Speaking of Nebraska| Farm Economy

(upbeat music) DENNIS KELLOGG: It’s already
been a challenging year for farmers in Nebraska
and across the Midwest. Low commodity prices,
the impact of tariffs, and now severe flooding have
dealt many a triple blow. We’ll talk about
the struggle ahead and some help for farmers on this episode of
Speaking of Nebraska. (gentle music) KELLOGG: Welcome back to
Speaking of Nebraska. I’m NET News Director
Dennis Kellogg. Tonight, we’ll talk
with the state senator behind a proposal
in the legislature to remove slavery from
Nebraska’s Constitution, and we’ll also have an update on the state’s flood
recovery efforts. Though we begin with
difficulties on the farm. Farmers in this state
and beyond have had a rough couple of years, and 2019 isn’t off
to a great start. Our Jack Williams
talked with some of them abut the difficulty
of balancing the books on the farm and the
impact of the stress that comes with that. TOM GEISLER:
The flood water went right
through our place here, and it took a gully right out
of the middle of the place. (tractor engine rumbles) JACK WILLIAMS: In Hooper,
in northeast Nebraska, the flood water has gone down, but for farmers
like Tom Geisler, the work has just begun. GEISLER: The water lines for our
cattle are laid right there, and it took the water line
right out of the ground. WILLIAMS: He’s farmed this
land, about 400 acres, for the past 42 years,
(muffled speaking) and he’s never seen
anything like this. GEISLER: Our community, and
just devastation, and wherever you look. WILLIAMS: Before the flood,
many Midwest farmers like Geisler were
dealing with challenges such as low commodity
prices, trade tariffs, and high property taxes. Added to their
already heavy burden, the high waters
will likely delay planting season set
to start this month. The water is even threatening
some of last year’s crops stored away in bins
that are now soaked. That could lead to
even more lost income. GEISLER: We’re just trying to
get corn out of the bin. We can’t get corn
out of the bin, because it’s wet on the bottom. We’ve got to get
it out of there. WILLIAMS: Geisler
also raises cattle and was amazed most of them
(cows moo) survived several days of
standing in ice cold water, with nothing to eat
(cows moo) because their hay
had been washed away. He lost only two cows
and a couple of calves. WILLIAMS: How do you
pull yourself up after something like this? GEISLER: Keep going, that’s
all you can do. If we don’t keep going,
our business will be gone. WILLIAMS: In the southeast
Nebraska town of Peru, along the Missouri River,
getting back into his fields, or even his farm, won’t
be easy for Brett Adams. Levees along the river failed, and rising waters
flooded his farmland. He was finally able to
check things out on a boat. BRETT ADAMS: Yeah, over here
is our main shop. This is kind of our
farming headquarters where literally
everything happens, shop machinery,
storage, this and that. WILLIAMS: Adams grows
corn and soybeans with his father on 2000 acres, but there’s a good chance he
won’t plant anything this year. He’s a relatively young farmer who missed the farm
crisis in the 1980’s, but still knows
the ups and downs of the agriculture economy. ADAMS: We don’t know how
long it’s gonna take to repair these levees,
and the water to go away, and this and that,
so it’s a big, it’s gonna be a hurt for a
lot of people, me included. WILLIAMS: Adams, who’s
married and has two kids, says he’ll make it,
but some might not. ADAMS: You get to a point,
you’re just like you can’t take it
any longer, you know, but you gotta keep fighting. We don’t, like me, I don’t
how to do anything else. I was born and raised on a farm, and this is my livelihood,
and I’m emotionally, financially, I’ve got
everything invested in this. WILLIAMS: For some
farmers already dealing with financial uncertainty
before the flood, adding another layer of hardship
is more than they can take. They’ve been calling the
Rural Response Hotline, the oldest farm crisis
hotline in the nation. JOHN HANSEN: This last year,
we set four new, all-time monthly highs for the most new first-time, high-stress phone callers. WILLIAMS: John Hansen
is the president of the Nebraska Farmers Union, and has been involved with
the Hotline since 1984. HANSEN: So, this is the worst ag turn-down since the mid 1980’s, so there’s a great need, of course, for
services right now. And then of course,
the flood just makes all of that even more so. (birds tweeting) WILLIAMS: Farmers and
ranchers are faced with potentially losing
their only source of income. Many are dealing with
mental health issues and increased stress. HANSEN: It’s their identity,
in addition to being a high-risk, capital-intensive, low-margin business. WILLIAMS: Chapter 12
farm bankruptcies in the Midwest were
up 19% last year compared to 2017, although
the numbers nationwide were actually down slightly, according to U.S.
