No 'crisis' yet, but concerns grow about 2017 credit conditions

As combines roll across much of the nation’s mid-section, many farmers are finding bumper yields. But the bad news is, market prices for most commodities are still sagging. As a result, more farmers are starting to worry about access to credit in 2017. “The farmers and ranchers that I talk to remain in distress and worry whether their family farm can stay afloat,” noted Senate Agriculture Chairman Pat Roberts, R-Kan., said during a recent committee hearing. Many farm households would be losing money if not for their off-farm earnings, he added. In fact, USDA’s Economic Research Service announced last month that it expects farm income to drop for the third straight year. It’s predicting a decline to $71.5 billion for 2016, from $80.7 billion in 2015 and $92.6 billion in 2014. Still, Agriculture Secretary Tom Vilsack explained during that same Senate Agriculture Committee hearing that the farm debt loads remain far below the levels of the 1980’s crisis. Only 10 percent of farm operations are classified as highly or extremely leveraged, he said. Vilsack acknowledged that the dairy industry in particular is struggling but he said that the department’s ability to help is limited by restrictions congressional appropriators have placed on purchasing surplus commodities through the Section 32 program. USDA agreed in August to purchase $20 million in cheese, but that’s all the department can do, he said. “Everything I can do I have done. Every penny I could spend I have spent,” Vilsack told committee member Pat Leahy, D-Vt. USDA’s Chief Economist Rob Johansson told Agri-Pulse that farm credit demand has been growing since 2011 and saw spikes in the boom years of 2013 and 2014 when prices were high, income was strong and farmers felt confident enough to increase investment in new equipment and land. But now many farmers have taken on too much debt and are having trouble making payments...more