One of the worst wheat harvests in decades followed by an abundant corn and soybean crop that's driving down prices have Kansas farmers preparing for a sharp income decline after several good years.
The agricultural sector contributed nearly one-third of the income that fueled the modest economic recovery in Kansas last year, despite an off-and-on drought, The Wichita Eagle reported. That's not likely to happen this year, with Kansas' wheat harvest down 26 percent from last year, according to the U.S. Department of Agriculture.
Bountiful rains and cool temperatures in June and July have put the country on track for the second-biggest corn crop ever and a record soybean crop. But that's pushed the price for corn down more than $1 a bushel in the last month, putting it in the mid-$3 range per bushel.
The USDA predicted early this year that U.S farm net cash income would decline by 26.6 percent in 2014, after four consecutive years of record highs.
"This will be a belt-tightening year," said Dan O'Brien, an economist with Kansas State University Agricultural Extension Service.
But it's not all bad news for some segments of Kansas' agriculture economy, especially livestock producers, who are likely to perform much better financially because feed costs less, economists said. Plus, ranchers are beginning to rebuild their herds, which has dropped the number of cattle going to slaughter to its lowest point in decades. That means the profit per head is large.
Still, the downturn in agriculture could mean slower growth in the overall Kansas economy unless other sectors speed up, economists said.
Kansas State ag economist Brian Briggeman estimated that farm incomes are headed for a below-average, but not disastrous, year. However, if crop prices continue to fall, the impact would be more severe and widespread as farmers lose more money on the fall harvest.
Briggeman said that if the price for a bushel for corn falls to $3 to $3.25 per bushel, "then we're talking trouble."
Family-owned farms in Kansas had net incomes averaging $146,000 a year over the last five years, according to the Kansas Farm Management Association. It gave producers the ability to buy farm implements, and land prices rose from 2010 through 2013.
Garden Plain farmer Mick Rausch said his wheat crop this year was about half what it was last year, and the price of wheat keeps falling. The price for his grain sorghum also has fallen and is now below his cost of production.
"We'll just kind of ride it out, make do," he said.