February 1, 2015

Cheap gas prices are treat for drivers, fright for Wall Street

gas-pump-111While gasoline is selling below $2 a gallon in some Nebraska cities, the great news for motorists is cause for alarm for investors.

Markets around the globe are showing signs of weakness as crude oil dropped to $50 a barrel, half what it was a year ago.

Creighton University economist Ernie Goss says stock markets in Europe and Asia are reeling and Wall Street is reacting.

“Investors are saying, well, sooner or later, that economic slowdown is going to hit the U.S., so that’s being reflected in the markets with economic pullbacks,” Goss says. “We’re seeing that in all the markets, whether it’s the Dow, whether it’s the S&P or the NASDAQ.”

Some fear Russia’s petroleum-heavy economy is nearing a critical low, while Goss says the U.S. economy has seen a big shift over the past decade.

“We’ve gone from an economy, the U.S. economy, of exports of about 4% of GDP, gross domestic product, to about 16%,” Goss says. “So, if we have pullbacks in Russia, that means they’re going to be buying less of our goods. We’re already seeing that in Europe as they buy less of our goods and certainly Asia is another place where we’re seeing a real pullback in economic growth and that’s going to mean they’re buying less of our goods.”

Nebraska is the nation’s #2 ethanol producer behind only Iowa and Goss says the steady drop in gas prices will force ethanol to respond.

“Overall, ethanol will be hurt by this,” Goss says. “Of course, ethanol competes with gasoline and is a blend in gasoline. With corn prices up a bit over the last couple of months, this is going to put a squeeze on the profit margins of ethanol producers.”

AAA-Nebraska reports gas prices in Nebraska are averaging $2.08 a gallon, the lowest in about five years.

 

Gov. Heineman says agriculture remains Nebraska’s economic base

Gov. Dave Heineman

Gov. Dave Heineman

Gov. Dave Heineman says the growth of agriculture spurred the great economic growth Nebraska has enjoyed the past few years.

And Heineman says agriculture in Nebraska is more diverse than it was 25 years ago.

“What I mean by that is the foundation of our economy is agriculture, but agriculture today doesn’t mean just the individual farm and ranch,” Heineman tells Nebraska Radio Network. “It means value-added agriculture. Well, one of the first things you think about there is the ethanol industry in the state. We’ve now become the second-leading ethanol producer. That helped us, along with our water resources and corn resources to become the number one cattle feeding state in America.”

Food processing also has become an economic driver in Omaha and Lincoln, according to Heineman.

Nebraska ranks high on many national economic rankings of states. It has the second lowest unemployment rate in the country, well below the national rate.

Heineman says agriculture remains the foundation.

“Agriculture is bigger, more diverse than we’ve ever had it before and it’s more inclusive than most of us think,” according to Heineman. “And then that’s led to the fact that we’ve got smart manufacturing in the state, more technology than we’ve ever had, our ethanol plants and others. We’re a leading insurance industry state. We’re a leader in transportation. But all of it kind of starts with agriculture.”

Rural Nebraska homeowners see benefits of USDA program

USDA Rural DevelopmentMore than $114-million in federal funding was delivered to Nebraska families for home repairs, rental assistance and home ownership last year.

USDA Rural Development housing grants are used in communities of 20,000 or fewer people, according to the program’s state director Maxine Moul.

Moul says, “We were able to help more than 1,100 families in rural Nebraska get into new homes, either their first-time homes or a larger home for a growing family or a couple who is downsizing.”

She says eligibility for housing programs and funding is dependent on income, credit and repayment ability. Also, the property must be in a rural area. Moul says the success of these programs is due to the structure of the grants.

“This program is self-funded,” Moul says. “As people pay back their principal and interest, it allows us to issue new loans and we don’t have to wait for Congressional funding. This funding is there constantly.”

Moul says USDA Rural Development funding for Nebraska totaled $189-million, which includes business and industry, energy, loans and grants, and improvements to rural electric and distance learning programs.

By Jerry Oster, WNAX, Yankton

 

Sen. Johanns recalls days at USDA fondly (AUDIO)

Sen. Mike Johanns (left) talks with Nebraska Radio Network News Director Brent Martin

Sen. Mike Johanns (left) talks with Nebraska Radio Network News Director Brent Martin

Sen. Mike Johanns looks back fondly at his time as Secretary of Agriculture.

Johanns is retiring after 32 years in public office, including serving as the director of the United States Department of Agriculture under President George W. Bush.

“You know you’re in the cabinet room and there’s no higher board or commission or whatever to buck the issue up to,” Johanns tells Nebraska Radio Network. “The cabinet is as high as it gets in our government and you’re there with the President and Vice President and other cabinet members. So, tremendous amount of pressure; very, very intense, but, also what a great honor.”

Johanns has served at every level of government:  county, city, state, and federal.

Johanns says serving in the Bush Administration was one of the real highlights of his public career.

Johanns became Secretary of Agriculture in January of 2005, leaving the office of governor in Nebraska. Johanns says he had a good team at the USDA, which included several people he brought to Washington from Nebraska.

He says he became aware in short order of the significance of the office.

“And, wherever you go worldwide, when you speak, people listen, because you do represent the United States of America,” Johanns says. “And the power of that is huge. It is just unbelievable.”

Johanns says he was most proud of the USDA’s work to negotiate and pass trade agreements, especially the Central America Free Trade Agreement, which barely passed Congress. Johanns also hosted public forums on the Farm Bill, many of which he attended.

His time as Secretary of Agriculture began as beef producers were reeling over concerns about BSE, bovine spongiform encephalopathy, better known as Mad Cow Disease. Those concerns closed markets throughout the world to American beef. Johanns worked hard to re-open the markets and largely exceeded. He says the United States has nearly normalized trade in beef and the current Secretary of Agriculture, Tom Vilsack, has continued the efforts.

Johanns says he’s proud of how the USDA responded in wake of Hurricane Katrina. He remembers well the tragedy of Katrina, late in the summer of 2015.

“While many in the Bush Administration were being criticized, we were receiving accolades for the unbelievable way that we got in the middle of that very, very difficult time and got food and fresh water to people,” according to Johanns.

Johanns left the cabinet to successfully run for United States Senate. He steps down from public office this week after 32 years. He will be succeeded in the Senate by fellow Republican Ben Sasse.

AUDIO:  Sen. Mike Johanns reflects on his years as Secretary of Agriculture. [6 min.]

USDA predicts meat prices will continue to rise

090423_HerefordTour 084For many Nebraska families the price of meat is taking a bigger bite out of the weekly food budget.

United States Department of Agriculture economist Annemarie Kuhns says that trend will continue in 2015.  She is predicting a 4 1/2% to 5 1/2% increase for both beef and pork in the year ahead.

Kuhns says beef prices now are 18% higher than one year ago and nearly 50% higher than five years ago.

Kuhns says prices for poultry, dairy, fruits and vegetables should increase about 3% in 2015.  Prices for bread and other baked goods, sugar and eggs are predicted to increase slightly.