In the agricultural heart of the country, it's a tale of two farm economies

It was the best of farm economies, it was the worst of farm economies. In fact, a Dickens reference is right there in the title of a recent Kansas City Fed report: A Tale of Two Farm Economies.

The report takes a look at the K.C. Fed district — that includes Colorado, Kansas, Nebraska, Oklahoma, and Wyoming, plus parts of Missouri and New Mexico; all places with economies tied to cattle or crops or both. What it found was pretty much a K-shaped farm economy.

Right now, in most of the country, no matter what you grow, profits are bleak. Crop prices are low, fertilizer prices are high. Don’t even mention diesel prices, red diesel notwithstanding.

But as far as ag states go, Oklahoma is actually doing alright. The reason for that is simple: cows.

Cattle are selling at historic high prices, because the national herd is smaller than it's been since the 1950s. But there’s still a lot of cattle in Oklahoma. “As far as beef cows, we're number two behind Texas,” said Derrell Peel, an ag economics professor at Oklahoma State University.

High prices for cattle mean high prices for beef at the store. (Even though President Trump allowed some imported mystery beef into the country.)

“You know we've had all this trade stuff and a lot of noise about that, but frankly, it doesn't change the overall picture very much,” Peel said.

Meanwhile in the rest of farming America, crop demand is lagging, said Nick Levendofsky, executive director of the Kansas Farmers Union.

“We've lost significant markets with soybeans due to the trade war. Grain sorghum is another one. We lost a good share of that market with USAID [cuts],” he said.

Crop prices for farmers may be relatively low, but it’s not like shoppers are seeing lower prices for bread or tortillas or pasta at the grocery store.

“Primarily, the crops that we produce in this country are commodities and very much separate from the food that we consume,” said Cortney Cowley, assistant vice president at the Kansas City Fed. “If you look at what makes up the food dollar, only about 15 cents of that comes from the farm gate.”

And right now, a growing chunk of the food dollar is going to diesel.