The 2017 growing season may be a make or break year for thousands of farmers across the upper Midwest, especially operators focused on corn and soybeans. Prices have been tanking for two years – if there’s a third year of doldrums for the soybean and corn market, many farmers say they may go under.
Almost a third of grain crop and livestock farmers reported heavy losses in 2016 in Minnesota, one of the nation’s biggest producers of those commodities. And across the nation, the USDA reports that average net farm incomes fell by almost half since peaking in 2013. It’s the biggest slide in 40 years.
As is often the case, good news combines with bad news to create financial struggles for farmers. Last year was an excellent growing season, for example, resulting in record soybean crops. But big supply usually means low prices. While having more grain to sell cushions the blow somewhat, a low price-per-bushel is a position farmers would rather not take.
As it stands today, some 90 percent of farmers will have higher production costs than what commodity prices will deliver in return. Many farmers can absorb losses like that because they enjoy certain advantages, such as low debt, use of land they own outright and older machinery that’s paid for. Some 30 percent are on the wrong side of that equation, however, with debt and other ancillary expenses. The price of fuel can be critical, for example.
The situation is still not as dire as the farm crisis of the 1980s when literally thousands of farmers went bankrupt, lost their land and homes, and in some cases, farms that had been in the family for generations. Today most farmers will likely hang on by restructuring their debts and stretching their loan payments, according to an official with AgStar Financial Services, which services the debt of farms across the Upper Midwest.
Even so, getting strung out on payments and restructuring “bad” debt is never easy, and any farmer will tell you they’d rather make a straight-out profit from what they grow, pay their debts and make a healthy profit.
How 2017 shakes out remains to be seen. If prices rebound, farmers will be smiling. If not, some could face the end of the line.