BELLE PLAINE, Kan. – Farmers across the nation leaned more heavily upon the federal government last year to finance their agricultural operations amid low commodity prices and trade disputes, and more of the money they borrowed is now delinquent.
Although the U.S. Agriculture Department said it has not seen a significant change in loan delinquency rates because of the coronavirus pandemic, it expects an impact if the economic fallout continues.
Farm foreclosures have not increased, and the department has taken a number of measures to forestall them — including more flexibility for borrowers to extend repayments for annual operating loans.
The department said in an email that it also temporarily suspended loan accelerations and non-judicial foreclosures as well as stopped referring new foreclosures to the Justice Department. U.S. attorney's offices will determine whether to stop foreclosures and evictions on delinquent accounts they were already handling.
Nathan Kauffman, vice president and Omaha branch executive of the Federal Reserve Bank of Kansas City, said he does not expect COVID-19 to have an immediate impact on farm loans in part because of the timing of the pandemic.
“It really started to intensify toward the later part of March, but that is a time of year when a lot of the major planting decisions and financing decisions ... had already happened. So a lot of things had already been set in motion prior to the crisis,” Kauffman said, adding that if the crisis continues for a few more months borrowers are going to start thinking about those things again.
A state-by-state breakdown for the last two years of delinquent direct and government-backed loans that The Associated Press obtained through an open records request from the USDA's Farm Service Agency offers a glimpse into financial difficulties faced by producers that varies widely by geography and industry.
Most vulnerable are beginning farmers and smaller agricultural operations that typically get their financing through the agency’s direct loan program. Those are typically the riskiest borrowers who cannot get financing elsewhere.