By Heather Schlitz
SMITH CENTER, Kan. (Reuters) – In a small town surrounded by miles of rolling wheat fields, Brady Peterson’s restaurant sits nearly empty during what should be a busy Saturday lunch hour. Normally, Pete’s would be full of farmers ordering fried chicken and cheeseburgers, but as farm income dwindles, so does Peterson’s business.
Slow sales have reduced his income so much that he can’t afford to keep the air conditioning in his home running during the sweltering Kansas summers or pay for a suit to wear to a close friend’s funeral.
“I ended up wearing a t-shirt that I wear to work and a nice pair of jeans,” Peterson said.
As U.S. farm incomes are predicted to fall in 2024 due to a sharp reversal in commodity crop prices, reduced government aid, and high borrowing and labor costs, the economic difficulties of Farmers are spreading from the fields to the main street.
The situation in the US prairie states is particularly serious. Farmers here face the worst economic situation in more than a decade and small towns risk becoming ghost towns, sources told Reuters.
Two years of severe drought, followed by national agricultural economic problems, including inflated seed and chemical costs, higher interest rates and lower crop prices, have sapped money from neighboring communities, ten business owners, two council directors of trade, two economists and three farmers in Kansas told Reuters.
Business owners have seen a 20% to 30% decline in revenue compared to the previous year. Nationally, farm income is predicted to drop 25% from last year, according to the U.S. Department of Agriculture. This would be the largest annual reduction in dollar terms.
“We are a farming community and farmers just don’t have money to spend,” said Megan Jensen, owner of Meg’s Grooming and Pet Salon in Concordia, Kansas, through tears. “Every penny I have goes into this. If I fail, I’m homeless.”
US farm income reached an all-time high in 2022, before a sharp drop in commodity crop prices due to large harvests in South America and decreased demand from importers and meat packers, which changed the fortunes of US farmers. Corn, soybeans and wheat futures are trading around three-year lows.
Farm income in Kansas and other Prairie states has fallen further and is expected to be the lowest since at least 2010 this year, according to data from the U.S. Department of Agriculture.
Kansas is the largest wheat-producing state in the U.S., and economists say the national recession has particularly hurt wheat-producing regions as demand for U.S. wheat dwindles.
Feast or famine
Smith Center Mayor Bryce Wiehl is a tanned farmer with a scraggly white beard and a husky voice. Over fried chicken at Pete’s, he described foreclosures, the town’s dwindling population of 1,500 and the downward economic spiral.
“It is difficult to find an industry that does not depend on the prices of agricultural products. This has a dramatic impact on the community,” he said.
Kansas’ rural downtowns are filled with boarded-up businesses, and residents have noticed that streets are emptier than ever.
“Things are incredibly volatile here. It’s either feast or famine,” said Shane Wyatt, a gun shop owner in rural Norton, Kansas. “I wouldn’t call it a ghost town, but you can really see the impact of low prices.”
Although the broader U.S. economy is growing strong, researchers at Creighton University reported in May that the country’s rural economy in the Midwest and Great Plains had slumped as farm equipment sales fell and land prices fell. agricultural prices fell for the first time in five years.
Russ Erbert, a jeweler in Norton, Kansas, loves showing young couples how a good diamond shines even in low light and seeing a newly engaged woman smile when she sees her ring. During an economic crisis in a small farming town, these scenes happen less frequently.
“Some of the young farmers are waiting until next year to get married,” he said. “They’re worried about the budget.”
When customers come to businesses, they often buy cheaper items: pocket knives instead of firearms at a gun store, and modest gemstones instead of two-carat diamonds at a jewelry store. At pawn shops, residents are pawning more goods for quick cash and fewer returning to buy them back.
Inflation and high interest rates particularly affect farmers, as they rely on short-term, variable-rate loans to pay for everything from seed and fertilizer to livestock and machinery, with the aim of repaying them after the harvest.
Persistent inflation is also putting pressure on business owners, although they are reluctant to raise prices in a community where even a small price increase raises complaints and can drive away customers.
“I feel like I have to work three times as hard to make the same amount of money,” said Tammy Britt, owner of a soda fountain and gift shop in Concordia.
Some said they suffered from health problems due to the constant pressure and incessant workload.
“There are days (sic) when the stress increases and you want to pull your hair out. Sometimes you have to run to the back of the building, scream a little and come back,” said restaurant owner Peterson. “But you have to be optimistic.
(Reporting by Heather Schlitz; additional reporting by PJ Huffstutter; editing by Caroline Stauffer and Anna Driver)
