June 26, 2002
Drought Already Is Hurting Nebraska's Economy
LINCOLN, Neb. - The deepening drought has already cost Nebraska's economy more than $300 million, a University of Nebraska agricultural economist said.
Losses to pastures, dryland alfalfa, other hay and wheat in the 26 counties already declared disaster areas are estimated at $154 million, said Roy Frederick, NU policy specialist. Add in the additional economic activity that is lost as farm income diminishes and the state is looking at a $307 million loss so far, he said.
Numbers are based on Damage Assessment Reports submitted by County Emergency Boards in late May and early June. Counties will continue to release loss estimates.
"Unfortunately (these hot and windy conditions have continued), and it's probably gotten worse," he said.
Cheyenne, Custer, Lincoln and Sioux counties have suffered the highest losses at more than $10 million each. Other counties were under $10 million each at the time reports were issued.
For perspective, $150 million in losses would amount to 1.5 percent of Nebraska's normal $10 billion in annual agriculture receipts, he said. However, the drought's total impact on fall crops, such as corn soybeans, sugar beets and sorghum, won't be tabulated until fall.
These losses affect the entire state not just those involved with agriculture, the Institute of Agriculture and Natural Resources economist said.
"Our whole economy is tied together," he said. "When there are losses, there are fewer purchases and fewer people going to larger urban areas to buy things."
In addition, farmers are spending more money on irrigation.
"Because of dry conditions we've had irrigation start earlier than normal," Frederick said. "It's expensive to irrigate and as we go along we'll have to make some assessment of how much irrigation costs have increased (production costs)."
Grazing Conservation Reserve Program acres and roadside haying are only partial solutions to replace lost resources, he said. Farmers and ranchers with crop insurance should be reviewing their policies to get the best returns.
"When you have a disaster, basically you are talking about dealing around the edges to soften the blows, but they won't make you whole again," Frederick said.
Farmers with crops on hand from last year may want to take advantage of the weather scare to sell some commodities they have on hand, or they can look at using the weather scare to preprice part of next year's crop, Frederick said.
06/26/02-SA
Roy Frederick - Ph.D.
Agricultural Economics
Professor
(402) 472-6225
Sandi Alswager Karstens IANR News and Photography (402) 472-3030
Department: Agricultural Economics
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