Increased rice production helped Arkansas lead the nation in economic growth in the first three months of the year, even though those farmers are receiving lower prices for their crops, said a spokesman for a federal agency.
According to a report released by the federal Bureau of Economic Analysis on Wednesday, Arkansas led the nation in economic growth in the first quarter of 2016 largely because of farming. That fact has puzzled agriculture experts, who said low commodity prices are hurting farmers.
In an interview Thursday, Thomas Dail, a spokesman for the bureau, said rice farmers drove economic growth in Arkansas agriculture.
"Much of the increase in agriculture, forestry, fishing and hunting is actually coming from crop output," he said. "As you know, Arkansas is the top-ranked state for rice production, and nationwide, the [U.S. Department of Agriculture] is projecting rice cash receipts, or sales, to increase 32 percent in 2016 after falling sharply in 2015."
According to the USDA, cash receipts for rice are expected to total $2.9 billion in 2016 nationally, up from about $2.2 billion in 2015.
Arkansas farmers are growing more rice, which increases the state's gross domestic product, Dail said. However, they're receiving less money per pound for their efforts.
The price Arkansas rice farmers received went from $15.20 per 100 pounds in 2013 to $11.60 per 100 pounds in 2015.
The bureau factors out price swings when calculating real gross domestic product, and prices have been depressed, Dail said.
"Our real state GDP data is adjusted for changes in prices, so even if a commodity price falls, the GDP is going to reflect the higher crop output," Dail said. "Farmers may not feel it, but they're producing more rice."
GDP is the total value of goods produced and services provided over a given period of time.
Travis Justice, chief economist with Arkansas Farm Bureau, said Friday the numbers don't reflect reality for farmers in Arkansas.
"They're calculating based on planning, intention and forecast here, not on actual production because those two quarters are not the rice production months," he said. "They're just basing it off of anticipation."
The bureau cited the change from the fourth quarter of 2015 to the first quarter of 2016 to rank Arkansas No. 1 in the nation for economic growth, with a 3.9 percent increase in gross domestic product.
"Given the cost of production -- and given the current price -- the income generation is down significantly from where it has been two or three years ago," Justice said. "Farmers are still reeling from those low prices."
Arkansas grows about half the nation's rice.
"Farm income has suffered some significant setbacks, and it's continuing on throughout this year," Justice said. "We're still down in the weeds. We're not up in the clouds."
Business on 07/30/2016