Nebraskans will go to the polls May 14 for the primary election to elect candidates to appear on the general election ballot in November. The November election will determine who occupies the White House and which political party controls Congress. Commentary has been offered on what the election could mean for the U.S. and global economies. Agricultural media has focused on potential impacts to agriculture from this fall’s election. The election and commentary raise questions in one’s mind regarding agriculture and elections. Is there a correlation between farm income and election results? Is farm income influenced by which party controls the White House? Or which party controls Congress? This week Tidbits explores the relationship between election results and Nebraska net farm income. Net farm income in Nebraska between 1981-2022, adjusted for inflation, ranged between $979 million and nearly $10 billion and averaged $4.5 billion per year.
Examining yearly deviations in income from the average and comparing them to the party in control of the White House and Congress might offer insights into the relationship between elections and Nebraska net farm income. The years chosen for the analysis were selected simply because the election of Ronald Reagan in 1980 was when this author began paying attention to politics and agricultural policy. Figure. 2 plots the annual variances from average real farm income (black bars) since 1981. For example, real net farm income in 1983 was more than $3 billion less than average while income in 2011 was more than $5 million above.
The background colors indicate which political party controlled the White House. The years Republicans occupied the Oval Office are shaded red. The years Democrats sat behind the Resolute Desk are shaded blue. Prior to 2009, real net farm income was above average in 6 out of 28 years—five times during Republican administrations and once during a Democratic administration. In most years prior to 2009, income was below average regardless of which party controlled the White House.
Conditions changed after 2009. After 2009, farm income exceeded the average in 11 out of 13 years. And, like the period prior to 2009, Nebraska farm income was above average regardless of who controlled the White House. In eight of the nine years Democrats occupied the White House, and in two out of the four years Republicans controlled it, net farm income was above average. Thus, it seems the party which controlled the White House didn’t have significant influence on net farm income in Nebraska.
FIGURE 2. DEVIATION IN NEBRASKA NET FARM INCOME VS. PARTY IN WHITE HOUSE
Source: Income data from USDA Economic Research Service
Figure 3 is similar to Figure 2, but here the shaded areas indicate which party controlled Congress. Again, red shading indicates years Republicans controlled both the House and Senate, blue shading indicates years Democrats were in control, and purple indicates years control was split between the parties.
Interestingly, control of Congress was almost evenly split over the period: Democrats (16 years); Republicans (14 years); and split (14 years). Here again, no definitive pattern emerges between variations in farm income and political control of Congress. Farm income was less than average prior to 2009 and greater than average after 2009 no matter which party controlled Congress.
FIGURE 3. CHANGE IN NEBRASKA NET FARM INCOME VS. PARTY IN CONTROL OF CONGRESS
Source: Income data from USDA Economic Research Service
Finally, there were ten years between 1981-2022 where one party controlled both the White House and Congress at the same time—six years for Republicans and four years for Democrats. During the six years Republicans controlled all seats of government, net farm income was less than average in five. In the four years controlled by Democrats, net farm income was above average in three. What to make of this?
This simple analysis suggests there’s little connection between election results and variations in Nebraska net farm income. But more rigorous statistical analysis could shed further insights. From this analysis, it appears other economic and global forces beyond politics have greater influence on income. General economic conditions, geopolitics, world supply and demand, and other factors likely play a bigger role. Does this mean elections do not matter? Definitely not.
Often it is public policy which sets the stage and rules on which the economic forces act. For example, the Renewable Fuel Standard (RFS), passed in 2007 still has significant implications for net farm income. The RFS passed when Democrats were in control of Congress and signed into law by a Republican in the White House. Free trade agreements have opened and expanded foreign markets for U.S. agriculture. The agreements have been negotiated by both Republican and Democratic administrations and passed by Congresses controlled by both parties.
Thus, while the political rhetoric will heat up this election year, the election results, if history is any guide, will not provide much direction on what’s in store for Nebraska net farm income in the coming years.
Source: Income data from USDA Economic Research Service