Bankruptcy Court statistics. Creighton University
economist Ernie Goss compiles a monthly economic
survey for Midwest states, and says, “For the most
part, farmers entered “the latest downturn
in good shape.” And he says, “Despite
the current tough times, “long-term, they’re
in a good business.” PROF. ERNIE GOSS:
There’s one thing we all need, and that’s food,
and that’s globally. It doesn’t matter
if you’re in China, India, France, or
Germany, wherever. They need food, and they need it from the most productive farmer
on the face of the earth, and that’s the farmers in
this nation, in the U.S., and the farmers in the Midwest. WILLIAMS: At the
Nebraska Farm Bureau, President Steve Nelson
says, “During the downturn, “in the 1980’s, high interest
rates and more farm debt “drove a lot of farmers
out of business.” Now he says, “Higher costs
for pretty much everything, “along with tighter margins,
and now bad weather, “are combining to make
things rough for farmers.” STEVE NELSON: It might be a year
or two before some operations figure out that they just
aren’t able to recover from an event like we’ve had. (bells chime) WILLIAMS: Back in
Hooper, Nebraska, Tom Geisler is hopeful. GEISLER: We have to be
resilient and keep going, and hopefully it’ll work
out for us this year. WILLIAMS: For many
farmers in the Midwest, this summer crop season may be the most challenging
they’ve ever seen. (upbeat music) KELLOGG: Joining us now are two
experts who have been dealing with this struggle from
different perspectives. Brad Lubben is an ag economist with the University
of Nebraska-Lincoln, and Vern Jantzen is a
farmer and president of the Rural Response Council. Thanks to you, thanks
to both of you, for being with us here today. Let’s start off
by looking at some of the not-so-good
trends from the USDA. From 2012 to 2017, average net income
per farm is down 19%. The number of farms in Nebraska decreased 7% during that time, and the average age of
producers increased. The average farmer
in this state is now more than 56 years old. So the situation for
farmers was pretty good, five, six, seven years
ago, eight years ago, and it was really bad during
the farm crisis of the 1980’s. So Brad, looking at
those two extremes, where are we today? How does it compare? BRAD LUBBEN: We are struggling
through what is now going on our sixth year of economic
downturn in the ag sector. High production levels,
lower commodity prices, increasing challenges
and pressure on international trade
and export opportunities have all contributed to
lower farm incomes here. Now we’re coming
off of record highs, back in 2011, and again in 2013, but since then, we’ve really
been trending downward and dealing with the growing
repercussions of that. KELLOGG: And this year, we’ve
got low commodity prices, which we’ve had
for several years. We’ve got the tariff
situation in trade. We’ve got property taxes, which have been around
along time as well. And then on top of all that,
you add this severe flooding, so it just seems like it just
keeps piling on for farmers. LUBBEN:
It is a compounding effect,
and these are big issues, and on what’s not much of a
bottom line left any more. Net farm income in Nebraska,
according to USDA statistics, peaked out at around
$7 1/2 billion dollars in the state in 2011 and ’13. It’s trended down to an
estimate now that we have for ’18 completed and ’19
coming, around two billion, but yet, the trade impact,
by some private estimates, is a billion
dollars in Nebraska. It’s the net farm income. The flood impact, and the blizzard, and the
resulting flooding impacts, the combined disaster
effects there, could approach a
billion dollars as well. And the property tax
question, well that’s at least a several hundred
million-dollar question, if not close to a billion. So these are big items, big questions, on top of an already stressed
farm income level. KELLOGG: And so Vern Jantzen,
with the Rural Response Council, and the hotline that you run. You’re a farmer yourself, so
you know about this stress, and how it compounds and
just builds on these farmers. So what’s been the reaction
like at the phone line? VERN JANTZEN: The
phone continues to ring
at an increasing rate. There are several, many farmers, as this economy continues
to be in a down trend, they have to find money
to continue to farm, to borrow, and that
can be hard to do. At some point in time,
the place where they get, borrow their money to operate, will say to them, “I
think we have reached “the point where we can’t
work with you anymore.” And so then they call the
