Local farmer talks about high loan delinquency rate
A number of farmers around the country are having a tough time paying back government loans. Some of them are now scrambling to borrow money as the spring planting season nears.
Nearly one in five loans through a government farm program are now delinquent, making for the worst January default rate in the last nine years. There are a number of reasons for that.
Jason Heerdegen has been farming for 19 years. He grows corn, wheat and soybeans. He's also the head of the Ottawa Lake Co-Op, "Inputs continue to be up. The cost of living, machinery, fertilizer and chemicals are on the rise. The cost to grow keeps going up, and we're getting less for a lot of the crops."
According to the Farm Service Agency, nearly 20% of FSA direct loans nationwide were delinquent in January. That's compared to 16.5% a year ago. Heerdegen says many of the nation's farmers are struggling to pay back those government loans because of low crop prices and backlash from foreign buyers over the Trump Administration's tariffs, "The tariffs on the soybeans dropped prices by about 25%. There were additional payments to cover that last year but those payments weren't enough to cover that drop."
Having said that, Heerdegen does believe the negotiations with China will eventually pay off, "We need to get the trade war fixed with China. We need them to buy our soybeans and grain and a lot of this would go away."
In addition to the law of supply and demand as well as the weather, there are other factors that are out of the farmers' control, "We always have a buyer but we are price takers so we cannot go to a buyer and say we want four dollars a bushel for something. We take what they give us."
Even with all the challenges, Heerdegen and so many others wouldn't change a thing, "You put a huge amount into your equipment and land and you pour your heart and soul into it and you may not get rewarded because so much is out of your control It's a hard profession, but we all love it. There's nothing we'd rather do."
While those FSA direct loan delinquencies are high, the agency is a lender of last resort for riskier agricultural borrowers who often don't qualify for commercial loans. Delinquency rates typically drop in subsequent months as more farmers pay off overdue notes and refinance debt.
The situation now is not as bad as the farm credit crisis of the 1980s.
That was a time of high interest rates and falling land prices that was marked by widespread farm foreclosures. At the height of that crisis, American farmers filed 5,788 Chapter 12 bankruptcies. There were 498 filed in 2018.