The booming economy isn't touching all corners of the country, and farmers in particular are facing a very different economic reality than the strong growth and low unemployment rate that's often touted, Axios' Courtenay Brown reports.
- Driving the news: America's farmers are living through the worst economic crisis in almost 30 years, driven by low commodity prices, trade war pressures and record flooding.
The deterioration of rural fortunes can be seen most acutely in Wisconsin, where dairy farms closed at a rate of 2 per day last year. The state's dairy industry accounts for half of the state's "critical agricultural sector ... generates $43.4 billion a year in economic activity ... and supports 413,500 jobs or 11.9% of the state's employment," according to the Wisconsin Policy Forum.
- "For a lot of farmers, this has been a gut check. Are we going to tough this thing out, or are we going to get out?" Chris Pollack, a fourth-generation dairy farmer, tells Axios.
Downturns in farming are normal and almost expected. The worst in recent history was the farm credit crisis in the 1980s, with low commodity prices and sky-high interest rates. At the height of that crisis, there were almost 6,000 farmers who filed for bankruptcy. There were 498 in 2018.
What's different this time is farmers have seen declining commodity prices for years. And the trade war, which caused less demand for commodities from foreign buyers, has made it more painful (despite $7.7 billion so far in aid from the Trump administration). Extreme weather conditions, like the record flooding seen in the Midwest, have added another layer of uncertainty.
- "Farmers are structured to ride these waves out, but when the waves are this long they can't ride that out," says Steven Deller, a professor of agricultural and applied economics at the University of Wisconsin-Madison.
By the numbers: Farm profitability was $63 billion last year, the second lowest in the past 10 years, according to the American Farm Bureau Federation.
- Overdue loan payments for farmers with loans from the Agriculture Department's Farm Service Agency hit the highest level in 9 years in January.
- Rod Hebrink, CEO of Compeer Financial, which lends to farmers in Illinois, Wisconsin and Minnesota, says the company hasn't seen a significant uptick in loan delinquencies, "but there's stress out there, no question."
"When [farmers] go to the banks, they are leery and hesitant to lend," Deller, the professor, says. "If farmers are at the end of their rope, [banks] make loans but they make loans at rates that are unfavorable to the farmer."