‘There’s bleed­ing go­ing on’ in farm econ­omy, ag lender says

The Buffalo News - - BUSINESS - By Jim Spencer

WASH­ING­TON – Amer­ica’s de­pressed agri­cul­tural econ­omy is not yet at “a tip­ping point where vast num­bers of farms will be lost,” the CEO of one of the coun­try’s big­gest agri­cul­tural lenders says. But “there’s bleed­ing go­ing on” thanks to a con­flu­ence of low com­mod­ity prices, bad weather and tar­iffs.

It’s forc­ing some farm­ers to re­fi­nance loans and con­vinc­ing oth­ers to re­tire.

“It’s a slow ero­sion,” said Rod He­brink, chief ex­ec­u­tive of Com­peer Fi­nan­cial, a 43,000-mem­ber co­op­er­a­tive op­er­at­ing in the Mid­west.

He­brink, a na­tive Min­nesotan who still lives in the state, tes­ti­fied to a con­gres­sional sub­com­mit­tee Tues­day about cur­rent chal­lenges fac­ing U.S. grow­ers and live­stock pro­duc­ers.

In an in­ter­view with the Star Tri­bune, He­brink did not pre­dict an agri­cul­tural melt­down on the scale of the 1980s. He said Com­peer, one of the na­tion’s big­gest ru­ral lenders, has not been forced to deny new loans to many cus­tomers. But the co­op­er­a­tive is now coun­sel­ing some to rethink the way they do busi­ness.

A pro­longed down­turn “has im­pacted farm­ers of all ages, ex­pe­ri­ence lev­els and sizes,” He­brink said in his tes­ti­mony.

The Uni­ver­sity of Min­nesota re­cently re­ported that farm in­come in Min­nesota is at its low­est level since the state be­gan keep­ing that statis­tic.

Many grain farm­ers have not gen­er­ated in­come for four or five years ow­ing to bad mar­ket and weather con­di­tions, He­brink said. They have been liv­ing off work­ing cap­i­tal.

“You can’t draw on eq­uity for­ever,” he said.

Now, bad weather has added another bur­den. Farm­ers in the Up­per Mid­west face pos­si­ble cat­a­strophic floods as the win­ter’s heavy snow­falls melt. Even where floods have not ru­ined prop­erty, Com­peer’s Fund for Ru­ral Amer­ica has given out a to­tal of $117,000 in $1,000 quick re­lief pay­ments to peo­ple who have had barn roofs col­lapse from snow ac­cu­mu­la­tion, He­brink said.

As he spoke in one con­gres­sional hear­ing, the Na­tional Pork Pro­duc­ers Coun­cil, whose mem­ber­ship in­cludes many Min­nesota hog farm­ers, sub­mit­ted writ­ten tes­ti­mony in a neigh­bor­ing hear­ing. It of­fered an ugly as­sess­ment of what re­tal­i­a­tion to Pres­i­dent Don­ald Trump’s pro­tec­tive tar­iffs on steel, alu­minum and Chi­nese im­ports has done to places like Min­nesota that lead the coun­try in hog pro­duc­tion.

China, which bought $851 mil­lion worth of pork in 2018, now has re­tal­ia­tory tar­iffs to­tal­ing 50 per­cent on Amer­i­can pork prod­ucts, the coun­cil re­ported.

Mex­ico, which could not charge tar­iffs un­der the North Amer­i­can Free Trade Agree­ment that Trump scrapped, has placed a 20 per­cent tar­iff on U.S. pork in re­tal­i­a­tion to the pro­tec­tive levies the U.S. placed on Mex­i­can steel and alu­minum for rea­sons of na­tional se­cu­rity.

Congress has yet to ap­prove Trump’s rene­go­ti­ated trade deal with Mex­ico and Canada – the United States, Mex­ico, Canada Agree­ment (USMCA). With­out it, some econ­o­mists say U.S. pork pro­duc­ers risk los­ing a Mex­i­can mar­ket that was worth $1.3 bil­lion in 2018.

Los­ing the Mex­i­can mar­ket “would be cat­a­clysmic for the U.S. pork in­dus­try and for all of Amer­i­can agri­cul­ture,” the pork pro­duc­ers coun­cil said.

Mean­while, an­tic­i­pated in­creases in pork sales to Japan and other Pa­cific Rim coun­tries un­der the Tran­sPa­cific Part­ner­ship fell off the ta­ble when the White House with­drew the U.S. from that free trade agree­ment.

He­brink said the tar­iff bat­tle “ex­ac­er­bated” an al­ready grim sit­u­a­tion.

“There’s more ner­vous­ness now,” he said. “Farm­ers are op­ti­mistic by na­ture. But there is a re­al­ity set­ting in.”

Getty Im­ages

Newspapers in English

Newspapers from USA

© PressReader. All rights reserved.