Crop, dairy, and livestock farmers in Minnesota are suffering because of a continuing drop in prices for their goods, driving some of them to file bankruptcy.
One Dairy Farmer told Minnesota Public Radio News that it is almost possible for him to break even on milk production. For nearly two years, he says the farm has been going backwards. While he is taking it one day at a time and says that “you’ve got to learn to deal with it,” others are finding the hardship almost impossible to navigate.
The dairy farmer says that he has lost tens of thousands of dollars in a single month on a farm that has a much higher operating budget. He estimates the farm lost $300,000 in 2015. He says it is very hard to go to a bank or any lender and get a loan when the cash flow is in the negative numbers. He said this has led him to entertain the possibility of filing Chapter 12 bankruptcy.
Chapter 12 bankruptcy will give the family more time to produce milk from the hundreds of cows on the property, but they will have more time to satisfy their debts. The hope is that the price of commodities will increase so that the debts can be paid.
A farm business management instructor at a Twin Cities community college said that out of the almost two dozen farmers he is working with, more than half of them are experiencing some kind of stress. Out of the 50 percent of farmer’s experiencing a great deal of stress, around 25% of them are experiencing dangerous levels of stress.
The number of troubled agricultural loans has been on the rise throughout Minnesota and the number of farmers that have been offered mediation by their lenders are up 20 percent so far in 2016.
The farmers that have been able to stay in business are relying on savings and other financial vehicles to pay their expenses. The savings that they have built up most likely came from the very high soybean and corn prices that were experienced during 2007 and 2014. This was a major boom for Minnesota farmers, allowing them to get ahead of the curve before prices started to drop. Even when the prices dropped a little, they weren’t yet distressed. Now that the cost of their commodities has seen a significant dive, they are running out of money.
With another record-breaking harvest expected this year, it is expected that prices will remain low, which means there may be an increase in the number of farmer’s filing Chapter 12.