2017 may be ‘tipping year’ in tightening farm economy

No one is saying that farmers are headed for a repeat of the 1980s, when high interest rates, inflation and huge debt forced thousands of producers out of business. But the tougher agriculture market and weakened farm economy of the past few years is steadily taking its toll, and cracks are beginning to show.University of Minnesota Extension researchers reported recently that more than 30 percent of Minnesota crop and livestock producers lost money in 2016. Federal estimates show that average net farm incomes have fallen by nearly half since their peak in 2013, the largest four-year drop in 40 years. February was the busiest month in 10 years for filings at the Farmer-Lender Mediation Program at the University of Minnesota Extension, which helps producers work through financial roadblocks with their bankers.“It’s clear that everybody that’s in farming is worried about this year and what’s going to happen,” said U.S. Rep. Collin Peterson of western Minnesota, the ranking Democrat on the House Agriculture Committee. “If they have an average year and the prices keep trending down, that’s going to be a significant problem.”Peterson said he expected serious financial difficulties would surface last winter for many farmers, but record yields in 2016 helped to offset the low crop prices and cushion the losses.  Not many farmers have been forced out of business yet, but increasing numbers of producers have needed to re-balance their debts and stretch out loan payments, said Mark Greenwood of AgStar Financial Services, which lends to growers across Minnesota and Wisconsin.Greenwood said those in greatest jeopardy are beginning farmers who own very little land and have not had time to build equity, and may be paying too much to rent. Also at risk are producers who spent cash for new machinery and farmland when times were good five years ago, but now have lots of short-term debt that hurts cash flow.