Most farmers recognize the economic value that their agriculture enterprises, including livestock, bring to a school district and to their communities. It's not only revenue for the farms, but also employment, services and in-kind contributions that are much harder to track.
Last year, Nebraska producers had $12 billion in sales receipts from livestock. Given the fact that for every $1 of direct economic impact from livestock, an additional 62 cents or more in sales are generated outside the agriculture production complex, that means more than $740 million were realized in additional sales not related directly to livestock.
The largest livestock sector in the state — cattle — had a $5.96 billion multiplier impact on businesses and workers outside of ag production, according to the report, “The 2017 Economic Impact of the Nebraska Agricultural Production Complex,” which was prepared as a collaborative effort between the University of Nebraska-Lincoln Department of Agricultural Economics and the UNL Bureau of Business Research. Cattle is followed by economic impact from hog production, milk, poultry and eggs.
If you break out the impacts down to the local level, it is easy to understand how small expansions in livestock production can have major economic effects on a local area.
“Livestock has a multiplier effect in that it adds value to feedstuffs by creating demand for grains and hay in a local area,” says Steve Martin, executive director of the Alliance for the Future of Agriculture in Nebraska (AFAN). “This can reduce basis resulting in a higher price to the farmer. It also creates jobs in caring for livestock — from the livestock producer to the veterinarian to the feed salesperson to the hardware store.”
With expansion of production comes a greater need for goods and services, such as barber shops, clothing stores, coffee shops and restaurants, Martin explains.
“The key is keeping those dollars circulating in the local community, and the first step is feeding grain and hay to livestock, rather than exporting feedstuffs out of state,” Martin says.
Some out-of-state livestock operations may choose to relocate to Nebraska, bringing an influx of out-of-state money with it.
“A 5,000-cow dairy, for instance, will cost upward of $10 million or more to build, which is money coming into the local economy, providing for an increase in property tax and sales tax base, because dairies typically buy from local sources,” Martin says. “Much of the employment income from these operations will be spent locally on housing and living expenses.”
Many communities and counties understand these benefits, as evidenced through the statewide “Livestock Friendly County” program.
“Adopting the Livestock Siting Matrix is another way the county can show that their regulations have predictable results, which sends a signal to producers that if they meet regulations, they will be permitted,” Martin explains.
“Ultimately, the placement of livestock facilities will fall on decisions made by the county board,” he adds. “Community leaders can work with the county to ensure that zoning regulations that impact livestock are workable and make sense. Regular evaluations or audits of how those regulations impact modern livestock should be performed. This is something that AFAN can help with.”
Martin points out that livestock production continues along the path of being more sustainable and more environmentally friendly. “Livestock today uses less feed, water and land to produce more than we could just 30 years ago,” he says. “We have environmental regulations that dictate the application of manure at an agronomic rate and application practices that are geared toward reducing odor and runoff.”
Manure doesn’t have to be looked upon as waste. “The UNL team of biological systems engineers continually works to improve manure management practices,” Martin says. “Technology, like GPS and field mapping, allows for the manure to be injected right next to the location where seeds will be planted, or even sidedressed as crops emerge, allowing for less manure to be applied on a particular field, but with better yield results.”
Gateway for young producers
Most rural communities continually urge their best and brightest high school graduates to consider returning home to work and raise their families. Livestock is one way that farm youth can join the operation and return to rural Nebraska.
“One way of getting into farming is to find a job that will support the beginning farmer as they build equity to be able to grow their operation,” Martin says. “Livestock provides a four-pronged effect to help a farmer reach their goal. Depending on the type of livestock production a farmer selects, there will be positive cash flow; manure that offsets fertilizer costs or can be sold; depreciation that can be written off income taxes; and built-in equity position. Together these four things positively impact a beginning farmer’s financial situation.
“Calling livestock as a gateway into farming is a great way of phrasing how it works,” Martin adds. “What we ultimately see in many states is that after three to seven years, the farmer has equity to expand their operation, and in many of those cases, we see them adding the livestock component, rather than adding acres, because of the speed in which they can build equity and write off the depreciation.”
If they do add acres to accommodate a younger producer into the operation, they can come in after a few years and build a livestock facility on a corner of the property, so the manure resources are close to the acres where they need it.
Learn more about sustainable expansion of livestock operations and the economic impact of livestock production in Nebraska by emailing Martin at [email protected].