay Parsons

Cornhusker Economics

The Nebraska Farm Real Estate Market Survey and Report 2018-2019 provides insight on recent trends in the market value of land and cash rental across the state. Each year the special feature section from this report covers topics on new or emerging issues related to the agricultural land industry in Nebraska. These topics reflect interest expressed by panel members and readership of the Nebraska Farm Real Estate Market Highlights Reports. The special feature section in 2019 focuses on trends and considerations for cover crops across Nebraska and implications on cropland lease arrangements.

Findings from the 2017 Census of Agriculture in …

Dealing With Control Of The Farm/Ranch, Allan Vyhnalek

Cornhusker Economics

As I have traveled the state presenting farm and ranch succession/transition workshops, I’ve run into several family situations where the older generation is lucky enough to have the next generation come back to the farm. The younger generation, in some instances, is not that young anymore and have formed knowledgeable opinions about how the farm or ranch should operate. I wrote this article to challenge both the younger and older generations as they move their operation forward as a family.

Long term family cohesiveness can become challenging if there are control issues within the family. The younger generation often brings …

Nebraska Monthly Economic Indicators: June 19, 2019, Eric Thompson

Leading Economic Indicator Reports

The Leading Economic Indicator – Nebraska (LEI-N) rose by 0.63% during May of 2019. The increase in the LEI-N, which is designed to predict economic activity six months into the future, implies moderate economic growth in Nebraska through the end of 2019. Strong business expectations were the sole reason for the increase in the leading indicator. Respondents to the May Survey of Nebraska Business reported plans to increase both sales and employment at their businesses over the next six months. Other components were mixed with airport passenger enplanments, initial claims for unemployment insurance and building permits for single-family homes pointing …

Will “Matopiba” Change The Competitive Landscape In The International Grain Market?, Fabio Mattos

Cornhusker Economics

In a previous article in this space (on 6/20/2018), I discussed changes in the corn market and highlighted how the rapid growth of the Brazilian winter crop has been reshaping the market within Brazil and abroad. However, since corn exported by Brazil comes mainly from the country’s center-west, its competitiveness in the international market is grossly impacted by the transportation infrastructure in Brazil. The same issue applies to Brazilian soybeans as well.

The development of a new agricultural frontier in Brazil, in a region known as Matopiba, may help Brazilian grain become more competitive and bring more changes to the …

Expanding The Farm Income Safety Net, Bradley D. Lubben

Cornhusker Economics

When the 2018 Farm Bill was passed in December, producers were looking ahead to implementation and thinking of the coming decision between enrollment under the Agricultural Risk Coverage (ARC) program or the Price Loss Coverage (PLC) program. With continued low price projections at the time, the safety net decision may have seemed relatively straight-forward. Now, with all of the weather and market challenges in 2019 coupled with ad hoc assistance expected from the federal government, the safety net and the decisions related to it have become exceedingly complex. A look at the wide and expanding safety net for crop producers …

Nebraska Business And Consumer Confidence Indexes: June 7, 2019, Eric Thompson

Leading Economic Indicator Reports

Consumer confidence rebounded in Nebraska during May 2019 and business confidence also improved. The Consumer Confidence Index – Nebraska (CCI-N) rose to 105.3 in May, above the neutral value of 100 and well above the April value of 95.6. The Business Confidence Index – Nebraska (BCI-N) rose 113.2 in May, well above the neutral level and up from 107.8 in April. When asked about the most important issue facing their business, 30 percent of respondents chose customer demand while 21 mentioned the quality and availability of labor and 18 percent mentioned competition from other businesses. Fifty-two percent of responding households …

Nebraska Property Taxes And The 2019 Flood, J. David Aiken

Cornhusker Economics

Much of eastern and central Nebraska suffered devastating flooding in March 2019. Much agricultural land, as well as agricultural, residential, industrial and commercial property has been damaged or destroyed. A 2019 bill just enacted— Legislative Bill 512—allows property owners suffering significant flood damage to have the 2019 property taxes on flood damaged property lowered.

Under prior Nebraska law, land and buildings were valued for property tax purposes on January 1 of each year. There were no statutory provisions for changing that property valuation after January 1 due to property damage, although some county assessors have done so in the past. …

Point-Of-Decision Prompts And Cognitive Resources, Christopher R. Gustafson

Cornhusker Economics

Many of us have long-term goals to maintain or achieve a healthy body weight. However, most of us have a hard time following through on these plans. Maintaining a healthy body weight requires constant consideration of the future consequences of our current actions, which are shaped by our immediate desires, such as eating the tasty-looking brownie at the coffee shop or relaxing after a long day of work instead of forcing ourselves to go to the gym. The difficulty in balancing short-term and long-term goals is reflected in the change in the average American body type over the past five …

Nebraska Monthly Economic Indicators: May 22, 2019, Eric Thompson

Leading Economic Indicator Reports

The Leading Economic Indicator – Nebraska (LEI-N) rose by 0.79% during April of 2019. The increase in the LEI-N, which is designed to predict economic activity six months into the future, implies moderate economic growth in Nebraska through the end of 2019. Strong business expectations were again the primary reason for the increase in the leading indicator. Respondents to the April Survey of Nebraska Business reported plans to increase both sales and employment at their businesses over the next six months. There also was growth in manufacturing hours-worked during the month.