MPR: Running Out of Time on the Farm

Running Out of Time on the Farm
by Dan Gunderson
January 11, 2000

Even as the Clinton Administration is looking to the next session, farmers and lenders around our region are crunching the numbers as they prepare for spring planting. For most, the bottom line doesn't look good. Government disaster payments in the mailbox will help some survive another year, but many are running out of options.

A STEADY STREAM of farmers is applying for disaster aid at the Farm Service office in Thief River Falls. This office administers federal farm programs in 10 northwest Minnesota counties, an area that's had a crop disaster of one sort or another the past seven years.

Regional Farm Service Director Karen Fredrickson says the financial situation is not quite as bleak as she feared it would be.

Fredrickson: We were scared we were going to have so many of our borrowers that weren't going to be able to make their annual payments. But a lot of them did because of the extra money the government put out this year.

Still, Karen Fredrickson has already had the unpleasant task of signing dozens of letters telling farmers to pay delinquent loans or face foreclosure.

Fredrickson: Any time a county has more than 10 percent delinquency, we're in trouble. I have to say northwest Minnesota is sitting with an average 12 to 15 percent delinquent.

It's too early to know how many of those farmers face foreclosure. The current disaster signup may bring a cash infusion before spring.

Rogalla: You know, these disaster payments are fine; everything helps, but they're just Band Aids.

Jim Rogalla is a sort of paramedic, working on the hemorrhaging farm economy of northwest Minnesota. He's vice president of the Marshall County State Bank in Newfolden.

Rogalla: Boy, I tell you I would say I'm not so sure there are 30 percent of the farmers left as there were 10 years ago. I'm quite confident there aren't that many left.

Rogalla says last year demand for farm loans was down by 80 percent, in part because many farmers couldn't plant because of wet weather. He says the bank survives by expanding its business-loan portfolio.

He says a majority of farmers he works with makes their loan payments with federal assistance, either a disaster check, or payments from the Conservation Reserve Program.

He says one farmer's experience last year puts the situation in perspective. The farmer seeded wheat in one field. A field across the road was too wet to Plant, so it qualified for a disaster program. The disaster payment was more per acre than the farmer got selling his wheat.

Rogalla: He made more money not planting. You know, it just can't work, and the frustration level is really growing.

Rogalla says he's been working the numbers for a lot of farmers, and based on current prices for crops, it's impossible to write a business plan that will show a profit.

Rogalla: I'm not optimistic at all about the farm situation, and I'm frank with my farmers and they know. They're frustrated, but they're asking me what do. You think and I say, "It's going to get worse."

Jerry Krueger shares that viewpoint. The Warren, Minnesota farmer has been trying to cut his losses. Ten years ago he farmed 5,000 acres with hired help. The farm was essentially debt free. Now he's trimmed the size of his operation by two thirds and runs it alone. This year, he says, disaster payments will keep the wolves from the door.

Krueger: It's really scary to me as a producer to see what's kept me in business the last few years, because I want to grow a product and market it and get my living that way. I'd feel a lot more secure.

Krueger says rather than thinking about the future of farming, he's thinking about a way to get out without losing the equity that will provide retirement income for him and his wife.

He says farm payments under the federal Freedom to Farm program will end in two years, and if market prices have not improved, farmers will have no income.

Krueger: One of two things has got to happen: they've got to change that program or the markets got to get better, because it just won't work. You can't stretch the rubber band that far. It's not possible.

Congress will debate several proposals this year to pump more money into the farm economy. That may help in the short term, but an agriculture policy analyst says if changes aren't made carefully they could simply delay the problem a couple of years. Jasper Womach is an agriculture-policy specialist with the Congressional Research Office. He says for decades farm policy has favored larger farmers. He says that's unlikely to change. Womach says it will take more than farm programs to save small farms and towns. He says it will take intense rural development.

Womach: Helping rural communities would create the off-farm jobs for the small farmers. It's really what can you do in that regard. There's no easy answers there. A lot of what has to be done in terms of rural development has to be initiated at state and local governments.

Womach says it's likely U.S. farm policy in the future will depend on world markets to support agriculture production, and the century-long trend toward larger farms will continue.

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