Category Archives: Nebraska

What’s Going on with Nebraska Panhandle Farmland Prices?

As the rest of the Midwest’s farmland valuations are cooling off, the Panhandle of Nebraska is on fire.

Jessica Johnson, Extension Educator at the UNL Panhandle Research and Extension Center has provided the following assessment of the situation. (It’s mostly about irrigation and tilling potential of land.) Also, this year’s farmland prices data is showing pastureland to be doing well as compared to other categories.


Farmland values in the Nebraska Panhandle continue to climb, according to results of the annual Nebraska Farm Real Estate Survey released in June. The results reveal that in 2014, the average statewide value of farmland increased 9 percent to $3,315 per acre. In the Panhandle, the average farmland value increased 20 percent to $855 per acre.

Several factors have contributed to rising land values in recent years, including record high farm income, low interest rates, expanding operations, and limited land sales. Even though some of these factors are still in play, the downturn in commodity prices led to more modest increases in statewide cropland values in 2014.

The value of gravity-irrigated cropland in the Panhandle increased 6 percent, consistent with the statewide average for this land class. Center-pivot-irrigated cropland in the Panhandle increased 21 percent to $3,770 per acre. The Panhandle district reported the highest percentage increase for center-pivot-irrigated cropland.

Dryland cropland also showed significant increases from 2013. Dryland cropland with no irrigation potential increased 21 percent to $845 per acre. Dryland cropland with irrigation potential increased 28 percent to $935 per acre.
The survey indicated that lingering effects of drought, the conversion of grazing land to cropland, and higher cattle prices could be factors driving up grazing and hayland values.

Non-tillable grazing land increased 9 percent in the Panhandle to $405 per acre. The Panhandle had the lowest reported increase of this land class in the state. Tillable grazing land had an increase of 29 percent to $550 per acre. Hay land had the largest increase of any land class in the Panhandle with a change of 31 percent from 2013 to 2014, resulting in an average hay land value of $1,025 per acre.

Water Used to Produce Ethanol in Nebraska

Do you notice any similarities between the two maps below? The top map shows us the corn production regions in Nebraska in 2012 (a drought year), the dark green areas having the highest production.

The red stars represent the ethanol plants in Nebraska.

The second map from year 2005 shows us the regions of Nebraska which irrigate most heavily using groundwater withdrawals. As you can easily see, the regions which irrigate most heavily, are the same as those that were most productive for corn in 2012.

Nebraska ranks as the third highest corn producing state, and it is also the state that is gifted with the most underground Ogallala Aquifer water. Seed corn companies prefer to use Nebraska’s irrigated corn acres for reliability during drought years and ethanol plants also like the reliability of corn production that Nebraska’s irrigated acres can provide. In 2008, 3.6 million acres in Nebraska were irrigated using center-pivots, and that number has surely grown since then.

According to a 2011 article out of Columbia University: “In Ohio, because of sufficient rainfall, only 1% of the corn is irrigated while in Nebraska 72% of the crop is irrigated. It takes 19 gallons of water to produce a bushel of corn in Region 5, 38 gallons in Region 6, and 865 gallons in Region 7. (Region 5 includes Iowa, Indiana, Illinois, Ohio and Missouri; Region 6 includes Minnesota, Wisconsin and Michigan; and Region 7 includes North and South Dakota, Nebraska and Kansas.) The Baker Institute estimates that producing the corn to meet the ethanol mandate for 2015 will require 2.9 trillion gallons of water.”

Nebraska ranks second of all the states in ethanol production. I was curious to find out what percent of Nebraska’s corn was turned into ethanol. The clearest and most recent numbers that I could find using a non-drought year belong to 2011.

To do the calculation, I used data provided by the National Corn Growers Association:

1,536,000,000 bushels corn was produced in 2011 in Nebraska
2.089 billion gallons of ethanol operating capacity* in 2011 in Nebraska
(if) 1 bushel of corn produces 2.8 gallons ethanol
then the % of corn going to ethanol in the state of Nebraska in 2011
= 49 %

From the University of Nebraska’s website, the issue becomes is it worth it?

Life cycle analysis (LCA) of ethanol production from corn grain has yielded a net energy ratio of 1.2 to 1.45 (Liska et. al. 2009). This represents just a 20 to 45% positive energy balance when producing ethanol from corn. This number has been the criticism of corn ethanol because of the large amount of fossil energy used to produce ethanol.

Yes, I know, the ethanol industry would argue that today’s conversion factor is more efficient, however… irrigated corn requires higher energy inputs even if the price of the water is considered to be free. It is possible that the energy returned on irrigated corn converted to ethanol in Nebraska is negative or about 1:1.

Where is the outrage on that, I ask the Nebraskans who proudly protested the Keystone pipeline to protect the state’s water?

In conclusion, the majority of the corn produced in Nebraska is produced by using irrigation water. And, around half of the corn produced in Nebraska is being converted into ethanol. Given ethanol’s negligible energy return, it looks like a hamster on a wheel that gets nowhere, a frivolous thing to do with this precious fossil water.

***

*note that this number should be quite accurate because ethanol plants were operating at near 100% capacity in 2011 in Nebraska.

