Farm-income losses hurting Midwestern states’ budgets; no turnaround for sector in sight

The U.S. Department of Commerce reported that real gross domestic product increased 2.3 percent nationally between 2016 and 2017, but agriculture subtracted from overall economic growth in every state in the Midwest — most notably Iowa, Nebraska and South Dakota. “It’s a big deal in Nebraska when our farmers are hurting,” says Tony Fulton, the state’s tax commissioner and a former state legislator. Last year, Nebraska had to close a nearly $1 billion shortfall for the biennium that began July 1, and lagging tax collections opened an additional $200 million shortfall.States whose agricultural economies are tied more to dairy haven’t had as many highs and lows over the past decade, says Mark Stephenson, an economist with the University of Wisconsin. Still, the dairy industry is clearly facing struggles as well. Federal court data shows the Western District of Wisconsin, which covers more than half the geographic area of the state, had 28 Chapter 12 (family farm) bankruptcy filings in 2017, the highest number in the country. The Eastern District of Wisconsin had 17 cases and the Minnesota District had 19. Farmers are trying various ways to make it through this difficult period — for example, planting more niche and organic crops, accepting wind turbines on their property, relying on off-farm income, or raising chickens or hogs on contract (this latter strategy, though, requires taking out loans of up to $1 million). According to Jay Rempe, an economist for the Nebraska Farm Bureau, a growth in livestock processing also should help stabilize the agriculture sector.