Author: Chrystol Thomas

The Food and Agriculture Organization (FAO) of the United Nations defines a person as food insecure if s/he “lacks regular access to enough safe and nutritious food for normal growth and development and an active and healthy life.” According to the U.S. Department of Agriculture’s (USDA) 2023 report on Household Food Security in the United States, 13.5% of households—approximately one in seven—experienced food insecurity (Rabbitt et al. 2023), underscoring the continued prevalence of this issue nationwide. Food insecurity exhibited an upward trend from 12.8% in 2022, reflecting a growing number of households with limited resources and chronic health conditions, among other factors. 

The Southern region faced higher food insecurity rates (14%) compared to the national average of 12.2% between 2021 and 2023 (see Figure 1). Only five of the thirteen Southern states fell below the national average: Florida (12.0%), Tennessee (11.7%), Alabama (11.5%), North Carolina (10.9%), and Virginia (10%). Arkansas ranked as the most food-insecure state in both the Southern region and the nation, with a rate of 18.9%. The state’s food insecurity rate has steadily increased since 2020, reflecting significant challenges many Arkansan households face in accessing adequate food. According to Feeding America, more than 560,000 Arkansans experienced food insecurity in 2022, with approximately 24% of those affected being children. Other Southern states with food insecurity rates above the national average include Texas (16.9%), Mississippi (16.2%), Louisiana (16.2%), Oklahoma (15.4%), Kentucky (14.5%), South Carolina (14.4%), and Georgia (12.8%).

It is important to address a lack of sufficient access to food due to its negative impact on health, which leads to poor productivity and lower overall economic growth and development. This is especially important given the increasing risk of food insecurity from greater uncertainty in global developments, such as wars in various parts of the world. These conflicts have disrupted food supplies in the US and worldwide (Filho et al. 2023; Kemmerling et al. 2022). Furthermore, higher domestic food prices and reduction in overall economic activity make it more difficult for low-income households to achieve food security (Elmes 2016). 

To address this issue, the federal Supplemental Nutrition Assistance Program (SNAP) provides temporary assistance to help households purchase food until they regain financial stability. Non-profit organizations, such as food banks and food pantries, also play an important role in local communities. Sustainable efforts to reduce food insecurity must be intensified. Prospects for improving long-term food security are tied to the same economic factors that influence household income and budgeting, especially those connected to labor productivity and wages (LeBlanc et al. 2005). Efforts of this nature generally require the collaboration of community stakeholders to ensure a resilient economy, so that the benefits reach all community members.

Figure 1. Prevalence of Household Food Insecurity by State, average 2021-2023

References

Elmes, M. B. 2018. Economic Inequality, Food Insecurity, and the Erosion of Equality of Capabilities in the United States. Business & Society 57(6): 1045-1074. https://doi.org/10.1177/0007650316676238

Filho L. W., M. Fedoruk, JH Paulino Pires Eustachio, J. Barbir, T. Lisovska, A. Lingos, and C. Baars. 2023. How the War in Ukraine Affects Food Security. Foods. 12(21): 3996. 

Kemmerling, B., C. Schetter, and L. Wirkus. 2022. The logics of war and food (in)security. Global Food Security 33. https://doi.org/10.1016/j.gfs.2022.100634.

LeBlanc, M., B. Kuhn, and J. Blaylock. 2005. Poverty amidst plenty: food insecurity in the United States. Agricultural Economics 32(s1): 159-173.

Rabbitt, M. P., Reed-Jones, M., Hales, L. J., & Burke, M. P. (2024). Household food security in the United States in 2023 (Report No. ERR-337). U.S. Department of Agriculture, Economic Research Service.

Feeding America, Food Insecurity among the Overall Population in Arkansas, Retrieved September 27, 2024, from https://map.feedingamerica.org/county/2022/overall/arkansas

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Thomas, Chrystol, and An-Ting Liao. “The Food Insecurity Challenge: A Snapshot of the Southern U.S.” Southern Ag Today 4(40.5). October 4, 2024. Permalink

