Farming’s Economic Troubles Go Much Deeper than Floodwaters

Flooding and trade wars have intensified weaknesses that have long swirled under the media’s radar. Recent crises remind many of  the worst days of the 1980s.

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Land isn’t the only thing submerged in the continued flooding that inundates parts of the Midwest.

Also down in the depths where no one can see it is the real story about what’s happening in the nation’s farm economy, according to John Hansen, president of the Nebraska Farmers Union.

“I’ve yet to speak with anyone in the media who wants to dig any deeper than the floods and trade wars,” Hansen said in an interview with the Daily Yonder. “The truth is, these floods are just revealing the real story about the agricultural economy. Farmers aren’t in any shape to take this kind of hit.”

Since February, Hansen has fielded dozens of calls from journalists covering the devastating spring floods throughout Nebraska, Iowa and Northwest Missouri. While Nebraska Farmers Union and partner organizations have helped farmers and other rural residents respond to the flooding disasters, Hansen feels that national media coverage has been too narrow.

Hansen said that overproduction of certain crops, low prices paid to farmers, corporate concentration, trade policy and underfunded or poorly-managed rural infrastructure were all pre-existing problems that the flooding intensified.

“Before the flood, before the tariffs, the Nebraska Rural Response Hotline had set monthly records for calls from farmers in crisis. This is the oldest national continuously operated farm crisis response hotline in the country.” The Nebraska Rural Response Hotline (1-800-464-0258) is a service of the Farm Crisis Response Council, where Hansen is a board member. Farmers, ranchers or rural people who call the hotline speak with staff who refer callers to attorneys, financial counselors, clergy, other farmers and mediators.

“We haven’t seen farmers in financial crisis like this since the worst day of the 1980s. This year, 10% of agricultural loans in Nebraska were not renewed,” Hansen said. The most recent Federal Reserve report on conditions for the agricultural economy in Nebraska and surrounding states confirms the struggles of farmers dealing with low farm incomes and rising debt. The report states:

Farm income decreased across the Tenth District and the trend of steady deterioration in agricultural credit conditions continued in the first quarter of 2019. With low income weighing on farm finances, the pace of decline in farm loan repayment rates increased slightly. In addition, carry-over debt increased again for many borrowers and bankers continued to restructure debt and deny a modest amount of new loan requests due to cash flow shortages. Major flooding and blizzards across some regions in the District late in the first quarter may also put additional financial pressures on some farm borrowers as damages continue to be assessed.

(Source: Ag Credit Survey from the Kansas City Fed)

Hansen said rainsoaked soils and bank high rivers and streams are also at risk of new flooding any time there is a significant rain. “It’s true that we had more than $1 billion in damage to Nebraska agriculture this spring, and close to that amount of damage to infrastructure throughout the state. What a lot of people don’t know is that we still have active flooding in the Missouri River corridor in Eastern and Southeastern Nebraska. Just this we week we had a major rainfall event around Kearney that brought back active flooding in the central part of the state.” First responders and public health officials urged Kearney residents to evacuate Tuesday, after the city received close to 9 inches of rain Monday night causing widespread flooding. Floodwaters are now moving downriver causing flood damage for the second time this year.

Down the Missouri River corridor, Missouri farmer Richard Oswald said that the spring floodwaters are now down to their lowest level, but that numerous roads and bridges are still closed due to damage. His farm has remained under water, making planting or cleanup impossible. Oswald, author of the Daily Yonder column “Letter from Langdon,” reported in an email, “if they stop up the holes in the levee, and if the river doesn’t run away again, we might be able to start cleanup by late summer. The cropping window is closed. Crop insurance prevented planting is the only game in town.”

Prevented planting payments are made to farmers who experience floods, hurricanes or excess precipitation that makes regular farm planting operations impossible, according to USDA’s Risk Management Agency. The payments are made to assist farmers who won’t be able to produce and sell a marketable crop for that growing season. Farmers that select the option are not allowed to plant a different marketable or forage crop for the summer, though planting a soil conserving cover crop is allowed.

Federal crop insurance programs are a public-private partnership. USDA and farmers share the cost of premiums, with USDA paying the larger share. Private insurers are responsible for paying liabilities to farmers. USDA also pays private insurers annual payments for operating crop insurance programs. Crop insurance policies are available to protect farmers both from natural disasters (like floods) and from decreased income due to low crop prices.

Prevent planting payments could be the only source of revenue for thousands of crop farmers throughout the Midwest this summer. Heavy rains have continued to make planting difficult, and projections for corn and soybean production for 2019 are low.

Nebraska Farmers Union’s Hansen said he has spoken with many farmers that have chosen to utilize prevent planting crop insurance payments for this growing season. “Going with prevent planting is an easy decision to make when you’re still under water,” Hansen said, referring to the numerous farmers along the Missouri River whose croplands have been flooded out since early March.

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