Farm Foreclosure Predictions Don’t Materialize; Lenders Get Credit
Farm lenders in northern Iowa are taking proactive steps to prevent farm foreclosures, and a business consultant says that has kept many struggling farmers in business while commodity prices remain low.
David Underwood in Mason City, director of CFO On Demand, follows economic trends in that part of the state.
There are still farmers in trouble. -Mason City consultant David Underwood
He says lenders have formed so-called crisis committees to work with farmers before they get into too much trouble.
“A year ago there were comments about how many farmers were going to fail,” Underwood said. “I've heard of hardly any of that going on.”
The USDA estimates that net cash farm income will increase in 2017, and ISU economists suggest that farm economic conditions appear to have stabilized.
But Underwood says the crisis teams are still at work.
“That hasn't gone away according to the lenders,” Underwood said. “There are still farmers in trouble, not as bad as we saw the last time we had a collapse in the farm economy, but enough that the lenders are concerned.”
A depressed farm economy has contributed to sluggish state tax receipts.
The agriculture sector is holding its own. -Dept. of Management Dir. Dave Roederer
Some budget watchers are optimistic that will turn around.
“The agriculture sector is holding its own concerning what the crop prices are right now,” said Revenue Estimating Conference Chair Dave Roederer. “We're not seeing forced sales and there’s a slight increase in land values depending on where you are.”
But Underwood is not sure that farm income tax payments will increase this year.
“It would be helpful to their suppliers if farmers were actually making money,” Underwood said. “I was surprised last year on how low farm-reported income was so it's got a long ways to go back before it gets to a positive number.”
Follow Joyce Russell on Twitter: @russell_ipr