Rural Response Hotline and say, “What do I do now?” And so, the girls
that answer the phone try to come up with a way that they can give them some resources,
people to talk to. That’s the job of the hotline is to find out what
the problem is, and then match them up with a number of resources that
are available in the state. There are programs that
the state of Nebraska runs. There are funds
that are available to help them get some
mental health counseling, if that’s a path that
they would like to do, and so it’s, we try to put them in a place where they can talk to maybe an attorney, or to an accountant,
and figure out so what’s the next step for you
to do to figure out, you are not in this alone. We can get you through this. KELLOGG: And that Rural
Response Hotline number
is 1-800-464-0258, and we’ll put that up again a little later in
the show as well. But so, give me an idea of
what the typical call is like. What are they saying? What are they talking about? JANTZEN: Oh, it just runs
the complete gamut. When people are under
financial stress, that impacts their
relationships. And so that creates
stress in a marriage. That creates stress
in the family, and there are people, I guess a lot of farmers tend to internalize this stress, and so then that can
have health impacts, both physical and mental. And so you are dealing
with a lot of situations that people don’t know quite how to handle this, or who to talk to,
who to turn to, and so, if they
call this hotline, then we’ll try and
figure out what to, where they can fit into the
programs that are available. And so, sometimes people
don’t know what to do. Then you get into the whole
substance abuse thing, where they’re dealing with,
they’re self-medicating maybe with alcohol or some
other kind of drug that they shouldn’t be doing. And then that creates problems, and so it’s really important that they reach out and talk to somebody and call the hotline and try and get help before
something bad happens to them. KELLOGG: And
so much of this starts with
that lack of farm income, and then Brad, you’ve
already alluded to it, but your estimates show
that it’s gonna be down to two billion or so. That’s the projection.
So, how does a farmer work, when all he basically has is that capital and not
the income coming in? And also how, what’s the
reaction from the banks? What are they doing now? LUBBEN: Well, we’ll step
back a bit and note, for example, from
2002 through 2012, we saw sort of
continually increasing and improving prospects,
strong commodity prices, strong farm income
levels, growing levels, to a peak in that 2012 period. Since that time, we’ve
been falling lower and lower in terms
of farm income and putting more
pressure on finances. Initially, we’d go with
plenty of working capital, which means we have
enough current assets to handle our debts, to
handle our obligations, and our cash flow. And we start, what we call, burning through that
working capital. That takes a year, and that
took care of the first year, maybe the first two years. And then some producers
that were already leveraged in terms of borrowing capital
to operate their farm, they had to look at
new alternatives, such as extending
out current debt, so they took an operating note. And they leveraged
it or mortgaged it against some long-term
property like income. And that helps stretch
out the cash-flow needs, and you can manage through that. Eventually, year five, year six, you’ve sort of run out of
the financial solutions, and it’s all about
farm income levels. And eventually, the
question is what can we do to prop up farm income? What can we do in
terms of major choices about changing our operation, or about divesting
part of the operation, just to get the
finances back in order. So, it’s
gotten to that point that sort of the simple solutions
are already being implemented. The more difficult
questions are here to come, and that’s exactly
as Vern described, that’s when we get to the point that we’re not sure what’s next. We don’t know which tool or
which decision to make next. KELLOGG:
And so if you are a banker, are you looking at this
point at tightening credit, not doing as much loaning? What’s the situation? LUBBEN: Clearly, for producers
that are borrowing, conditions have gotten tighter. Bankers report more
demand for borrowing. They report longer
payback terms. They report more stress, but it’s also worth noting this is also not quite the level of stress that we saw, now 35 years ago in the 1980’s. In real terms, we’re
borrowing a record amount, we have a record amount of
debt on the balance sheet, but in real terms, the
