LINCOLN– Weak farm income will continue to hamper Nebraska’s economic growth during the next three years, according to the latest long-term forecast produced by the University of Nebraska-Lincoln’s Bureau of Business Research and the Nebraska Business Forecast Council.
“Farm incomes have been driven down over the last four years and are expected to bottom out in 2017,” said Eric Thompson, director of the Bureau of Business Research, an applied economic and business research entity of the College of Business at Nebraska. “Weakness in its largest sector will cap growth in the Nebraska economy, despite strong performances in select sectors like construction and business services.”
The updated forecast, which covers 2017 through 2019, was released June 9.
Nebraska’s net farm income is projected to decline by nearly 16 percent for 2017, to $3.7 billion, as federal support for agriculture continues to decline and as yields normalize following a strong 2016 harvest. It would be the fourth straight year of declining farm income and would equal about half of the nearly $7.5 billion Nebraska farmers realized in 2011’s record-high year.
Still, the forecasters say agriculture should hit bottom in 2017 and begin trending upward in 2018 and 2019. Better-than-expected grain yields in 2016 softened the impact of sinking crop and cattle prices. Farm income decreased by 9.2 percent in 2016, compared to previous predictions of a 17 percent decline for the year.
Farm income is projected to rise nearly 4 percent in 2018 and more than 7 percent in 2019 mostly as a result of improved productivity. The forecasters say they don’t expect a rebound in crop prices.
The outlook for farm income contrasts with the good news that non-farm income is expected to grow by an annual average of about 4 percent during the next three years – exceeding both population growth and inflation. Job growth will hover around 1 percent a year.
The complete Business in Nebraska economic forecast, is available at the Bureau of Business Research, http://bbr.unl.edu.