Nebraska Farm Sector On Top, For Now The rising cost of food and fuel is pinching most Americans' wallets. But this is not the case for farmers in southeast Nebraska, where demand for food and corn-based ethanol have doubled some incomes.
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Nebraska Farm Sector On Top, For Now

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Nebraska Farm Sector On Top, For Now

Nebraska Farm Sector On Top, For Now

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Two bits of news about vehicle sales may tell you something about the economy right now. SUV sales are way down. Large farm equipment is selling faster than it can be made. That last detail caught our attention because we're beginning a series of reports on MORNING EDITION. We're asking how the giant economic forces now sweeping the world are changing your hometown.

We call it The Money Map, and the first point on our map is Lincoln, Nebraska, a state where some of those tractors and combines are being sold. Reporter Sarah McCammon is there. And, Sarah, I realize food prices are up, which sounds good for farmers, but fuel is also up. Everything's up. Are they coming out ahead?

SARAH McCAMMON: Well, that's right. Energy costs are certainly driving up prices for lots of things for everybody, including farmers. And agriculture's a very fuel-intensive business, so farmers are certainly concerned about that. But for now, at least, some farmers I've talked to say that their income is going up faster.

There's another factor, which his worldwide demand. Demand is growing for food around the world, and here at home from the ethanol industry, which, of course, uses lots of corn. So, it's pretty simple. Food costs keep going up, and farmers are making more money.

INSKEEP: Okay, so where did you go to see those changes?

McCAMMON: I recently visited Cecil Roth. He's a farmer in southeast Nebraska, not far from here in Lincoln, where I am. Times are good now, but Roth says he's certainly seen his share of bad times, since he started out farming with his father back in 1974.

Mr. CECIL ROTH (Farmer, Nebraska): You struggle to get through, and then you hit a year like this, when corn more than doubled, so your income, you know, doubled - I mean, it did - per acre. So that was a huge decision in why I made investments this year that I did.

McCAMMON: And Steve, when Cecil Roth talks about investments, he's talking about half a million dollars that he spent just this year on two piece of farm equipment. He bought a new tractor and a one-year-old, shiny, green, John Deere sprayer. It's a big machine, and it makes a big sound when you start it up. Here's what it sounds like.

(Soundbite of engine starting)

McCAMMON: Now Cecil Roth says his other sprayer was getting old, so he bought this newer, higher-tech model. It costs about $280,000 by itself, but Roth says the machine does make it easier for him to spray herbicide on his crops to help keep the weeds away.

Mr. ROTH: It'll actually guide itself through the field, if you've got everything set right.

(Soundbite of laughter)

Mr. ROTH: It just takes a little while to get used to that stuff, but once you get it in your head in how to use it, then it's an awesome system. But so far, I love it.

INSKEEP: Well, Sarah McCammon, we're listening to this farmer who's obviously doing well and investing the money back in, but he's borrowing. Is he confident that food prices are going to stay as high as they've been?

McCAMMON: Well, he says it's hard to say. He certainly hopes so. And, you know, he is paying more right now for fuel and fertilizer all the time. And like a lot of farmers, he's certainly worried about that. However, he says he is done buying equipment for the moment. He hopes for more good years, but he compares farming to going to Vegas. He says you never know if you're going to win or lose.

INSKEEP: Anybody else on a winning streak right now?

McCAMMON: Well, industry leaders in the farm-machinery industry right now say they're seeing close to record sales for large farm equipment. So in May, the Association of Equipment Manufacturers reported a 25-percent increase in high-horsepower farm tractors sales for the year.

INSKEEP: And so how does that change things on the ground at your point in the map in Nebraska?

McCAMMON: Well, I visited a John Deere dealership in Seward, Nebraska, not far from Cecil Roth's farm in the southeastern part of the state, and the manager there, Russ Stigge, manages six dealerships in the area. Because of the demand, he says farmers now have to put in their orders 12 to 15 months ahead of time for equipment they used to be able to get in six months. Stigge estimates that new equipment sales are up about 30 percent over the last year, but he's not forgetting that what goes up does come down.

Mr. RUSS STIGGE (John Deere Equipment Dealer, Nebraska): This commodity bubble will burst just like the housing bubble burst and the tech bubble burst. We're very pleased with the marketplace right now, but we're not so naive to think this is going to last forever.

INSKEEP: Well, now he used the word bubble, and that's a word on many people's minds. They're asking if these commodity prices are going to go back down, if we're seeing the new economy. Are a lot of people thinking that this will not last forever where you are?

McCAMMON: Well on the one hand, it's hard to imagine this demand for food crops going away suddenly overnight, but at the same time, even if food prices stay fairly high, farmers may not be making as much money in the future because like everybody else, they're facing rising fuel costs. So farmers are just as worried about the energy economy as the rest of us.

INSKEEP: That's reports Sarah McCammon. Her point on our money map is Lincoln, Nebraska. Thanks very much.

McCAMMON: Thank you.

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