Dramatic increase continues in Farmer-Lender Mediations

Source: FLAG Matters

Published January 25, 2011

With all the talk of bumper crops in Minnesota this past harvest season, we hoped there might be some good news on the trend of ballooning bad debt among Minnesota's family farmers. But the news is discouraging. The Farmer-Lender Mediation Program of University of Minnesota Extension works with farmers and lenders to settle debt. As its 2010 fiscal year ended this fall, the program reported that its volume of bad debt among Minnesota farmers for the year nearly doubled over 2009, from $322 million to $624 million -- approaching 1987 levels during the nation's farm credit crisis.

For anyone wondering if the financial well-being of family farmers affects their rural communities, there is a note in the mediation service's annual report: In 2009, the service mediated $15.9 million in farmers' troubled debt to Minnesota's "main street and small businesses." In 2010, farmers' troubled debt to Minnesota's "main street and small businesses" grew 1100 percent to $177 million.

The Extension service reported, "Many well-managed operations are experiencing financial stress due to dramatic volatility in feed costs and market values." So, while some grain farmers may be doing well, farmers feeding livestock have faced soaring feed costs, pushing their debt well beyond what their operations can manage. And dairy farmers continue to be in crisis, with the double whammy of high feed costs and low prices. This is the third consecutive year of record increases in debt mediations for the program.