U.S. Farmbelt Productivity Hit: More Producers Struggle To Make Loan Repayments, as Land Values, Ag Income Drop
Aug. 18, 2016 (EIRNS)—Second-quarter 2016 statistics for agriculture states released earlier this month by the Federal Reserve Midwest bank districts and the U.S. Department of Agriculture measure what residents know first-hand in the Farmbelt—the situation is heading for a crash, in which mass numbers of remaining family farm operations can’t continue.
The National Farmers Union (NFU) summed up the point, in an Aug. 17 statement, saying that,
"As the second quarter report [of the Kansas Federal Reserve] highlights, the situation continues to decline. It found that farm income has continued to fall, there is increased demand for loan renewals and short-term operating loans, and there are declines in repayment rates and falling farmland values..."
The NFU issued an appeal, "Congress Must Act to Combat the Deteriorating Farm Economy."
Lyndon LaRouche, briefed in May, on the same patterns shown in the First Quarter, stressed that, this is now a crisis of productivity. This is the food supply system itself going into chaos.
Put simply, net farm income (from all sources) is dropping, as prices received by the farmer—for wheat, corn, cattle, hogs, milk and other basics—continue to drop. Farmers’ receipts are below their costs of production. Increasing numbers of farmers are struggling to be able to repay loans taken out, to continue to farm. More and more are being denied new loans, for operating purposes, because they can’t qualify under present conditions.
As many as one-third of Midwest farmers are having trouble making loan repayments, according to the Fed survey in the Kansas City, Chicago and St. Louis districts. Put another way, the share of farm loans that have repayment problems is running at 18% across all states in these districts.
And now, land values themselves are falling. In the states of Kansas, Nebraska, Missouri and Oklahoma (the Fed’s 10th District), surveys show that in Q2, the values of non-irrigated land declined 3% (from a year earlier) and 5% for irrigated land.