Now that fall has arrived, the attention of ag producers has turned to harvest.

Ranchers have completed their hay harvest and are preparing for the winter-feeding season once the grazing season comes to a close. The areas of the Sandhills that got some good rainfall this summer should have enough hay production to allow those ranchers to meet their needs this winter and hopefully build their hay supplies for future years when rain is not as plentiful.

Unfortunately, many did not receive necessary rainfall and may need to cull some of their cow herd to make available hay and grass supplies stretch if they are not able to find additional hay supplies.

Meanwhile, the crop farmers in the southern half of District 42 prepare to harvest fall crops. For many farmers, the fall harvest will be much shorter than normal as severe drought crippled production on non-irrigated acres. Even those receiving some rain may experience low yields in their fields and be required to harvest the limited bushels produced. In many cases, the cost of harvest will exceed the economic value of the crop. Although most carry Federal Crop Insurance to protect against crop failures, no producer wants to earn their revenue this way. Further, the Federal Crop Insurance Program pays claims based on a producer’s 10-year average and fields with no or low yield will negatively impact future averages and thus reduce the future safety net.

Both ranchers and farmers in District 42 are facing a delicate economic situation with many moving variables. On one hand, calf prices are near record levels. Corn prices are also high, which is good for the farmers who have corn to sell. However, low hay yields and high corn prices mean the cost to background calves and ultimately bring them to finish weights will cost much more than previous years. Likewise, farmers face high production costs as fertilizer, seed, and energy costs rise. Within the larger economy, labor is still in short supply and supply chains continue to be slow to return to pre-pandemic efficiencies.
Inflation continues to strain the wallet of everyday Americans and the ability of cattle and crop prices to stay high will depend on the degree to which the consumer is willing (and able) to pay more at the grocery store. This will, of course, depend upon the economy avoiding a deep recession.

The stage is set for tougher years ahead. Everyone in agriculture will need to prepare for leaner times ahead and manage their finances accordingly. We have seen this scenario play out too many times in the past.

Unfortunately, the Nebraska Legislature has little control over the variables mentioned above. However, one input the Unicameral can help reduce is the burden of how land is taxed. Ranching and farming both demand producers utilize a tremendous amount of real estate. Far too many of my colleagues do not recognize that the tremendous capital investment and risks that farmers and ranchers take on. And, unlike many industries, significant capital investment does not always translate to profits.

The amount of land for even a modest ag operation is large and in an inflationary environment, ag producers are seeing non-producers push up land values as they search for “safe places” to invest funds.
Although land values may rise, ag producers will only realize the gain in value if they are ready to sell. The public needs to remember that these farms and ranches work more like “factories” that allow the producer to grow their crops and livestock.

Unfortunately, higher land values lead to higher property taxes, even if profitability stays level or falls. Many homeowners experience the same situation. They bought the home to live in, not to sell.

Homeowners, especially seniors living on fixed incomes, see their property taxes rise simply because the home they live in went up in value, yet they have no additional income to make up the difference. Some are ultimately forced to sell the home because they cannot afford the higher tax bill.

Although the Legislature was able to pass LB 873 this past session to provide the largest tax relief package in state history, we still need to do more if we want to make Nebraska’s tax structure fairer and more affordable. I will continue to focus on educating my colleagues on how property taxes affect Nebraskans and help provide solutions to improving our tax system.

I can be reached at mjacobson@leg.ne.gov or 402-471-2729. My door is always open.

Mike Jacobson represents Lincoln, Logan, McPherson, Thomas, Hooker and the majority of Perkins counties – Dist. 42 — in the state legislature.

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