Surviving the Downturn: Rural vulnerabilities
Sept. 28, 2026
By Mary Hightower
University of Arkansas Division of Agriculture
Fast Facts
- Reliance on agriculture can make rural communities vulnerable to downturns
- Microbusinesses can help communities be more resilient
(720 words)
DOWNLOAD portrait of Frank Seo
LITTLE ROCK — Reliance on agriculture makes rural communities vulnerable to economic volatility, but strong regional partnerships can help build resilience, according to agricultural economics researchers.
Chrystol Thomas, assistant professor and extension specialist for community economic development in the department of agricultural economics at Texas A&M University and Frank Seo, assistant professor of rural development and extension specialist with the University of Arkansas Division of Agriculture, explored the phenomenon in “Rural Vulnerability in Times of Economic Downturn,” part of “Surviving the Farm Economy Downturn: 2026 Update.”
The two researchers noted two main aspects of the South’s vulnerabilities. First, southern states’ agricultural sectors tend to contribute a higher-than-average percentage to each state’s gross domestic product, or GDP. Additionally, the authors noted how the share of farm related income in total personal and total proprietors’ income “underscores the importance of agriculture to rural communities across the Southern states.”
The agriculture sector, including agricultural production, processing, and Ag Retail, contributes 5.2 percent of the total United States GDP. Among Southern states, Arkansas has the highest percentage of its GDP from the agriculture sector at 10.9 percent. It is lowest in Texas, at 4.1 percent of GDP.
The shares of farm income in total personal income and farm proprietors’ income in total proprietors’ income are also highest in Arkansas, with farm income constituting 1.9 percent of total personal income and farm proprietors’ income constituting 25.5 percent of total proprietors’ income. By comparison, total U.S. numbers are 0.4 percent for farm income and 3.3 percent for farm proprietors’ income. Among Southern states, Tennessee has the lowest rates, with farm income at 0.1 percent of total personal income and nearly zero percent of total proprietors’ income coming from farm proprietors’ income.
Farm income refers to net income generated by farm production after production expenses. Farm proprietors’ income refers to income earned by sole proprietorships, partnerships, and tax-exempt cooperatives that operate farms, excluding corporate farms.
“Agricultural commodities are particularly sensitive to supply and demand volatility caused by external shocks such as weather events, trade disruptions, and fluctuations in global commodity markets,” said Seo. “As a result, rural communities that rely heavily on agriculture are more vulnerable to economic downturns than communities with more diversified economies.”
Seo said, “The concentrated economic structure of Southern rural communities further increases their vulnerability. Although these communities produce a variety of commodities, most income remains focused on a few high-value commodities, including broilers, cattle and calves, cotton and soybeans.”
“A shock to any of these key commodities can have a severe impact on farm income, generating significant economic challenges for these rural communities,” Seo said.
However, there’s a strength within these communities that allows them to survive the turbulence: “microbusinesses” — those businesses with fewer than five employees. These businesses comprise 85-95 percent of all businesses in the United States, according to a report from the JPMorganChase Institute. Businesses of this type are concentrated in the South and employ more than half the workforce in rural areas.
“Yet despite economic strains such as those created by COVID-19, researchers have shown that agribusinesses in rural areas are better able to survive economic shocks due in part to their social capital characteristics such as customer loyalty, tight community networks, and mutual business support, as well as having fewer competitors and relying on internal financing,” Thomas said.
“Value-added enterprises are central to this resilience,” Thomas said. “The processing of raw commodities into higher-value products enables rural areas to capture more income locally rather than exporting raw goods with minimal returns. By moving up the value chain, rural businesses retain a larger share of the farm dollar.”
The authors suggest there are a few actions that can help rural communities increase their resilience.
Rural leaders can strengthen resilience during economic downturns by fostering deep community engagement and building coordinated regional partnerships, the researchers wrote. Firms that also prioritize community ties in conjunction with local inputs or sales are better positioned to manage economic shocks because they cultivate trust, shared problem solving and diversified demand.
“Policymakers can encourage partnerships that connect farmers with agribusiness firms in coordinated blocks, improving access to credit, aggregation, technology and markets,” Thomas said. “Developing efficient local value chains, including local processing and marketing enterprises, reduces profit leakage and generates multiplier effects that sustain employment across agriculture, food services, logistics, and retail.”
The researchers said stakeholders should also address challenges such as broadband infrastructure and monitor the rural financial ecosystem, “especially as consolidation among small banks, which have historically been key rural lenders, reduces credit access.”
“Surviving the Farm Economy Downturn” is a report from the Southern Extension Risk Management Education Center, based at the University of Arkansas Division of Agriculture, and the Agricultural and Food Policy Center, based at Texas A&M AgriLife. It features the work of 37 experts from across the U.S. offering analyses and recommendations for agriculture’s period since the 1980s.
The publication was made possible by support from the Southern Extension Risk Management Education Center, under project award Nos. 2021-70027-34722 and 2025-70027-45397, from the U.S. Department of Agriculture’s National Institute of Food and Agriculture.
The Southern Extension Risk Management Education Center is based at the University of Arkansas Division of Agriculture. The Agricultural and Food Policy Center is housed at Texas A&M University.
To learn about extension programs in Arkansas, contact your local Cooperative Extension Service agent or visit uaex.uada.edu. Follow us on Facebook and Instagram. To learn more about the Division of Agriculture, visit uada.edu. To learn more about ag and food research in Arkansas, visit the Arkansas Agricultural Experiment Station at aaes.uada.edu.
About the Division of Agriculture
The University of Arkansas Division of Agriculture’s mission is to strengthen agriculture, communities, and families by connecting trusted research to the adoption of best practices. Through the Agricultural Experiment Station and the Cooperative Extension Service, the Division of Agriculture conducts research and extension work within the nation’s historic land-grant education system.
The Division of Agriculture is one of 22 entities within the University of Arkansas System. It has offices in all 75 counties in Arkansas and faculty on three campuses.
Pursuant to 7 CFR § 15.3, the University of Arkansas Division of Agriculture offers all its Extension and Research programs and services (including employment) without regard to race, color, sex, national origin, religion, age, disability, marital or veteran status, genetic information, sexual preference, pregnancy or any other legally protected status, and is an equal opportunity institution.
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Media Contact:
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