Retail sales analysis recently completed

Retail sales across Nebraska continue to concentrate in areas of larger populations. Yet, despite the major shifts, a smattering of Nebraska communities scattered across the size continuum remain viable retail centers, according to Bruce Johnson, University of Nebraska Agricultural Economics professor.

Johnson recently finished an analysis report on research of retail sales trends in Nebraska since 1990. This report is the second of it kind in an ongoing project to provide an accurate, up-to-date assessment of geographic patterns and trends in retail sales overtime.

By using taxable, non-vehicle sales data maintained by the Nebraska Department of Revenue, Johnson developed indicators of relative retail activity performance for counties, towns and cities.

“The key index of this data is the retail pull factor which can be found by taking the local per capita taxable retail sales divided by the state average per capita taxable retail sales,” Johnson said.

“Towns and community developers want to understand how they are doing compared to everyone else. This report gives a good measure of trends and comparisons,” he said.

Based on the pull factor, only nine Nebraska counties are experiencing positive retail pull, while the rest are experiencing retail leakage. Excluding Red Willow County, these counties are situated in a fishhook pattern following the Platte River/Interstate 80 corridor and then turning back northwest toward Madison County.

“This pattern is influenced to a considerable extent by relative population densities as well as transportation networks,” Johnson said.

Though current trends don’t bode well for rural Nebraska, a variety of market forces still provide hope. “An energy crisis could change our very mobile, but unsustainable, economy into a more geographically-centered, place-based focus,” Johnson said.

Internet commerce, niche marketing and providing superior service also leave opportunities for rural Nebraska.

“The dynamics of retailing seems poised for fundamental change in the near future. There will be challenges to be sure, but also encouraging opportunities in which literally all of Nebraska can participate,” he said.

Johnson will continue to monitor retail sales in Nebraska in the future and provide analysis. The findings of this report serve as a complement to work done in 2006 by Dave Peters, University of Nebraska Agricultural Economics professor.

Click here to view the full retail report by Bruce Johnson.
Click here to view the work done by Dave Peters.

Professor provides plant profitability analysis

The Nebraska ethanol industry continues to grow, and more communities are exploring the potential impact an ethanol plant could have in their area. This creates a need for analysis on whether or not a plant can be profitable, said David Peters, Assistant Professor of Agricultural Economics.

Analysis is something Peters hopes to provide with his community ethanol plant economic impact studies. Peters recently finished one impact study for a plant in Wood River and has eight more communities identified for analysis.

“Everyone talked about ethanol plants paying for themselves in two to three years, but that’s historically not accurate,” Peters said. “Those trends existed for a short period when ethanol prices were high and corn prices were low.”

Today’s environment has changed and there is a real need for communities to see the trends in the ethanol industry, determine potential plant profitability and understand the economic impacts before building a plant, Peters said.

In the Wood River study, Peters found that the construction of an ethanol plant would generate 767 jobs and $34.07 in valued added for Hall County short term. The first five years of plant operation would generate 285 jobs and $34.24 million each year in value added. The next five years will generate 20 fewer jobs but about $700,000 more in value added per year.

To view the full Wood River ethanol plant report, click here. Similar reports will be available for the other eight identified communities once analysis has been completed. To view other studies and publications completed by Dr. David Peters, click here.

Nebraska regional group explores bio-based economy

In September of 2006, Governor Dave Heineman designated a fifteen county region in central and north central Nebraska to be a bio-based business development friendly region. Counties included Blaine, Boyd, Brown, Cherry, Custer, Garfield, Greeley, Holt, Howard, Keya Paha, Loup, Rock, Sherman, Wheeler and Valley.

Since that time, the regional group has worked with faculty from the University of Nebraska–Lincoln Department of Agricultural Economics and staff from the Center for Applied Rural Innovation (CARI) to identify specific alternative bio-energy enterprises that the region can support support.

The project began a little more than a year ago after the group approached the University seeking assistance, said Alan Baquet, Agricultural Economics Department Head and CARI Director.

“They were interested in becoming a bio-energy friendly region, but didn’t know the appropriate alternative energy forms to explore. They wanted help determining the resources available to the region for bio-energy,” Baquet said.

In their May progress report, project personnel identified four specific bio-based energy alternatives for the region—corn-based ethanol production, wind energy production, biodiesel production and wood-fueled heating and cooling.

