Farmers' financial pain spills from Kansas wheat fields to Main Streets

By Heather Schlitz

SMITH CENTER, Kansas (Reuters) - In a tiny town surrounded by miles of rippling wheat fields, Brady Peterson's restaurant sits nearly empty during what should be a Saturday lunch rush. Normally, Pete's would be filled with farmers ordering fried chicken and cheeseburgers, but as farm income thins, so does Peterson's business.

Sluggish sales have slashed his income so much that he can't afford to run his home air conditioner during the baking Kansas summers or pay for a suit to wear to a close friend's funeral.

"I ended up wearing a T-shirt I wear to work and a nice pair of jeans," Peterson said.

As U.S. farm incomes are forecast to plunge in 2024 due to a sharp reversal in commodity crop prices, less government support and high borrowing and labor costs, farmers' economic pain is spreading from the fields to Main Street.

The situation in U.S. prairie states is particularly severe. Farmers here are facing the worst economic situation in over a decade, and small cities are at risk of becoming ghost towns, sources told Reuters.

Two years of severe drought followed by national farm economic problems including inflated seed and chemical costs, higher interest rates and lower crop prices have sapped money from the surrounding communities, ten business owners, two chambers of commerce directors, two economists and three farmers in Kansas told Reuters.

Business owners noted anywhere from a 20% to 30% decline in revenue compared to the previous year. Nationally, farm income is forecast to fall 25% from last year according to the U.S. Agriculture Department. That would be the largest annual decrease in dollar terms.

"We're a farming community, and the farmers just don't have the money to spend," Megan Jensen, owner of Meg's Grooming and Pet Salon in Concordia, Kansas, said through tears. "Every penny I own is invested in this. If I fail, I'm homeless."

U.S. farm income hit a record high in 2022, before a steep drop in commodity crop prices due to large harvests in South America and waning demand from importers and meatpackers upended U.S. farmers' fortunes. Corn, soy and wheat futures are trading around three-year lows.

Farm income in Kansas and other prairie states has fallen even more and is forecast to be the lowest since at least 2010 this year, according to U.S. Department of Agriculture data.

Kansas is the biggest U.S. wheat-producing state, and economists say the nationwide downturn has particularly hurt regions that produce the grain as demand for U.S. wheat shrinks.