Struggling farmers could see relief from loan fees

With a farm crisis entering its sixth year, lawmakers are considering a bill that would help Minnesota farmers in the red.

Sponsored by Rep. Todd Lippert (DFL-Northfield), HF3739 would provide up to $880,000 to the Department of Agriculture for grants to cover loan origination fees for farmers seeking to restructure their debt with a Farm Service Agency or Rural Finance Authority loan.

Eligible farmers would need to have a total net worth of less than $800,000 and be participating in, or eligible for, mediation with a creditor under the state Farmer-Lender Mediation Act.

The bill was held over Thursday by the House Agriculture and Food Finance and Policy Division for future consideration.

Lippert said 3,500 state farmers were referred for mediation in 2018 because they were not able to pay their bills and had at least $15,000 in debt. About 1,200 entered mediation and 85% were successful.

He said the bill would help farmers whose mediation failed or whose loans were withdrawn or denied. The fees are 1.5% of the loan value, averaging about $3,000 to $5,000.

“We think this is a concrete way to respond to the farm crisis and help more farmers get through the mediation process,” Lippert said.

Paul Sobocinski, a livestock farmer and a policy program organizer for the Land Stewardship Project, said he worked in the 1980s farm crisis, and he sees “extreme similarities,” with farm income now at a “disastrous level.” However, this time interest rates are at historic lows.

The group says 2018 median farm income in the U.S. a negative number. More than half of farmers and ranchers have lost money on their crops or herds during the past six years.

“Farmers need different tools,” Sobocinski said. “It’s great to provide farmers with counseling, but it you’re giving farmers counseling, you’ve got to do something to relieve the pressure.”

Dan Miller, a farm business management instructor at Riverland Community College, said net farm income last year is about half what it was in 2013, and farmers’ debt-to-asset ratio was about 40% in 2013, compared to about 50% today, so their net worth has diminished.

“The coronavirus issue will not help our efforts to export Minnesota products and actually will likely make a bad situation slightly worse,” he said.

A companion bill in the Senate, SF3580, sponsored by Sen. Michael Goggin (R-Red Wing), awaits action by the Agriculture, Rural Development, and Housing Finance Committee.