The U.S. Agriculture Department said loan delinquency may increase because of the coronavirus pandemic, in a May 21, 2020 story. (Photo by THE ASSOCIATED PRESS)

The U.S. Agriculture Department said loan delinquency may increase because of the coronavirus pandemic, in a May 21, 2020 story. (Photo by THE ASSOCIATED PRESS)

US farmers leaning more heavily on government loan programs

“A precarious time for the producers”

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.

The agency directly lent those farmers more than $12.7 billion dollars, and more than $639.4 million of that amount was delinquent as of April 30. That represents an increase of $1.26 billion in direct loans under that program and a jump of more than $8 million in delinquencies compared with the same date a year ago. Nationwide, 18.76% of government direct loans were delinquent.

“It is just a precarious time for the producers,” said Allen Featherstone, an agribusiness professor at Kansas State University. “Overall you would like to see the total volume going down, but we are adding volume that is ultimately backed by the federal government.”

Delinquency rates topped 30% for direct government farm loans issued in several states, including Florida, New York, North Carolina, Rhode Island and Texas. Thirteen other states have farm delinquency rates exceeding 20%. Hurricane-battered Puerto Rico was an outlier with a farm loan delinquency rate of more than 67%.

Just six states — Kansas, Missouri, Illinois, Indiana, Iowa and Hawaii — had direct farm loan delinquency rates in the single digits at the end of April.

A separate program in which the federal government guarantees that farmers will make payments on the loans they borrow from banks and other commercial lenders also was more heavily used. The government backed $16.58 billion of those loans, and $270.65 million of it was delinquent on April 30. That is a delinquency rate of 3.23%.

States heavily dependent on the troubled dairy industry — such as Maryland, Michigan, New Mexico and Wisconsin — all saw delinquencies rise on government-guaranteed loans, Featherstone noted.

The U.S. Agriculture Department said it will begin accepting applications May 26 under the Coronavirus Food Assistance Program, which will provide up to $16 billion in direct payments to farmers and ranchers impacted by the coronavirus pandemic.

By The Associated Press

FarmingUnited States

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

SARS-CoV-2 virus particles, which causes COVID-19, emerge from the surface of cells isolated from a patient in the U.S. and cultured in a lab in a 2020 electron microscope image. THE CANADIAN PRESS/AP-HO, National Institute of Allergy and Infectious Diseases - Rocky Mountain Laboratories
Alberta adds 463 new COVID-19 cases on Sunday

The central zone has 818 active cases

Damien Kurek
The return of parliament: ensuring you are heard

‘If you have any questions about my work for you, please do not hesitate to reach out to my office’

As of Friday, Alberta has under 10,000 active COVID-19 cases. (Image courtesy CDC)
Alberta identifies 573 new COVID-19 cases, 13 deaths on Saturday

There are currently 9,727 active cases of the virus in the province

As of Friday, Alberta has under 10,000 active COVID-19 cases. (Image courtesy CDC)
Three new COVID-19 deaths in Central zone, Alberta under 10,000 active cases

The Central zone sits at 849 active cases, with 52 people in hospital and 10 in the ICU.

Kyla Gibson with her boyfriend Gavin Hardy. (Photo used with permission)
Sylvan Lake couple lose ‘fur babies’ to house fire

‘They were our world and nothing will ever replace them,’ Kyla Gibson said of her three pets

Terrance Josephson of the Princeton Posse, at left, and Tyson Conroy of the Summerland Steam clash during a Junior B hockey game at the Summerland Arena in the early spring of 2020. (John Arendt - Summerland Review)
QUIZ: How much do you know about hockey?

Test your knowledge of Canada’s national winter sport

A woman injects herself with crack cocaine at a supervised consumption site Friday, Jan. 22, 2021 in Ottawa. THE CANADIAN PRESS/Adrian Wyld
Drug users at greater risk of dying as services scale back in second wave of COVID-19

It pins the blame largely on a lack of supports, a corrupted drug supply

RCMP. (Phil McLachlan - Black Press Media)
Blackfalds RCMP investigate fatal collision

Preliminary investigation revealed a south bound pickup truck collided with an eastbound car

Jennifer Cochrane, a Public Health Nurse with Prairie Mountain Health in Virden, administers the COVID-19 vaccine to Robert Farquhar with Westman Regional Laboratory, during the first day of immunizations at the Brandon COVID-19 vaccination supersite in Brandon, Man., on Monday, January 18, 2021. THE CANADIAN PRESS/Tim Smith - POOL
Top doctor urges Canadians to keep up with COVID measures, even as vaccines roll out

More than 776,606 vaccines have been administered so far

Dr. Jerome Leis and Dr. Lynfa Stroud are pictured at Sunnybrook Hospital in Toronto on Thursday, January 21, 2021.THE CANADIAN PRESS/Frank Gunn
‘It wasn’t called COVID at the time:’ One year since Canada’s first COVID-19 case

The 56-year-old man was admitted to Toronto’s Sunnybrook Health Sciences Centre

FILE - In this Feb. 14, 2017, file photo, Oklahoma State Rep. Justin Humphrey prepares to speak at the State Capitol in Oklahoma City. A mythical, ape-like creature that has captured the imagination of adventurers for decades has now become the target of Rep. Justin Humphrey. Humphrey, a Republican House member has introduced a bill that would create a Bigfoot hunting season, He says issuing a state hunting license and tag could help boost tourism. (Steve Gooch/The Oklahoman via AP, File)
Oklahoma lawmaker proposes ‘Bigfoot’ hunting season

A Republican House member has introduced a bill that would create a Bigfoot hunting season

FILE - In this Nov. 20, 2017, file photo, Larry King attends the 45th International Emmy Awards at the New York Hilton, in New York. Former CNN talk show host King has been hospitalized with COVID-19 for more than a week, the news channel reported Saturday, Jan. 2, 2021. CNN reported the 87-year-old King contracted the coronavirus and was undergoing treatment at Cedars-Sinai Medical Center in Los Angeles. (Photo by Andy Kropa/Invision/AP, File)
Larry King, broadcasting giant for half-century, dies at 87

King conducted an estimated 50,000 on-air interviews

Black Press File Photo
Maskwacis RCMP lay charges for attempted murder, kidnapping, and flight from police

Female victim remains in hospital in serious condition.

In this Dec. 18, 2020 photo, pipes to be used for the Keystone XL pipeline are stored in a field near Dorchester, Neb.  THE CANADIAN PRESS/AP-Chris Machian /Omaha World-Herald via AP
‘Gut punch’: Alberta Premier Jason Kenney blasts Biden on revoked Keystone XL permit

Kenney said he was upset the U.S. wouldn’t consult with Canada first before acting

Most Read