A north Iowa business consultant is painting a picture of deteriorating finances for Iowa farmers, as the agricultural economy continues to languish.
David Underwood of Mason City is one of three members of the Revenue Estimating Conference, which this week predicted essentially flat state tax collections this year due in part to weakness in the farm sector.
They could survive a couple of years of down prices. -REC member David Underwood
Underwood said up to now, farmers had enough reserves to get them through the recent lean times.
“They could survive a couple of years of down prices and fluctuations in cattle and hog prices,” Underwood said. “But recently I’ve heard some of the bankers talking about farmers really in trouble now.”
As recently as October, Underwood said banks were working proactively to keep farmers in business, but some are reporting no longer being able to loan to some producers.
“I talked to one banker, one of the good farmer customers, they had to tell him we’re not going to be able to be your banker anymore,” Underwood said.
Iowa revenues... are disappointing. -REC member Holly Lyons
“We worked with him as long as we could, but we’re in that position now that the numbers for that farmer aren’t there,” the banker reportedly said.
Farmers are part of an overall Iowa economy that’s producing sluggish growth in tax receipts.
“Iowa revenues, while still growing, are disappointing for the first five months of the fiscal year,” said REC member Holly Lyons. “There is nothing, however, to indicate that the growth will turn negative, but growth is very slow.”
Underwood said if farmers begin to default on loans, tax receipts will suffer even more.
“It will impact Iowa farm ag businesses over the next two years,” Underwood said.
