Historic flooding across the heartland has left large swaths of farmland underwater and farmers unsure of when – or even if – they will be able to plant their crops.
Unfortunately, this stormy spring is just another in a series of blows to rural America. The financial security of our farmers and ranchers is increasingly at risk.
The most recent reports from the federal government indicate that a growing number of farm loan recipients are falling behind on payments.
Last week, the FDIC released their quarterly report on the state of our nation’s financial institutions. The rate of agricultural loans that are past due or in nonaccrual status has reached the highest level since early 2012, according to a Reuters analysis of the data.
Diane Ellis, Director of the Division of Insurance and Research at the FDIC, said that the agency continues to “monitor challenges in the agriculture sector” and that “some farm banks are reporting asset quality deterioration.”
Farms are struggling to make ends meet in the face of difficult market conditions and unpredictable weather, putting a strain on the financial systems that support rural America. The banking data presented by Ellis demonstrated that the rise in noncurrent loans “mostly affects our community banks more or less in the middle of the country.”
A recent Wall Street Journal article quoted Tracey Allen, an agricultural commodity strategist at JP Morgan, regarding the spring planting delays and the financial hardships many farmers face. “We have some of the highest delinquency rates among U.S. farmers ever—that’s really terrifying,” Allen said.
As Ellis noted, however, this is not a new trend. Trouble has been brewing for several years.
Earlier this year, Farm Policy Facts highlighted the toll that years of depressed commodity prices and escalating costs has taken on the farm economy. Farm income has dropped more than 50% since 2013 while farm bankruptcies are on the rise.
Add to that mix ongoing uncertainty with our global trading partners, where farmers take the brunt in lower crop prices and higher input costs, and you have a recipe for disaster.
Not only do we rely on the food and clothing provided by America’s farmers, but our nation’s economy is intrinsically tied to the success of the agriculture community. Financial woes on the farm often have reverberating effects and the troubling news out of the FDIC last week bodes ill for the future.
Rural America is resilient. Our farmers will continue to work the land in hopes that the next season will bring renewed abundance. But they are also relying on Washington, DC to take decisive action to stand by U.S. farm families as we negotiate a quick end to ongoing trade disputes.
Standing idle and allowing rural America to endure another farm crisis like the one we faced in the 1980s would set our economy back in incalculable ways. We must support our farmers through these challenging times, just as they support us every day.