See previous post: Pivots and Loss of Habitat in Flyover-Country

Pivots and Loss of Habitat in Flyover-Country

The middle of this nation is referred to as flyover-country, which is appropriate because much of our population lives on the East or West coast and flies over this area to get to the other side.

The satellite map above is of an area not all that far from where I grew up, in Northeastern Nebraska, an area squarely embedded within this so-called flyover-country. It’s really close to where Alexander Payne’s new movie “Nebraska” was filmed, in the towns of Plainview and Stanton. (I spent many days in Stanton when I was growing up, because my grandmother lived there.) We saw the movie last weekend, by the way, and it is true to Alexander’s style, artistic genius portraying a sorry story about the pitiful human condition made even bleaker with his choice of black and white film. It was winter, of course. Winter scenery can make bleak bleaker, and Alexander uses every bleak tool that he can find for this film.

Payne portrays realism well. He included the center pivot a few times in the film, and he showed non-English speaking Hispanics changing a tire in the local filling station. There were many camera scenes so desolate that they took my breath away. You could see that there was no new investment going on in his chosen communities, outside of roads and cars and pickup trucks, which he portrayed as being of prime importance to the people living there — evident through their conversations. Oh, and lest I forget, he never left out the brain drain, either.


Main Street of Stanton, Nebraska (Wikimedia)

There are many satellite maps of regions in Nebraska which look similar to the one above, but this particular one (up top) is an area north of Highway 275, northeast of the town of Clearwater. This region also made the national news not too long ago because of the huge vintage car auction held in Pierce, Nebraska, which you probably remember.

Don’t you love that town’s name, Clearwater? There aren’t many people that live in Clearwater, or near it for that matter, but the center-pivots are the new life-form, populating the region and enhancing the growth of corn by pumping out the clear water from underground. The town had 419 people in the last census. In the decade between 2000 and 2010, its Hispanic population percentage increased from 0.26 percent to 11.5 percent.

If you’ve never looked at this region using Google satellite maps, I wish you would. Maybe you’ve seen how pivots have taken over as you’ve flown over. It seems like they are almost everywhere that they can be, by now. For those of us who never invested in Valmont, we’ve missed out on a great investment opportunity.

Along with population losses, rural areas such as this one in Nebraska have lost too much wildlife habitat and biodiversity. A couple of barometers for us are the monarch butterfly and the pheasant. According to Harvest Public Media, in Nebraska, wild pheasant concentrations have fallen 86 percent since their peak in the 1960s. As for the monarch, there are no longer milkweeds in the Midwest which are necessary for them to breed on, and so their population is falling dramatically. No longer will first graders in science classes be able to marvel at the story about the massive and mysterious annual monarch migration, like you and I did.

Yesterday, I was reading a twitter feed from the Renewable Fuels Association, because they were testifying to defend ethanol mandates by our government at a hearing discussing the new EPA proposal to cut back the mandate to levels more in line with the blend wall problem. The ethanol-industrial-complex representatives kept saying that the ethanol industry is providing new jobs for rural America.

From what I’m seeing, if anything, the opposite is true, as increased corn production is leading to larger and too-expensive farms making it difficult to begin farming. As farm depopulation continues, the small communities also depopulate and lose their goods and services so that remaining rural residents drive farther for off-farm jobs and groceries.

There is a new USDA report out about ethanol industry job growth. It revealed that the new jobs created, which are negligible in number, are primarily for truck drivers and natural gas pipeline workers (to get the gas piped to the distillation plants and to get the corn hauled to the ethanol plants). Sadly, too, the USDA reports that net job growth in nonmetro areas since 2011 have been near zero, and that between 2010 and 2012, the rural areas have, for the first time ever, experienced a net population loss.

As for the population growth of pivots in the state of Nebraska, the most recent data that I can find out of the University of Nebraska-Lincoln, tells us that in 2008, there were 55,000 center pivots in the state, which irrigate about 6.7 million acres, and that center pivot irrigation increased by 5 percent between 2003 and 2008. It would be safe to assume that number went up a lot since 2008, as a result of high corn prices caused by the ethanol mandate. I can tell you that the farm next to my own family farm put one in exactly a year ago in our dryland corn farming county of Nebraska. I guess it was a knee jerk reaction to the drought of 2012, but doing so will punish those of us nearby when we have to dig our own general purpose water wells deeper.

The subject of irrigating corn for use as ethanol is a very interesting one, and important, too, as everyone tends to pretend it’s a rational thing to do in flyover-country.

Watch this space next week for more on this subject.

Agricultural Manufactured Exports from Nebraska Increased 15 Percent Last Quarter

This blip up in manufactured agricultural-related exports out of Nebraska during the second quarter of this year is rather interesting.

From the Federal Reserve Bank of Kansas City, a report by Nathan Kauffman.

After holding relatively steady for the past couple of years, exports of Nebraska’s manufactured goods climbed 15 percent, reaching a value of $1.7 billion. Much of this growth was driven by demand for agricultural products. A surge in shipments of processed meat products to Japan and China was accompanied by a jump in orders of agricultural and construction machinery bound for China.

Is this a trend or an anomaly?

SOURCE: http://www.kansascityfed.org/publicat/ne/ne-3q-2013.pdf