Kinsley High School

Kinsley, Kansas

Teacher:  Dr. Galen R. Boehme

 

 

Farm Aid Through Investment in Processing

Presented by:

Mr. Amanda Wetzel

 

 

 

Kansas farmers have seen tough time the past couple years.  Some form of financial assistance is a needed supplement to farm income in order to keep these farms running.  Investment in the processing of the crops farmers produce is one possible solution to this need.

           

In 1999, Kansas farmers are entering their second year of depressed grain prices.  Farm income is down sharply.  Loan delinquency rates are up.  Calls for help to public and private agencies are on the rise.  Net farm income--what farmers have left after paying all operating expenses--dropped 70 percent to an average of less than $17,000 last year according to the Kansas Farm Management Association.  Without government subsidies and emergency assistance, those farms would have lost an average of $10,000.  From 1992 to 1997, the state lost nearly 1,700 farms.  Kansas farmers who listed farming as their principal occupation dropped by 11 percent.¹  From 1991 to 1997, crop production costs rose 47 percent.²  While production costs are rising, government subsidies are plummeting and debts are rising.  Kansas farmers carried $6.69 billion in debt in 1997 compared to $5.78 billion in 1993.³  These facts demonstrate a need to find a way for farmers to increase their income.  While farmers are having such a difficult time earning a living while producing the raw grain products used in much of the food we eat, grain processors—the individuals who take this raw product and turn it into something we can eat—are making huge profits.  This is apparent when we consider what we pay for cereals, breads, and other products of this sort.  Someone is making money from these products, and it is not the farmers.

           

A possible solution to farmers’ money problems is that the farmers have at least a portion of their money invested in the processing of the products the farmers grow.  I plan to make this suggestion a reality in the community in which I live.  As a high school student, I have explored many career options, including milling science.  Milling science is essentially taking hard white or hard red winter wheat, and turning it into flour.  According to Kansas State University, milling is a stable and basic industry where demand for its products (flour, grain products, etc.) tends to remain constant.⁴  People have been making and using flour throughout much of our history, and will continue to do so into the foreseeable future.  The Hudson Flour Mill in Stafford, Kansas, is one example of how successful milling can be.  This business sells products around the world and the products produced there are well known, especially in Kansas.

           

In order to make it possible for farmers to invest money in a milling business, I plan to start a business to benefit farmers in this way.  In order to do this, I plan to attend Kansas State University and major in milling science management to gain the necessary knowledge of flour milling. After earning a degree, I plan to gain job experience in my chosen career field.  With my education and job experience in hand, I will return to my home area to start a flour milling business.  Rather than being a business based solely for the purpose of making profit, this business will serve a dual purpose.  It will also allow farmers to invest money in it, which will give each of them part ownership.  The implications of this are that they will not only see the small profits rising from their work in producing grain, but they will also see profits stemming from processing wheat into flour.  Another possible benefit to these farmers who invest in the business could be the offering of prices slightly above market value for the grains they produce.

           

This business would not only benefit farmers, but also the economy of the surrounding area.  The labor pool would require workers with a knowledge of milling.  By starting this business, workers would move to this area, bringing many benefits—tax revenues, lower shipping costs for both shipping grain to be processed and for shipping flour to area businesses, and added diversity to the current businesses in the area.  This would benefit at least a large portion, if not all, of the area’s population in general. 

             

This area is an ideal area for such a milling business because of the availability of wheat.  The typical method of growing wheat is non-irrigation.  In 1998, Kansas had 747 farms producing non-irrigated wheat.  These farms averaged 520 acres in use for wheat production.  On the average, each of these 747 farms produced 19, 647 bushels of wheat⁵.  Kansas is known as “Bread Basket State” because of the amount of wheat produced here.  Not only does availability of wheat make this area ideal, but also marketability.  Nearly any area of the world has a market for flour.  In this immediate area, a number of restaurants and grocery stores exist to serve as a local market.  A demand exists throughout the world for flour, providing an international market.

           

With the education and training that I plan to earn throughout the next few years, I would be well qualified to start and manage this business.  Money to start this business would come from investments in the form of area farmers buying shares.  This would, in a sense, make them owners of the business, which would in turn provide them with more income.  By having the business owned this way, ownership would also be kept local, which is becoming a very popular trend in rural areas.

           

A milling business funded by farmer investments would be beneficial to farmers as well as the economy of the local area.  Through education, training, and hard work, I hope to make this vision a reality.

 

Endnotes

¹ Painter.

² Hemman, p. A3.

³ Hegeman, pp. A1, A2.

⁴ “Milling Science and Management.”

⁵ Kansas Farm Management Association, p. 63.

Answers to Qs wouldn’t open

Selected Bibliography

 

Hegeman, Roxana.  Soaring Costs Take Bite From Farm Incomes.”  The Hutchinson News, March 18, 1999, pp. A1, A2.  Folder:  Farm-Economy, Article #25.

 

Hemman, Ray.  “Farmers Brace for Tougher Times.”  The Hutchinson News, April 26, 1998, p. A3.  Folder:  Farming-Economy, Article #23.

 

Kansas Farm Management Association.  “State of Kansas, Profit Center Analysis—1998, Nonirrigated Wheat.”  Enterprise Profitcenter Summary—Analysis and Management Information, July 6, 1999.  p. 63

 

“Milling Science and Management.”  Kansas State Study Guide.  Unpublished manuscript.  n.d.

 

Painter, Steve.  “In Kansas, No Place to Run, Nowhere to Hide.”  Wichita Eagle.  June 27, 1999.  February 16, 2000.  <http:\\www.wichitaeagle.com\business\agriculture\harvestsofrisk\kanfarm0627.htm>