Farm Program Payments: A Changing Pattern in Nebraska’s Farm Income

Over the last decade, considerable change has occurred to the nature of farm cash receipts and net farm income. Total cash receipts to the state’s agricultural sector doubled from about $9.5 billion in 2000 to more than $19 billion in 2010. At the same time, total receipts to the crop sector accelerated even more - increasing from the $3 billion range to around $9 billion by the end of the decade, a threefold increase! The result has been net farm income levels climbing to the $4 billion range annually over the last few years, a level more than 50 percent above the ten-year average of the decade. A very profound aspect of this decade of change has been the role of Direct Farm Program payments. In 2000, direct farm payments to the state’s agricultural sector exceeded $1.4 billion and accounted for 97 percent of the total net farm income in that year (Figure 1 on next page). Crop commodity prices were low enough to engage counter-cyclical payments as well as a direct revenue transfer; and the crop sector economy was essentially sustained by them. In fact, for the first five years of the decade direct government payments remained a substantial financial element, averaging about 44 percent of Nebraska’s total annual net farm income. Moreover, the economic impact of the farm program was not limited to just the crop sector. The low cash prices of major feed grains during this time period were, in turn, providing indirect economic advantages to the livestock sector in the form of low feed input costs during these years; so the total economic impact across the state’s farm economy was substantial