Prompts winter weather advisories as cold air moves in Friday night

MPR News helps you turn down the noise and build shared understanding. Turn up your support for this public resource and keep trusted journalism accessible to all. 

Turn Up Your Support

Crops are still standing in snow-covered fields in parts of the Upper Midwest, including Minnesota. They weren’t harvested last fall because rain left the ground too soggy for farm equipment — and then heavy snow buried many fields. 

Those wet fields will likely be a challenge again during spring planting. And one of the region’s top farm bankers said he sees other challenges ahead for the 2020 season.  

"Projections are tough right now,” said Marc Knisely, CEO and president of 

Fargo-based AgCountry Farm Credit Services

. “I mean, when you look at an average yield and you look at what the current commodity prices are, it's tough to project a profit."

AgCountry is a cooperative lender with more than 18,000 customers in rural Minnesota, North Dakota and Wisconsin. It’s part of the nationwide farm credit system established in 1916 by Congress to expand credit options in rural areas. 

MPR News - "Agriculture is unique, particularly production agriculture. ... You kinda get what the market allows and what supply and demand dictates."

Ag lender Knisely on the unique nature of the ag economy

Like most lenders, AgCountry assigns a credit risk score to each loan it issues — and across the region, ag loans have gotten riskier, as bad years with relatively low profits pile up. 

Fall weather - and falling numbers - hit farmers hard

This year, a bitter harvest

Are we on the cusp of another farm crisis?

"Credit quality, I think, as measured by most financial institutions, has deteriorated over the course of the last five to six years, but not as significantly as we thought the potential was," said Knisely.

Farm income peaked in 2013 during a short period of strong prices and good yields. But income has trended much lower since then, forcing farmers to refinance debt when they don’t earn enough to pay back the loan they take out each year to plant crops.  

Knisely said he thinks several factors are helping farmers manage increasing debt: 

Farm income for 2019 is forecast to increase slightly over the previous year, according to the U.S. Department of Agriculture economists, but only because of a big infusion of direct government payments. Those payments included $14.5 billion in market facilitation program payments the Trump administration sent to farmers to offset the impact of the trade war with China, which drove down farm prices. 

Those payments were a welcome economic boost for many farmers — and helped many farmers pay expenses this year — but they can actually complicate financial planning. 

"You really can't count on those types of payments,” Knisely said, “so from a lending standpoint, it just creates a lot of uncertainty both for our producers and for us as a lender. "

Farmers wait, hope as weather delays harvest in October

Poor prices, trade woes follow farmers to the field in May

Financial worries grow as farmers prep for spring

Knisely said he hopes recent trade deals with Mexico, Canada and China will help farm profits rebound, but he said what farmers need most is open access to world markets. 

Most farmers keep their banker updated on financial progress throughout the year, but this time of year, they’re looking back at the previous year and tweaking their plans for the coming growing season. They hope it’s less than three months away. 

MPR News - Ag lender Marc Knisely: "There is stress in farm country" and the role of lenders is evolving

Ag lender Knisely says: 'There is stress in farm country'

And because of the financial stress, Knisely said that lenders’ relationships with farmers are taking on a new aspect: They’re paying close attention to signs of emotional stress in farmers and each other as they work through sometimes difficult conversations.  

His most important advice for farmers is to maintain clear communication with their lenders in those tough talks, leaving no room for surprises in the farmer-lender relationship. 

"Oftentimes when producers run into financial difficulties, you can tend to become a little paralyzed,” said Knisely, “and that's why it's all the more important to have a plan in place and execute on the plan that you have."

MPR News - The ag economy is challenging, he said, but: "It's guiding some people to maybe take that retirement step and begin to transition the farm. Those present themselves as opportunities, though, ... opening the door for that next generation to get involved in agriculture."

Ag lender Knisely on the effects of a tough farm economy

While many farm balance sheets are showing signs of weakness,  Knisely said he doesn’t foresee a big surge in farm bankruptcies — and so far, the data bears that out.

"As a former farm kid I'm just always optimistic," said Knisely. "Farmers in general are very sophisticated business people and I think that there's an underlying principle that that will help us sustain agriculture through a cycle like this."

Knisely watches a lot of economic indicators throughout the year to gauge the health of the farm economy. But the most important indicator for him is simple: Will weather and markets improve enough to allow farmers to earn a profit in 2020?

Minnesota teacher honored for efforts to educate students about farming

In a traditional field, farmers strive for sustainability

Finding land

Struggling farmers take emotional step to forge new career paths

Business and Economic News

Agriculture

Shows

Morning Edition

NewsPartners

Dan Gunderson

Author

One regional ag lender says he’s optimistic despite a weakening farm economy in the Upper Midwest. Some key economic factors are helping farmers survive a stretch of several years of low profits.

Optimism remains, despite tough times in farm country

Ag lender Marc Knisely on the unique nature of the ag economy

Ag lender Marc Knisely: "There is stress in farm country"

Ag lender Marc Knisely on the effects of a tough farm economy

water standing on a muddy sugar beet field

Top ag banker: Optimism remains, despite tough times in farm country

Go Deeper.

Like this?