debt-servicing obligation is about half of what it
was back in the 1980’s, because total assets are higher, because interest
rates are lower. So the obligations
with that debt are not at the level that
we saw 35 years ago. And we don’t have the
same sort of concerns that interest rates are
shooting through the roof, or that farmland is
going to fall back 50%, and thus, the balance
sheet disappears. We don’t have those
concerns on the horizon, but clearly, we have
issues to watch. KELLOGG: Vern Jantzen, you’re
a farmer as we mentioned, and we all know about
Nebraska strong, and farmers are resilient. And so is it tough
to get a farmer who is struggling
to pick up the phone and call the hotline
and ask for help? JANTZEN:
I think it is extremely tough. They have to reach a point
where they just don’t know where to turn to anymore. And they don’t want,
a lot of times, their neighbor to
know that they’re in this situation they’re in, and so if they call the hotline, it’s completely confidential. You know they, the ladies
that answer the phone will try and assess your situation
and plug you in. There are clinics that
you can sign up for where you are one-and-one
with an attorney and with an accountant, and
they go over your books. And they try and figure out, so what are the options
that are left for you. Because a lot of times when
you get back in the corner, it’s a little hard to
think clearly what to do, and there’s a lot of emotion
involved, because most farmers, their farm is more
than just a business, it’s a lifestyle,
it’s a heritage. And so, when you have those kind of factors happening, when things are kind of
crashing down around you, that’s really hard for people
to know what to do next, but we want people to
understand that they have an opportunity to call this
number and get some help. KELLOGG:
Of course, now we have this
severe flooding to deal with, and I know even on your tracking
and the response hotline, you’ve now added a special
category just to deal with those who are calling
in about the flooding. We could have upwards of,
well certainly millions of dollars in damage
to agriculture. So, but you have a grant now that you can maybe help
some of these people. JANTZEN: There
are funds available, a number of farm
groups have them, and different organizations, and the ladies at the
hotline have that list. And so, if you are in a position
where you have had issues from either the blizzard or the flooding that
resulted when that melted, there are resources that they can plug you into, and see if we can
get you some help. There’s going to be problems
with getting your fences fixed, with getting your
farmland reclaimed, and so, there are some funds
available to help do that. And so, you just have
to call the hotline, and they’ll figure out
which fund you may be available to get help from. KELLOGG: And we should probably
point out that we talk a lot about farmers and
ranchers and producers, but when it comes to
the ag economy, Brad, it affects much more than just the people who are on
the farm or on the ranch. One in four jobs in
the state of Nebraska is somehow tied to agriculture, so when the farmers
hurt, everybody hurts. LUBBEN: That’s right, and
certainly we know that the ag sector is still the
base of the Nebraska economy, and what happens in agriculture
does show up on Main Street, which eventually shows up
in every city in the state. And shows up in the state
balance sheet as well, the state revenues,
so it matters. What’s even more sort of
critical this go-round is the ag economy in
the state as a whole was struggling with multiple
years of down-trending prices and down-trending
farm income levels, but then these flood losses, which are tremendous
in their own right, are concentrated as well. It’s not the entire state that
felt the same sort of depth or challenges here
with the flood losses. Those are concentrated,
so in those communities, in those farm sectors,
you’re gonna see that economic loss
and challenges ahead. And that translates directly into the local
impact there as well. So we talk big numbers, if it’s really up to a
billion dollars of loss, in ag losses in the state
due to the flooding. Now some of that will
be recouped through
emergency programs and other assistance
programs, but whatever it is, hundreds of millions of
dollars in net losses to the ag sector, but it’s
concentrated in certain areas. That multiplies typically
in a two-to-one basis in terms of local
economic activity, and so, it really does matter,
and it really does add up. And it’ll be a challenge for