“It’s important to remember that this isn’t an economic feasibility report for these different fuel sources. We’re just exploring whether the region can support them and researching the pros and cons of each,” Baquet said.

Funded by the Nebraska Center for Energy Sciences Research, the project is scheduled for completion in October.

Baquet hopes the project can serve as a model for other regions with similar goals. “Our hope is to develop a process that others can use to identify what would be appropriate in their region. It would be sort of a prototype,” he said.

Farm Bill debate brings need for analysis

As the 2007 Farm Bill debate swings into high gear, Nebraska farmers wait with anticipation to see how this new legislation will influence their future.

The farm bill debate is also an exciting time for the Department of Agricultural Economics, according to Brad Lubben, UNL assistant professor and extension public policy specialist.

“The farm bill is an important federal policy for Nebraska farmers, and we gear up for the big event every five years,” Lubben said.

Lubben has played an active role in the 2007 farm bill process. In September of 2006, he unveiled the results of a 27-state survey highlighting the needs of producers in the upcoming farm bill.

“The results show that producers put quite a bit of value in the safety net,” Lubben said. However, there is some disagreement as to how this safety net should look, he said.

The Department of Agricultural Economics will continue actively educate Nebraskans on the impacts of farm bill legislation through research and analysis.

“What we would hope is not to regurgitate the news. There are several good sources that report the news quite well,” Lubben said. “What we hope to do is provide a full analysis of what that news means.”

For questions about the 2007 Farm Bill and what it means for you, contact:

Dr. Brad Lubben

Professor prepares alternative energy research findings

It’s everywhere. From local coffee shops to congressional committee meetings on Capitol Hill. The push to find alternative fuel sources that will reduce American dependence of foreign energy continues to expand.

Richard Perrin, University of Nebraska–Lincoln professor of agricultural economics, will soon be adding to this discussion as he finishes a five year project on the economic feasibility of switch grass.

Ten farm cooperators in Nebraska, South Dakota and North Dakota have grown switch grass for the past five years to estimate the cost of producing the biomass and the cost of converting it to ethanol, according to Perrin.

“This study should provide some benefit to both policy makers and researchers who are trying to figure out the cost of making cellulosic energy possible,” Perrin said.

Perrin’s research results have been submitted in two separate papers to the academic publication, Proceedings of the National Academy of Sciences. According to Perrin, one of the papers focuses on the economics of cellulosic ethanol and the other focuses on the energy and environmental impacts of it.

“In order for it (cellulosic ethanol) to be possible, you need to know the costs. People will also want to know how much energy it can produce and its environmental impact,” he said.

Compared to corn ethanol, the energy potential from switch grass is significantly higher. For every megajoule of fossil fuel put into corn ethanol production, 1.2 megajoules result. For every megajoule of fossil fuel put into switch grass ethanol production, 13.1 megajoules result.

“The issue of energy balance can often be misleading. A unit of energy in a lump of coal is not worth as much as a unit of energy in a battery. It’s important that we compare potential energy sources in terms of joules of usable energy relative to fossil fuels,” Perrin said.

In the coming months, Perrin’s results and the results of other UNL researchers will be summarized on a Web site dedicated to alternative fuel research. A link to that Web site will be provided as soon as it’s available.

Professor discusses studies on persistent poverty in Nebraska

Persistent poverty in Nebraska has been highly localized in recent decades according to Dave Peters, assistant professor and extension economics specialist at the University of Nebraska.

To be considered a persistent poverty community, 20 percent of the community’s population must have lived below the poverty line during each of the last three census periods.

“The good news is that only a very small number of Nebraska’s communities are considered persistently poor, which reflects well on the efforts of local communities and the state to promote long-term economic development and well-being,” Peters said.

However, the study does present some cause for concern. “Persistent poverty is highly localized in Nebraska, occurring in a few communities with certain economic and demographic characteristics,” Peters said.

These demographic characteristics predominately include being located in a rural area, being non-white and being poorly educated.

From an economic standpoint, persistent poverty communities have high unemployment rates, depend on agriculture and tourism-related industries and lack employment opportunities in traditional goods-producing and advanced services industries.

For the full text analysis on persistent poverty by Dave Peters, visit: http://www.agecon.unl.edu/Cornhuskereconomics/2-21-07.pdf