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Tallying 2006 Nebraska drought damage

Drought conditions in Nebraska so far in 2006 have caused an estimated $342 million in crop and livestock losses.

All parts of the state suffered from extended periods of severe or extreme drought conditions based on observations at the National Drought Mitigation Center. These drought conditions have led to significant losses for producers, particularly in terms of crop and forage production. Additionally, other producers have avoided some crop losses only through additional irrigation which also implies additional costs.

An analysis of the crop production losses, grazing losses, and economic losses due to higher irrigation requirements as a result of the 2006 drought conditions shows a significant economic hit to Nebraska's farm economy.

Crop losses
At this time Nebraska crop losses due to drought conditions are primarily concentrated in wheat production. Reported wheat yields in the state are down 8.8 bushels or 21% from expected levels based on long-term yield trends. The lost wheat production amounts to nearly $70 million of lost revenue. Table 1 reviews the major crops in the state and the economic impact. In total, crop losses due to drought and other weather concerns are currently estimated at more than $98 million.

Increased irrigation costs
Beyond production losses, crop producers also face economic losses in the form of additional irrigation costs to overcome the lack of moisture. To overcome rainfall deficits statewide and maintain yield potential, producers face an additional $51 million in irrigation pumping costs in 2006. Figure 1 illustrates the number of irrigated acres by district together with the rainfall deficit from April to early August. The map also shows the estimated irrigation costs by district to overcome this rainfall deficit.

Reduced grazing capacity
Livestock producers face the largest losses estimated thus far as a result of the drought of 2006. The impact of the drought shows up in reduced grazing capacity on the state’s pasture and rangeland acres. Figure 2 shows estimated grazing losses of 50-70% in the western two-thirds of the state. Converting those loss rates into lost grazing value indicates a drought loss of approximately $193 million. This lost production is leading to early marketings of feeder calves, cull cows, and even cow-calf pairs or the early end to the grazing season and the replacement of lost grass with hay or other forages.

Total losses and possible aid
Adding up the crop losses, supplemental irrigation costs, and lost grazing capacity, the total direct impact of drought conditions in 2006 on Nebraska crop and livestock producers is estimated at nearly $342 million. There are some policies and programs to help partially offset these losses, including crop insurance indemnities and emergency haying and grazing of Conservation Reserve Program acres.

Agricultural disaster assistance as currently proposed in Congress also would provide some relief with payments to livestock producers for part of their losses in 2005 and 2006 and payments to program crop producers for certain economic losses. But, crop disaster assistance provisions in the current proposal would cover crop losses related only to the 2005 crop, not the 2006 crop.

Regardless of how much assistance might be provided, it is clear that the effect of the drought is significant and will impact farm income and cash flow levels on Nebraska farms and ranches.

Drought conditions in Nebraska so far in 2006 have caused an estimated $342 million in crop and livestock losses.

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