many regions of the state. KELLOGG: And when you talk about
others being affected, Vern, the families of these
farmers can also be affected, and they can also call into
the response hotline as well. JANTZEN: That’s correct, any
family member can call in, and we’re set up to
try and figure out, based on what your situation is, and where you are
at in the family, if you’re a child, if you’re
a wife, if you’re a husband. I mean it affects a
family in different ways, and so we try to plug in, plug you in to a program that
can give you some assistance. KELLOGG: I wanna ask you
about something the legislature’s trying to do, and that’s trying to
address property taxes. We touched on that
just a little bit, but Vern, you’re a farmer. And Brad, you work
with the numbers. How important is it
that the legislature actually gets something
accomplished on property taxes, when it comes to agriculture? LUBBEN: Well, we can look at
the political perspective, and note that the property
tax issue has been an ongoing challenge
for many, many years. And it’s a question of how much should we spend on
public services? That’s a question of how should we fund those public services, and the reliance
on property taxes, particularly for
local K-12 education? But it’s also a
question of how does the asset base, how does
that evaluation base, sort of change over time
relative to the needs. And what we saw in the
last 15 to 20 years is that ag values grew
faster than non-ag values, which meant that the ag portion
of the assessed valuation, that percentage went higher. The state aid formula
says that that means that dollars disappear
from those districts and go to other
districts, and so, the net impact on taxation on farmland was that
we have effectively more than doubled tax collected
over the last 15 years. By any calculation,
it’s out-of-whack, or out-of-balance, at
least with what it was. The challenge is
how do you fix it without (chuckles) costing
somebody something, and thus we see the challenges, even today in the legislature,
trying to figure out what tax do you raise, or what
other spending do you offset in order to try to
provide potential relief. Now, there is also
another sort of related legislative proposal that
would offer an opportunity to reassess farmland
affected by flooding, to effectively reduce
its assessed valuation, and sort of relative to its drop in value because
of flood damage. That would offer
some immediate relief in the coming year to
those that had flood damage in terms of property taxes. But the bigger question is
still, very, very difficult to get to the finish line here. KELLOGG: There’s a lot of
different ways we could go with this conversation,
but we’re gonna have to leave it there, so
thank you both very much. It’s Brad Lubben, from the University of
Nebraska at Lincoln, ag economist,
LUBBEN: Thank you. KELLOGG: And Vern Jantzen
with the Rural Response Council. Thank you both for coming in.
JANTZEN: Thank you. KELLOGG: And
sharing your expertise with us today.
LUBBEN: Mm-hmm. KELLOGG: Well, this interview
and tonight’s program is available on our website. Just go to
SpeakingofNebraska (peaceful music) KELLOGG: In the
legislature, while there’s
plenty still undecided, lawmakers have
settled a few things. One is to ask Nebraska voters
in next year’s election if they want to prohibit slavery
in Nebraska’s Constitution. Senators voted 44
to 0 last month to put the question
on the ballot. NET News Statehouse
Reporter Fred Knapp recently visited with
Senator Justin Wayne, who introduced this
proposed change to the state’s Constitution. FRED KNAPP: What got
you interested in this
Constitutional amendment? SEN. JUSTIN WAYNE: My first
year I started working on LB75, which is the felony
voting rights, and it’s actually, part of
it’s in our Constitution, part of it’s in the statute, and I started reading
the Constitution. And as I went through
the Constitution, one of the other founding
discussions during the time that we were becoming
a state was around slavery, and so I looked at our
documents on slavery, and found the
loophole that as long as you’re convicted of a crime, you could be a slave, which also goes into, as long as you’re
convicted of a crime, particularly a felony,
you can’t vote. And so this year I decided
I wanted to challenge that black stain on
Nebraska’s history, and take it to the
vote of the people to remove that dark
era of our state. KNAPP: What surprising
things did you find as you were researching
the history of this? SEN. WAYNE: That Nebraska
actually was a part of the convict-leasing
