Kansas farm families most affected by economic downturn

Agriculture is the largest economic driver in Kansas, valued at more than $62 billion, accounting for 43 percent of the state’s total economy. Farmland accounts for 88.9 percent of all Kansas land. Kansas farmers and ranchers are feeding the world. In 2012, Kansas exported nearly $4.9 billion in agricultural products. The top five exports include wheat, beef and veal, soybeans, feeds and fodders and corn.

Unfortunately, the agricultural economy has seen a dramatic downfall in recent years. Within the past two years, farm income levels have hit their lowest point since 1985. From 2014 to 2015, farm income dropped 95% and farm debt levels have increased by 25%. The price of wheat has also dropped an alarming 55% since 2013. Unfortunately for farmers everywhere, this means they’re still spending money on inputs, and not having much revenue in return.

Low commodity prices have been the main reason for the recent economic downturn. Kansas wheat yields in 2016 averaged a record 57 bushels per acre, but record high production wasn’t limited to the United States. With worldwide production of wheat increasing, the overall demand for U.S. wheat has gone down, due to a strong U.S. dollar and decreasing exports.

While revenues have decreased, expenses and cost of production have gone up. From 2005 until 2015 the cost of production has increased by almost 200%.

According to the USDA Economic Research Service, in 2015, 99 percent of U.S. farms were structured as family farms, and they account for about 90 percent of farm production.

With family farms being the dominant producers, the rise in debt levels and the drop in farm income is concerning.

We are currently at the lowest capital repayment ratio since 1981. The ratio between large capital expenses and the low price of wheat isn’t balanced because of the two extremes on either side – overall, expenses should more closely match revenue.

In addition, K-State estimates that wheat farmers are managing up to 50% more risk now than they were in 2013.

With all of the negative events happening to the ag economy, there are still some things that Kansas can do to help its farmers. For one, the government can stabilize the imposed costs by having consistent taxes on farmers, with no increase. This means keeping current property tax valuation formulas for agricultural land in place, and keeping sales tax exemptions for farm machinery and farm products. They also can reduce regulatory costs that are imposed by the state. Lastly, the people of Kansas can continue their support for farm programs and farmer resources such as K-State Research and Extension. 

By Hannah Schlapp, Kansas Wheat Communications Intern