Economic Hardships Ripple Through Kansas Farmland Towns
In the small town of Smith Center, Kansas, a typical Saturday lunch rush at Brady Peterson's restaurant, Pete's, now sees scarcely any patrons. The farmers who once fueled his business with orders of fried chicken and cheeseburgers are experiencing a significant drop in their incomes, directly impacting local businesses. As farm incomes decline, Peterson faces financial strain, unable to afford air conditioning during scorching summers or attire for a friend's funeral, opting instead for work clothes.
The broader economic pain in U.S. prairie states is evident as forecasts predict a steep decline in farm incomes for 2024, largely due to plummeting commodity crop prices, reduced government assistance, and increased borrowing and labor costs. Local business owners in Kansas report revenue drops of 20% to 30% compared to the previous year. The U.S. Agriculture Department's forecast of a 25% national drop in farm income marks the most significant annual decrease in dollar terms.
Farmers in Kansas, the country's leading wheat-producing state, are particularly hard-hit, facing the worst economic conditions in over a decade. Contributing factors include severe drought, high costs of seeds and chemicals, rising interest rates, and falling crop prices. This has drained money from local economies, with some businesses teetering on the edge of closure. Megan Jensen of Meg's Grooming and Pet Salon expresses her desperation, stating that if her business fails, she'll be homeless.
In 2022, U.S. farm income reached record highs before a sharp downturn in commodity prices, spurred by abundant South American harvests and declining demand from importers and meatpackers. With corn, soy, and wheat futures hitting three-year lows, Kansas and other prairie states are experiencing the lowest farm incomes since at least 2010. The drop in demand for U.S. wheat is particularly detrimental to regions like Kansas.
Feast or Famine
Smith Center's mayor, Bryce Wiehl, describes the dire situation over a meal at Pete's, highlighting the wave of foreclosures, the shrinking population, and the town's economic spiral. Rural Kansas downtowns, marked by closed businesses and empty streets, reflect the volatility between 'feast or famine' as noted by Shane Wyatt, a gun shop owner in Norton.
Despite broader U.S. economic growth, rural Main Street economies in the Midwest and Great Plains are faltering, with farm equipment sales plummeting and agricultural land prices declining for the first time in five years. In Norton, jeweler Russ Erbert notes that economic downturns mean less frequent joyous occasions, such as engagements and weddings, as young farm families tighten their belts.
Consumer behavior is shifting too. Shoppers are opting for cheaper items, like pocketknives instead of firearms or modest gems over larger diamonds. Pawn shops see an uptick in pawning possessions, with fewer buybacks. High inflation and interest rates add to farmers' woes, who rely on short-term loans to cover farming expenses. Business owners, also feeling the inflation pinch, hesitate to raise prices in a community sensitive to even slight hikes.
In Concordia, soda fountain and gift shop owner Tammy Britt voices her frustration, feeling she must work three times harder to earn the same income. The pressure and workload are taking a toll, leading some, like Peterson, to vent their stress privately while maintaining a brave face publicly.
While the economic scenario demands resilience, there's an underlying current of optimism among the business owners as they navigate these challenging times.