program, and that we were one of the three northern
states, or western states. So outside of the South, there was us, Nevada,
and Washington. I’m not sure on Nevada,
but I know Washington, who allowed convict leasing. What that means is if you
were convicted of a crime, you were literally sold to a
company and worked for ’em. KNAPP: What’s wrong with
forcing prisoners to work? After all, they’ve
committed a crime, so, what’s wrong with it? SEN. WAYNE: If prisoners want to
voluntarily do license plates, or learn a trade, I have
no problem with that, but to force somebody
to go out and do that. One, I think that’s
fundamentally wrong, but two, I think we
can’t ignore the context in which this was created. KNAPP:
And how does this provision
in the Constitution fit into sort of the overall
racial history of Nebraska? SEN. WAYNE: So, when we were
first became a state, we are actually vetoed twice, and most people don’t know that, but the first time
was a pocket veto where they just didn’t
sign it into law, the president didn’t. The second time he
actually vetoed it, and the reason he vetoed it was because our fundamental
documents, our Constitution, excluded African-Americans
from voting and participating in
their civil liberties. And that’s in our
founding documents, so we were the only state to
be approved with a condition, a condition that at your next
Constitutional Convention and vote of the people, that you will treat
everyone equally, and that’s what our Congress
and our president at the time, in 1870, said, “You have to
have this in your Constitution.” So, in 1875, we passed
a new Constitution that said if you are
convicted of a felony, you cannot vote, and that if
you are convicted of a crime, you can still be a slave. KNAPP: What message would you
like to leave with people? How should they, in your
view, be thinking about this, as they go into
the voting booth? SEN. WAYNE: That nobody, whether
they’re convicted of a crime, or not, should be
forced into slavery, that we have came way
too far as a society, way too far as a country,
and way too far as a state, to say because you’re
convicted of a crime, you are now a slave. And although this
may not happen today, it’s still not
outlawed on our books. It could be done. (pages rustle) KNAPP: So the Nebraska House
of Representatives did pass a resolution against
convict labor in 1913, but it wasn’t a law, and
it remains on the books and in the state Constitution. SEN. WAYNE: I would like to
help out and make sure that we educate everybody
on the importance and this symbolic
significance of removing this archaic language
from our Constitution. KNAPP: All right, thanks
Senator Wayne. SEN. WAYNE: Thank you.
KNAPP: Thank you for your time. SEN. WAYNE: Appreciate it. KELLOGG: Fred Knapp updates
you on the latest news from the Nebraska legislature each weekday during the session. Listen for our legislative
updates on NET Radio at 5:45 and 7:45 in the morning, and 5:45 in the evening. You can also find those
updates on our website, at netNebraska.org/news. (peaceful music) KELLOGG: It’s been a month and a
half since eastern Nebraska was hit by severe flooding. The recovery and rebuilding
goes on after the flood. FEMA has opened both
temporary and fixed disaster recovery centers
across the affected areas. You can talk one-on-one
with a specialist, and get help with your
application for assistance. There are a number of deadlines. One of them is the FEMA
registration deadline. That’s May 20th. Also, the Department of
Agriculture is offering many programs to assist
landowners, farmers, ranchers, and producers
following the flooding. You’ll want to contact your
local USDA Farm Services Agency prior to conducting any repairs. And for the latest on coverage
of Nebraska’s flood recovery, and all of our stories
we’re working on, you can follow us
on social media. Just go to NET News Nebraska
on both Facebook and Twitter. Thanks again to our guests on
Speaking of Nebraska today, Brad Lubben and Vern Jantzen, as well as State
Senator Justin Wayne, and our own Fred Knapp,
Jack Williams, and all of our crew
behind the scenes. Next week, University
of Nebraska-Lincoln Chancellor Ronnie Green joins us to talk about the
university’s history and the challenges
facing higher education. I’m NET News Director
Dennis Kellogg. Thanks for watching
Speaking of Nebraska, and we leave you with the number for the Rural Response
Hotline, 1-800-464-0258. It’s a good resource
for struggling farmers. We’ll see you next week. (upbeat music)

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