A trifecta of high input prices, high interest rates, and depressed crop prices have Sen. Cindy Hyde-Smith (R-Miss.) and Sen. John Boozman (R-Ark.) bringing focus to the economic stress for farmers.
Earlier this week at a Senate Appropriations Committee hearing: A Review of Disaster Funding, the senators asked colleagues to broaden the scope to include market loss assistance for the nation’s agricultural sector.
Their warning included that one in five could be pushed out of business due to declining farm income, high production costs, and soaring interest rates.
“Many farmers across the country are on the verge of going out of business because a hurricane, wildfire, drought, or other weather-related event wiped out entire crops. And they need help,” Hyde-Smith said. “But there are also many farmers across the country on the verge of going out of business due to sky-high input costs and below break-even commodity prices. And they need help too.”
As Washington policy analyst Jim Wiesemeyer points out, despite USDA’s forecast of $116 billion in net farm income for 2024 — still 15% above the 10-year average — lawmakers argue it doesn’t reflect the dire circumstances of many individual producers, especially row crop producers.
Sen. Boozman said “it’s really dire in farm country,” especially noting the economic hardship on crop producers.
Senate Agriculture Committee Ranking Member @JohnBoozman presses @USDA about the economic distress America’s farmers are experiencing. pic.twitter.com/34HrLRrcai
— Senate Ag Committee Republicans (@SenateAgGOP) November 20, 2024
“I’ve never been in a situation where the bankers are coming in saying, ‘If you don’t do something because of our bank examiners we’re not being able to be able to provide the credit that our farmers need,” Sen. Boozman said.
Ag bankers report a 40% surge in new operating loans. With mounting financial pressure there are signs of growing debt distress in the central Plains and Midwest. It has many wondering as forced farm liquidations loom, the fate of rural America could hang on swift and significant government intervention.
“This year, producers in Mississippi and across the country are reporting some of the best yields ever. That’s what’s so hard about this. They did everything right, yet, they will go out of business if they’re able to unsecure financing to farm next year,” the Senator added. “The high cost, the high interest rates and the low prices is definitely the perfect storm. You may be hard pressed to find a lender able to finance a farmer who is that deep in the hole and we understand that. Just like the weather-related disasters, adverse market conditions are completely out of the farmer’s control.”
Wiesemeyer adds: “Calls for federal aid are intensifying, with proposals like a $21 billion House bill targeting crop growers as a stopgap ahead of the delayed new farm bill.”
At last week’s American Bankers Association Ag Lenders Conference market analyst Mark Gold shared his perspective on the farm lending atmosphere.
“They’re a little bit worried out here. With $4 corn, $10 beans, it’s very hard with these land prices where they are to make ends meet and they’re concerned that this thing gets worse, and there’s going to be a lot of bankruptcies in this community.” Gold said. “I don’t think that’s actually going to happen. I think there’s some things down the road like using ethanol and aviation fuel that could be an absolute game changer. I think that’s something the American farmers should really be pushing out here that would change the corn dynamics in a heartbeat.”
