“Know your rights,” Land Stewardship Project organizer Paul Sobocinski advised farmers regarding negotiating with lenders. Sobocinski spoke last week at a meeting in Lewiston on the tough economic situation for many farmers.
by CHRIS ROGERS
At what point do a few bad years become a crisis? At a meeting in Lewiston last week, Land Stewardship Project (LSP) members and staff said the current economic situation for local producers is a crisis — harkening back to the farm foreclosure epidemic of the 1980s.
“This is a downturn in the farming economy that’s in its sixth year,” LSP organizer and Le Seuer County, Minn., farmer Tom Nuessmeier said. “We all know farming is a business. It has its ups and downs. We’re all used to that, but this is a critical and important time,” he added. While not every farmer is in financial crisis, many are, LSP representatives said. Poor profit margins could force more and more small and mid-sized farmers out of business, leading to fewer farmers, more farm consolidation, and weaker rural communities, they stated. LSP organizers said last week’s meeting was the first of many to bring people together to do something about that.
“Everyone will have a different opinion,” Winona County Farm Bureau President Glen Groth stated when asked if there was a crisis in the farm economy. “I think for segments of the economy, particularly the dairy sector, the word ‘crisis’ could be thrown around,” said Groth, who himself made the difficult decision to stop dairy farming and focus on crops. “But across the ag economy, I don’t know if crisis is the right term.” He explained, “I don’t think this is a place where we haven’t been before, but there’s certain farmers and there’s many in the farm community that are having their own individual crises. And there’s certainly more pain and more hard decisions being made in the farm community than there have been in the last 10 years.”
Local farmers have faced challenging weather and years of low prices for crops and milk. The situation has been especially tough for dairy farmers. On the other hand, milk and soybean prices have been improving lately, with some milk contracts topping $20 per hundredweight for the first time in years.
“Recent economic conditions have raised concerns about the financial health of the U.S. farm sector. After peaking around 2012, farm sector income declined while farm debt continued to rise,” U.S. Department of Agriculture’s (USDA) researchers wrote in a recent report. Net income on Minnesota farms fell by 30 percent between 2012 and 2017, according to the USDA’s latest Census of Agriculture. Nationwide, net income for U.S. farms is projected to increase this year for the first time in four years, according to the USDA. However, a majority of agricultural lenders in the Upper Midwest and Northern Plains reported to the Federal Reserve Bank of Minneapolis that farm incomes are down this year, and the Fed reported a sharp uptick in farm bankruptcies last fall, especially in Wisconsin.
“For six years, we’ve had negative returns on corn,” Fillmore County farmer Dan Miller said during a small group discussion at last week’s meeting. When farmers are making a return on investment of just a couple percentage points, he added, “You can’t do that forever if you’re borrowing at five or six [percent interest].”
In a position paper released this month, LSP organizers described the current farm economy as unsustainable and unfair, adding that it could lead to “the extinction” of a new wave of small and mid-sized farmers. “We need to address this crisis because if we lose this whole group of farmers, it affects the rural community,” LSP organizer Paul Sobocinski said.
LSP proposed a set of potential solutions to the crisis, from government policies to steps farmers could take themselves to make their farms more profitable.
Spring Grove, Minn., farmer Myron Sylling touted the average 265 bushels of corn per acre he said he harvested this year with little to no fertilizer after building soil health and natural fertility through decades of no-till agriculture and years of cover crops. By growing his own “green manure” and cutting input and tillage costs, Sylling said he was able to lower his expenses and increase net profit. “We’re not buying all this extra stuff … This is done on the cheap. So we are making a profit even now,” he stated.
LSP also urged farmers going through financial difficulties to work with Minnesota Farm Advocates — a state program that provides financial advice and help negotiating with lenders. Sobocinski reminded farmers negotiating with lenders over debts have a right to independent mediation. “Work with a farm advocate and know your rights,” Sobocinski said.
