Mediation Program Helps Struggling Farmers in Minnesota

February 16, 2017 03:40 AM
 
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Low commodity prices are causing financial pain on Minnesota farms, but bankruptcies are rare thanks in part to a state mediation program.

The farmer-lender program requires lenders to offer struggling farmers the chance to renegotiate debt terms with the help of a mediator before repossessing any property, Minnesota Public Radio reported.

The program has helped farmers like Jessica and Chad Hofschulte. Their southeast Minnesota farm had a poor crop in 2011, after a fertilizer company they paid didn't deliver its services.

"We lost about $60,000," Jessica Hofschulte said. "Couldn't meet our obligations."

The Hofschultes accepted mediation when the bank threatened to foreclose. It gave them time to find a new bank, get a federal loan guarantee and make a plan to keep farming.

The program began during the 1980s, when low crop prices, high interest rates and plunging land values sent thousands of farmers into financial collapse.

A phone call from Carl Pohlad, one of the Minnesota's best known bankers, put the idea of a mediation program in motion, said Jim Nichols, state agriculture commissioner under then-Gov. Rudy Perpich.

Nichols said Pohlad told the governor that bankers weren't able to loan the struggling farmers any more money because they hadn't even paid their debts. Minnesota and other states enacted mediation laws to ease the pressure on farmers and bankers, and to give them time.

First Minnesota Bank executive Scott Wakefield, who has been involved in several mediations, said he supports the program. He said it bothers some bankers who contend it delays settlements unnecessarily.

Wakefield said he believes making loans is about more than making a profit. He said it's also about keeping his local economy strong.

"It's all up to the attitude," Wakefield said. "Are you there for the almighty dollar? Are you thinking more about community, and keeping somebody in business?"

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