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elcheapo
Veteran Advisor

Farm Crisis 2019

Hello boys and girls.

I have been doing some things

In the background....talking to

People in the "agriculture sector".

What im hearing is not pretty,

Folks, i think we either are, or

Shortly will be in another "farm

Crisis"... The data is not good,

20% plus behind on payments,

Credit becomming tighter,

Commodity prices low....the

Number of chapter 11 are 

On the rise....and at some farm

Help lines.....call volume has made

A large rise.

But....there is something different

This is quiet....in the 80's, people

groups, even churchs were 

Doing things....today....nothing,

Much like society....so what, who

Cares, nothing can be done, its

Just the way it is.

One of my people is saying things

are so so, but the only thing 

Holding things together is land

Values.

Once that slips.....we're going to

Go down hill fast.

So.....

Im in the process of setting up

""something""...its i work in 

progress....it first will be ""local""

At present....a combination of

resource lists...and "someone

to listen"...non-judgemental

and supportive....

Im in the process of seeking 

funding for additional resources.

Some of my people are concerned

About sucide....

Sucide can be either "active"

Such as the obvious...or passive,

Such as not seeking medical care

When needed, neglecting current

Medical conditions...or becomming

Less safe.

As i said, it is a work in progress, 

an I dont have all the answers...

So thats where you folks come

In....are there any specific things

Or types of help (other than a 

blank check) that would help

Or make a difference ?

Thank you.

You can either post, or PM me

As I've said....i might be one of

The folks that this new "thing"

Helps....as far as ideas, just keep

In mind....the farm you save, could

be your own !!!!

 

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8 Replies
rickgthf
Senior Advisor

Re: While I applaud your good intentions, the most important thing to do is...

While I applaud your good intentions, the most important thing to do is to avoid voting against your own self-interest.

In the end, nobody will care if you commit economic suicide but you.

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roarintiger1
Honored Advisor

Re: While I applaud your good intentions, the most important thing to do is...

Farm economic suicide would include being the last farmer to have a farm sale.

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WCMO
Senior Advisor

Re: Farm Crisis 2019

Don't know where you get "20% plus behind on payments" -- wouldn't that be similar to the worst point of the 1980's?  The current trend might not be positive, but it does not appear to be a "crisis".   Don't confuse percentage increases with actual percentages of delinquencies -- it doesn't take very many delinquencies or bankruptcies to make the percentage increases look terrible, when the actual percentages of delinquencies or bankruptcies were generally low to begin with -- for a fictional example, if there were 1.5% delinquencies, and now there are 2.5%, the actual delinquency rate remains historically low, yet it still represents an increase of 1%/1.5%, or 67%!  Plus, this only represents those who borrow money -- there used to be more who did not borrow money than there were those who did, is that still the case?

A real crisis would look more like what happened leading up to the mid-1980s.  Of course, there could be certain locations or economic segments that are in worse shape than others, which is something that the overall type of statistics might not identify.

https://www.agriculture.com/news/business/farm-loan-delinquencies-rise-remain-historically-low

https://fred.stlouisfed.org/series/DRFAPGACBN

https://www.fb.org/market-intel/farm-loan-delinquencies-and-bankruptcies-are-rising

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sdholloway56
Senior Advisor

Re: Farm Crisis 2019

The structure is different now, though.

I'd expect stress to show up in vendor credit first.

Primary lender is in a pretty good position with first lien and somebody else taking the riskier portion- second lien or none.

Problem is when the primary lender decides the trend indicates it is time for them to grab what they can (probably come out pretty well in a lot of cases) rather than let the problems creep into their prime tranche.

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elcheapo
Veteran Advisor

Re: Farm Crisis 2019

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wrightcattle
Veteran Advisor

Diversity


@sdholloway56 wrote:

The structure is different now, though.

I'd expect stress to show up in vendor credit first.

Primary lender is in a pretty good position with first lien and somebody else taking the riskier portion- second lien or none.

Problem is when the primary lender decides the trend indicates it is time for them to grab what they can (probably come out pretty well in a lot of cases) rather than let the problems creep into their prime tranche.


Diversity.

Livestock should be good. 

On cattle there's a smaller calf crop and WoW cheap feed now. 

Hogs well China has lost 30 to 50% of theirs. 

As long as folks can hang on till 2021. Then we'll have a different president and Real Yankee Trade again. 

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WCMO
Senior Advisor

Re: Farm Crisis 2019

Elcheapo -- you're obviously looking at FSA loan data -- from your linked article, 

"While those FSA direct loan delinquencies are high, the agency is a lender of last resort for riskier agricultural borrowers who don’t qualify for commercial loans. Its delinquency rates typically drop in subsequent months as more farmers pay off overdue notes and refinance debt."

You can't really take FSA direct loan data and assume the same applies to overall farm loan data, nor the ag economy in general.  Yes, delinquencies are up over the prior year.  Yes, FSA direct loan delinquencies are up more than non-FSA delinquencies, but that should be expected based on "riskier agricultural borrowers".   Plus, wasn't there a shutdown that might have affected some payments, renewals and refinancing at beginning of year?  One would reasonably expect FSA direct loan delinquencies to be significantly higher than other lenders, both in good times and bad.

On the other hand, what appears to be happening with FSA direct loans, could represent the "canary in the coal mine", since the riskiest borrowers would typically be most affected before others, and since FSA direct and guaranteed lending appear to be at historically high levels.

 

sdholloway56
Senior Advisor

Re: Farm Crisis 2019

Unfortunately, somebody trying to hang on with a few thousand underwater rented crop acres isn't likely to get saved by a small new enterprise. 

Because the neoliberal system subsidizes land prices and rental values, the game is, was, and will always be about how much land you have, how well you bought (or inherited) it (or whether Dad/Grandpa got a writedown, etc), and the resulting strength of your balance sheet.

I basically have limited sympathy for people who had a pretty decent balance sheet but felt the need to overstretch it with rented acres.* Although I know somebody else will if you don't.

You only get ahead in that game once every 30 year cycle and even some people who rode too many acres into the boom and should have had a pretty amazing surge in NW are feeling some pain.

Not sure how this would have played out but I have long contended that some who were in that position should have considered staging a strategic retreat, but that isn't an easy thing to decide to do.

*although I don't approve of overtly doing them harm through trade malfeasance or weaseling out of the ethanol commitment.

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