On the policy side, LSP’s position paper asks the state to fund more farm advocates and the Farmers Legal Action Group and for the Minnesota Attorney General to investigate agricultural cooperative mergers and co-ops with special deals for larger producers. It calls for the federal government to reign in agribusiness mergers, implement grain supply management, limit subsidies to large farms, and require country-of-origin labelling for foods.
“It should have been done a long time ago,” a local livestock farmer chimed in regarding country-of-origin labelling.
“For the life of me, I don’t know why they don’t have more payment limitations,” Miller said of subsidies to large farms.
“I think we need the government for some kind of supply management,” Elba-area farmer Eddie Kramer stated. Supply management refers to systems in which farms or the government collectively control the amount of food produced in order to increase prices. “As individuals we can’t do anything,” Kramer said.
Supply-management systems can’t make consumers buy products, Groth stated. If supply management raises prices, the markets may just respond by buying less of the product or buying agricultural products from other countries, he noted. “I think it’s going to end up creating more problems than it solves,” Groth argued. “You’ve raised prices, but you’ve lost buyers, so then you have to shrink the supply even more just to keep prices up and eventually you’ll see farms go out of business, and you’ll end up destroying your market globally.”
The Minnesota Farm Bureau is pushing for other policy solutions to help farmers, including cutting regulations and property taxes and boosting foreign trade.
LSP’s position paper also calls for Minnesota to enact a moratorium to temporarily ban new, “massive dairies” with over 1,000 animal units (714 cows), saying that larger farms contribute to price-depressing milk overproduction. “You’ve got to be careful with that one because it really turns off farmers because it’s a regulatory thing,” Miller said of that idea, adding that he would be more concerned about far larger farms than 1,000 animal units.
“That size of farm is not massive nor is it necessarily a threat to small farms in any degree,” Groth stated. “Now maybe if they would have said 10,000 animal units, maybe. There aren’t many farms that are that size and those that are are more investor-backed operations.” He continued, “One-thousand animal units — at that level, you’re probably a family-owned and operated business at that point.”
There is at least one area where LSP and the Farm Bureau share similar policy goals: reducing the cost of health insurance. As small business owners, most farmers have to purchase their own health insurance, and the cost of premiums — especially in Southeast Minnesota, where the rates are the highest in the state — can be jaw-dropping. Without subsidies, a family of four in Southeast Minnesota could pay nearly $2,000 a month in premiums — to say nothing of co-pays and deductibles.
“It’s just atrocious what some people have to pay,” Sylling said. “That’s just crippling to a lot of operations.”
“Health care costs are a considerable issue,” Groth stated. “Our premiums skyrocketed and then we were dropped,” Groth said of his own family’s experience. That left them with two options: pay $30,000 a year in premiums or try to get on Minnesota’ subsidized low-income health insurance program, MinnesotaCare. “There was nothing in the middle,” Groth said. “I told some politicians, ‘There needs to be something in the middle.’ I can afford to pay something for my health insurance … Right now, there’s nothing in between extremely expensive and MinnesotaCare.”
When it comes to health insurance, Groth noted, “There are some differences in opinion about what to do about it.” Farm Bureau leaders would like to see farm cooperatives be allowed to offer health insurance plans to farmers — similar to employer health insurance policies many professional workers receive. LSP called on Minnesota to expand public health insurance programs.
“There is enough money in the [health care] system,” LSP board member and retired Rochester, Minn., physician Aleta Borrud said. “It’s just going to the wrong people,” she added, pointing to large profits reaped by insurance and drug companies and criticizing the closure of rural health care clinics. “We need to stand together … We need to speak out. People have pride and it’s hard to say, ‘I’m struggling, this is my story,’” Borrud said. However, people struggling to afford care are not alone, she continued, adding, “Legislators don’t want us to share our stories because every single story tells us that the system isn’t working and they’re not working for you.”
More information about LSP’s and the Minnesota Farm Bureau’s policy goals is available at www.landstewardshiproject.org and www.fbmn.org, respectively. More information about Minnesota Farm Advocates is available at www.mda.state.mn.us/about/commissionersoffice/farmadvocates.