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Will the farm rebound lead a rural recovery?
For rural America, the economic headlines of 2003 were mostly positive. Low crop supplies, strong demand, and high prices underpinned strong gains in farm income while the job losses and factory closures eased in rural communities. Will 2004 see the rural economy build on last year's gains?
Jason Henderson, economist at the Center for the Study of Rural America at the Federal Reserve Bank of Kansas City, reviews last year's economic headlines from rural America and explores the outlook for the year ahead in "Will the Farm Rebound Lead a Rural Recovery?" The article is featured in the first quarter edition of The Economic Review.
The farm sector enjoyed a banner year in 2003 with the cattle industry enjoying a boom year amid comparatively low supplies and strong demand. Easing drought conditions led to a strong harvest while shrinking global supplies boosted export markets and commodity prices. There were also signs of optimism on rural main streets where job losses turned to job gains.
Heading into 2004, the outlook for the rural economy looks promising, despite some uncertainties. The author writes that strengthening farm finances and small agricultural supplies will underpin commodity prices and farm incomes, but export activity and domestic demand remain uncertain. There is additional uncertainty about the Mad Cow Disease and the potential for drought conditions threatening 2004 crops.
Business activity and job gains should come to rural main streets as the nation's economy strengthens, Henderson said, but rural communities remain challenged to sustain economic growth by developing high-skill, high-wage job opportunities.
Date: 5/4/04
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