TOPEKA, Kansas — Personal income growth in Kansas is below the national average, due in large part to troubles in the agriculture industry, which makes up about 40% percent of the state’s economy.
Kansas farmers face an expanding drought and low commodity prices, though a break in the ongoing tariff dispute may bring those up.
“Farmers have bills to pay,” Kansas Wheat Commission CEO Justin Gilpin said. “Ultimately, what we need to do is hopefully see commodity prices somewhat bottom out here and get trade going.”
The blow also has been softened by a total of $732 million in federal trade-bailout money in 2019 alone, which Gilpin calls a “lifeline” for some Kansas farmers.
The Pew Charitable Trusts compiled data on personal income growth. The Kansas farm industry was “the biggest drag on personal income growth over the past year,” according to Pew’s Joanna Biernacka-Lievestro.
Personal income is a measure of economic health. It counts all the money Kansans take home from sources such as jobs and investments.
Kansas’ personal income has grown by 1.6% since late 2007 — when the Great Recession started. That’s well below the national rate of 2.1%.
And while Kansas, like all states, has seen its economy improve, it had the 8th-worst personal income growth in the nation over the last year. Neighboring Missouri had the 11th-worst personal income growth.
“The whole Midwestern region,” Biernacka-Lievestro said, “lags the country in total personal income growth over the past year.”
Agriculture is so critical to the Kansas economy because it ultimately reaches many different businesses. Kansas Department of Agriculture Economist Peter Oppelt points to the path a grain of wheat might take once harvested: traveling to a mill and eventually a bakery where it's made into bread.
“All of those things would not happen without production agriculture,” Oppelt said.
Making bread and other baked goods created 3,400 jobs in Kansas and produced $457 million in economic output in 2017, according to the department. And that’s just one sliver of the agriculture economy.
All the industries related to agriculture and food production in Kansas total about $65 billion annually.
The current low commodity prices mean farmers take home less money. Plus, costs continue to rise for seed, fertilizer and labor.
“If the farming sector is not doing well, those farmers aren’t going to go out and buy a new truck or they may not eat out as much at a restaurant,” Oppelt said. “The rest of that community is going to feel the effects.”
A nearly two-year-old trade fight with China has led to tit-for-tat tariffs affecting U.S. agriculture exports. Gilpin said hopes it’s a temporary pain as the U.S. started forging a truce with China in mid-December that would see an uptick in ag sales. Farmers also might benefit from the impact of renegotiated deals with Japan and Korea.
Gilpin said it’s critical to find more international markets for products like Kansas wheat, which could help raise commodity prices. Plus, the U.S. House forged an agreement and then passed President Donald Trump’s renegotiation of what was known as the North American Free Trade Agreement (NAFTA).
Now called the United States-Mexico-Canada Agreement, or USMCA, the deal largely preserves the current trade agreements with Mexico and Canada — two top destinations for Kansas crops.
That has Gilpin breathing “a sigh of relief.”
“We’re preserving what we’ve had for ag (and) making some improvements,” Gilpin said. “I think that’s something that we’re all going to be thankful for.”
Stephen Koranda is Statehouse reporter for Kansas Public Radio and the Kansas News Service, a collaboration of KCUR, Kansas Public Radio, KMUW and High Plains Public Radio covering health, education and politics. Follow him on Twitter @kprkoranda or email skoranda (at) ku (dot) edu.
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