Is the agriculture industry in a crisis, or has it experienced another cyclical trend?
Dan Miller, farm business management instructor with Riverland Community College, said it is cleary farmers have faced a serious downfall. Miller spoke Wednesday at a farm crisis forum help in Plainview, Minn. by the Land Stewardship Project.
“Net farm income is about half of what it was in 2013 today,” Miller said. “The profitability margin is diminishing. Certainly, that has been the trend for about six years.”
Miller noted numbers from the University of Minnesota show the debt to asset ratio is also in the rise. While the average farmer once had 40 cents of debt for every dollar of asset, farmers are now reporting 50 cents of debt per dollar.
“They are eating into their net worth, their equity,” Miller said. “It is really starting to impact them, their profitability, their farming operation and putting stress on their families also.”
Minnesota lost nearly 300 dairy farms in the past year and Wisconsin saw more than 800 farms exit the industry, according to Miller. Although some of those numbers can be attributed to farmers reaching retirement age, emotional and financial stress has also been a large factor.
Fortunately, Miller saw a large interest in young people wanting to enter the industry.
“There are low-interest loan programs through the USDA, and we can help put them in touch with those resources that are out there,” Miller said. “I do think that for young folks that want to get into it, there is just the extreme large capital investment now that is required as well as skills and knowledge and insight.”
While there are more challenges to get into the business of farming, Miller said there are also more resources available to help.
Despite low commodity prices, Miller said a key asset for farmers in the area is high-quality land and agribusiness infrastructure.
“That is a tremendous resource,” Miller said. “It is just that farmers have been really squeezed.”
Some solutions they have turned to included refinancing to stretch out debts and payments.
Additionally, Miller noticed farmers are looking at other alternative enterprises whether it is transitioning to organic agriculture, cover crops, or specialty crops like hemp. There has also been a historic trend in the last several years of working additional jobs to receive off-farm income.
“Farmers are hopelessly optimistic,” Miller said. “Thank God they are, or we would have all left years ago.”
He did find signs of optimism in recent trade deals and relatively flat interest rates that could help keep moving farmers forward.