Pub. 8 2013-2013 Issue 5

www.nebankers.org 24 Extraordinary Service for Extraordinary Members. W ith more than $20 billion annually in farm and ranch cash receipts the past couple years, Nebraska’s agricultural industry is the leading component of the state’s overall econ- omy. Those cash receipts turn over in our communities in what the Univer- sity of Nebraska-Lincoln Department of Agricultural Economics calls the “agricultural production complex,” leading to an industry that accounts for 40 percent of the state’s produc- tion output, 27 percent of gross state product, 25 percent of labor income/ earnings, and 24 percent of employ- ment numbers. As good as those figures are, a great deal of opportunity exists for additional growth in the sector. That may seem like an impossible statement tomake, when you consider that Nebraska farmers and ranchers already use 93 percent of the state’s 49 million acre land base for agricultural purposes. Livestock Facilities: A Rural Development Opportunity Greg Ibach , Director, Nebraska Department of Agriculture The growth opportunity comes when producers take the step of adding value to their raw agronomic commodities by feeding them to livestock. It’s a practice that’s always been a part of Nebraska’s agricultural production strategy, but perhaps has become less common as modern production has become more specialized. Over the past couple of years, the Nebraska Department of Agriculture and livestock industry group partners have been approached about possible opportunities for livestock growth in the state. We are recognized in Nebraska for our reliability as a source of feed- stuffs and for our water resources, our open rural spaces, and our processing infrastructure. The opportunities for economic growth in rural areas are ripe for the picking, if leaders within our rural communities step forward to work with farmers, ranchers, landowners, and agribusinesses to foster livestock development projects. Opportunities in Swine More than 3 million pigs are born in Nebraska each year, but at least a million of them are shipped out of state to be fed. In addition, nearly 2 million more weaned pigs are born in western states and travel through Nebraska to eastern states to be fed. This is 3million head of pigs that could be fed in Ne- braska, using Nebraska feeds, Nebraska feed mills, and Nebraska farmers. One of the current business models for feeding pigs fromweaning tomarket weight is for an integrator to contract with a farmer. Generally, the integrator owns the pigs and provides the feed, veterinary care, and technical resources. The farmer owns the building and will be the caretaker of the pigs. The inte- grator pays the farmer a set rate to rent the building and for providing pig care plus incentives for performance. Ad- ditionally, the farmer gets to keep the manure, which can offset the need for commercial crop fertilizer. The contract that the integrator and the farmer enter into generally runs for the length of the building loan. The rental payments are factored to allow the farmer to service the loan, and the value of the manure reduces the farmer’s overall expenditures, which can make the farming operation more profitable. Opportunities in Dairy Growth in the dairy industry has been driven by an expansion in the pro- cessing sector along the Interstate 29 corridor in eastern Nebraska. The I-29 corridor runs from Kansas City, Mo., to Fargo, N.D., but the recent growth mainly has been between Omaha and Brookings, S.D. Value-added products like Greek yogurt and whey protein are leading the growth in the dairy industry. Dairies typically will locate within about 100miles of a processor to reduce ship- ping expenses.