Commercial banks play an important role in the agricultural sector and communities. These financial institutions not only accept deposits but also provide relationship-based and information-intensive banking services to small businesses, including some family farms, and depositors of low to moderate wealth (Kgoroeadira et al., 2019; Keeton et al., 2003; Cole, 1998; Berger and Udell, 1995). Community banks are often more flexible in tailoring their loan policies to small business customers (Yeager, 1999). The banking sector’s involvement in agriculture has grown significantly, from providing about 8% of real estate loans in the 1980s to over 30% in 2023, second only to the Farm Credit System’s 49%. Commercial banks also serve as the largest lenders to agricultural producers for non-real estate loans (43%), compared to 38% from the Farm Credit System. Additionally, commercial banks have positive impacts on community development by providing capital to new and existing businesses for expansion or growth purposes, thereby fueling local economic growth and employment. Despite their increasing role in the community and the agricultural sector, the development and application of advanced information technologies are altering the finance market, leading to a reduction in the presence of local branches in both urban and rural areas (Dahl et al., 2021).

The number of banks across the southern states has decreased over time (see Figure 1). Since the 1980s, we have observed the consolidation of banks contributing to this trend, with large banks merging with other large banks and acquiring smaller regional banks (Gilbert, 2000). However, while the number of branches increased between 1980 and 2010, a downward trend followed thereafter (see Figure 2). The more recent closure of branches across the states is primarily attributed to the growing acceptance and use of online or mobile banking. Branch closures, for the most part, were concentrated in areas with branch duplication rather than those dependent on a single branch (Dahl et al., 2021). One of the economic impacts of these closures has been the reduction in employment and multiplier effects in five of the thirteen southern states (Alabama, Georgia, Kentucky, South Carolina, and Texas). Georgia experienced a significant drop of 61% in employment over the past decade, from 42,302 employees in 2014 to 16,329 in 2023. Additionally, Dahl et al. (2021) found that the median extra distance traveled to the nearest branch following a closure is 0.18 miles in urban areas and 0.64 miles in rural areas.

Bank closures have also been found to have a lasting and significant impact on credit supply to local small businesses, remaining depressed for up to 6 years (Nguyen, 2019). However, Nguyen (2019) noted that these effects were very localized, dissipating within six miles of the area where the closure occurs. Furthermore, bank closures or consolidations have a greater impact on the more vulnerable members of society. Although online banking is gaining popularity due to its cost-effectiveness and potential to reach a larger customer base, many rural areas still lack broadband access or may not be technologically savvy enough to participate in online banking. Hence, physical banking continues to play a crucial role for many consumers, especially lower-income, rural, older, and disabled individuals (Dahl et al. 2021). Therefore, the lack of nearby bank branches could disrupt access to banking services for some of the most vulnerable groups in our communities. This lack of access can, in turn, limit opportunities to improve financial health and build wealth, ultimately impacting community economic development. Thus, it is important to pay attention to potential bank mergers and acquisition strategies and their associated effect on community bank trends, as changes in this sector can strengthen access to financial services in communities affected by closures.

Figure 1: Total Insured Commercial Banks

Figure 2: Total Branches of Commercial Banks

References

Berger, Allen N., and Gregory F. Udell. 1995. The Journal of Business. 68(3): 351-381. https://www.jstor.org/stable/2353332

Cole, Rebel A. 1998. The importance of relationships to the availability of credit. Journal of Banking & Finance, 22(6–8): 959-977.

Dahl, Drew, Michelle Franke, and James Fuchs. 2021. How Branch Closures Affect Access to Banking Services. Regional Economist, Federal Reserve Bank of St. Louis (January 2021). https://www.stlouisfed.org/publications/regional-economist

Gilbert, R Alton. 2000. Big Fish, Small Ponds: Large Banks In Rural Communities. Regional Economist, Federal Reserve Bank of St. Louis (July 2000). https://www.stlouisfed.org/publications/regional-economist

Keeton, William, James Harvey, and Paul Willis. 2003. The Role of Community Banks in the U.S. Economy. Federal Reserve Bank of Kansas City Economic Review (Q2):15–43

Kgoroeadira, Reabetswe, Andrew Burke, and André van Stel. 2019. Small Business Economics. 52(1): 67-87. https://www.jstor.org/stable/48701893

Nguyen, Hoai-Luu Q. 2019. American Economic Journal: Applied Economics. 11(1): 1-32. https://www.jstor.org/stable/26565512

Yeager, Timothy J. 1999. Down, But Not Out: The Future of Community Banks. Regional Economist, Federal Reserve Bank of St. Louis (October 01, 1999). https://www.stlouisfed.org/publications/regional-economist