Economic Tidbits

Extreme Heat & Farm Income Linked

There is a connection between extreme heat and farm income. That’s the finding of a paper written by researchers at Cornell University, Kansas State University, and the Environmental Defense Fund. The paper, published on the University of Illinois farmdocdaily website, says extreme degree-days (EDDs) have increased in Kansas since 1981. Kansas had an average of 54 EDDs during the growing seasons between 1981-1990. By 2011-2020, the average had risen to 57 EDDs (Figure 4). Noting the increase, the researchers sought to quantify the relationship between farm income and extreme heat in Kansas and examine factors which might have mitigated the impacts.

FIGURE 4. EXTREME DEGREE-DAYS IN KANSAS

Source: Sajid, O., J. Ifft, A. Ortiz-Bobea and V. Gauthier. Extreme Heat and Kansas Farm Income. farmdoc daily (13):138, Department of Agricultural and Consumer Economics, University of Illinois, July 26, 2023.

Using farm-level financial data from farms participating with the Kansas Farm Business Management Association, the researchers found that for the average Kansas farm, a 1˚ F warming resulted in a $34,650 decline in gross income and $54,119 decline in net income. The average real gross and net farm income were $494,955 and $82,005, respectively. Additionally, certain farm practices were found to mitigate the impacts of extreme heat. Crop insurance, irrigation, and managing crop inventory helped offset the negative effects. The loss of income for highly irrigated farms was 37 percent less compared to the loss of other farms. Government payments also helped, but with a lag as payments are not received until the year following harvest.

Given the similarities between Kansas and Nebraska, the findings suggest Nebraska farms are also confronting more extreme heat and consequent negative effects on income. Fortunately, the research shows farm practices can offset the effects. Just more for producers to consider in the growing complexity of managing a farming operation. The paper can be found here.

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