Editor’s note: With the increased use of railroad transportation for other purposes, there could be fewer train cars available to haul farm crops from area grain elevators to their final destinations. This potential shortage comes at a bad time for Kansas farmers who are in the midst of multiple fall harvests, including milo, corn and soybeans. In this four-part series, the Great Bend Tribune will explore the potential impact of this looming problem. Part two considers the economic impact of agriculture on the local economy.
“Burn down your cities and leave our farms, and your cities will spring up again as if by magic. But destroy our farms and the grass will grow in the streets of every city in the country.” — William Jennings Bryan on July 9, 1896, at the Democratic National Convention in Chicago.
The Kansas wheat harvest was possibly one of the worst on record, but the fall corn harvest could be one of the best. The bad news is, the record harvest is driving prices down while other factors are pushing shipping costs up.
What is the impact of agriculture on the local economy? Farmers purchase some pretty high dollar items after they get paid for harvest. They buy farm equipment and new trucks, build big metal buildings, make major home improvements, take expensive vacations, and buy new hunting equipment and expensive boots. If they feel optimistic, they spend, and if they feel cautious they don’t.
Ag drives local economy
Jerry Marmie at Marmie Motors is quick to say that the economy of Great Bend depends on the success of agriculture and oil.
“If there’s more dollars in the community to be spent, it’s going to affect every business in town,” he said. “We feel the impact of a good or bad harvest. It’s simple economics.”
Marmie pays attention to what is happening to grain prices. His family does some farming, and it’s also important to his dealership.
“Basically, it has a major effect on our business. Agriculture is still one of our big customers for our total business,” he said. Currently, the price of grain is about a third of what it was two years ago, he noted. “Quite honestly, that takes a lot of dollars out of our total local economy. That affects implement dealers, but also any retail business up and down Main Street.”
Jay Simpson at Simpson Farm Enterprises in Great Bend said trends in agriculture “absolutely” have an effect on the local economy. “Agriculture is a huge part of the state economy,” he said.
Simpson receives daily ag updates on the Internet so he’ll know what to expect. “There’s not a lot I can do about it, of course.”
Last year was a record year for Simpson Farm Enterprises, which sells sprayers and chemicals. But from Great Bend west, Kansas wheat farmers mostly had a poor wheat harvest. Now, he said, “grain prices are off tremendously from a year ago.” When there’s less money, he said, “farmers’ buying decisions are definitely put on hold.”
A government census of American agriculture, taken every five years, shows there were a total of 2.1 million farms in the United States in 2012. However, Dr. Vic Martin at Barton Community College said it’s estimated that 17 to 18 percent of the U.S. workforce is involved directly and indirectly in agriculture.
“Agriculture really is probably the most important sector of economy,” said Martin, the college’s agriculture education coordinator. Ag-related jobs can be some of the better paying jobs in our area, he added. The list of businesses that rely on agriculture is huge: feedyards, co-ops, custom application services, farm stores, veterinary services, trucking and transportation, and irrigation are just the tip of the iceberg. “Think of all the ancillary services,” Martin continued, naming service offices, accountants, bookkeepers, marketing people and customer service representatives. Then there are banks, insurance agencies and places that sell food. The Stafford County Flour Mill and the Redbarn Pet Products are local ag-related companies.
Poor wheat harvest
The money generated directly and indirectly by agriculture trickles down to the rest of our economy, so a healthy farm economy means more retail and service businesses of all kinds, he concluded.
After the poor wheat harvest, Mary Knapp, a climatologist at Kansas State University’s agronomy department, commented on how poor production in one area affects other areas.
“Then it starts trickling into the community because if you have wheat farmers with very low production, they most likely also received very low income,” Knapp said. “That farmer is not going to invest in machine upgrades or make as many purchases in the community. That will cause the economy to drag, which may result in a ripple effect that can be far reaching.”
Knapp said the rain came too late to help the wheat harvest, but contributed to the fall grain harvest. “A good fall harvest will be welcome, but it isn’t likely to be enough to replace the income lost with the poor wheat harvest,” she said.
Asked about the economic impact of agriculture, KSU’s Howard O’Neill, an agricultural economist, told the Tribune, “The exact economic impact is difficult to calculate but it is significant and meaningful.”
“When shipping costs go up, someone always absorbs the increase,” O’Neill continued. “In today’s type of market with big crops, most of the increase will be shouldered by the producer.”
Asked if the North Dakota locomotive shortage extends to Kansas, O’Neill answered, “The issues with rail logistics are many and they go beyond locomotives and have impact throughout the entire Midwest and nation.”
In a recent interview with NBC news, O’Neill said, “It cost around $4,000 for secondary (additional) cars last year but it’s up to $5,000 a car for harvest season this year. That roughly comes out to $1.25 a bushel in losses for farmers.”
O’Neill assured the Great Bend Tribune that those figures also apply to Kansas farmers.
“There is urgent need of substantial capital investment in railroad infrastructure improvements,” O’Neill said. “This includes additional rail track, locomotives, train crews and scheduling efficiencies.” However, he said he doesn’t believe that federal government intervention is the answer. “Such action is usually more disrupting than helpful. This needs to come from the railroads and they are currently throwing a lot of money and manpower at the challenge.”
Bartlett Grain is building a new grain facility in Barton County, just east of Great Bend on the Kansas and Oklahoma Railroad. According to the company website, the new elevator is designed for efficient and high-speed handling of inbound trucks. Road access will be off of U.S. 56. The facility will have nearly 3 million bushels of storage and is designed to load out 110 car shuttle trains. The company expects to employ 10 or more people year-round. Bartlett anticipates being open for business by the 2015 wheat harvest.