The current economic crisis has taken a toll on many in the state, and farmers are no exception. As a result of agricultural hardships and shifting consumer demand, the number of farmers reaching out to the University of Minnesota for help with their debt problems has risen.
The University’s Extension Service has reported an increase in activity in its Farmer-Lender Mediation Program for the third year in a row. The number of notices received by the Farmer-Lender Mediation Program has increased by more than 9 percent since 2009.
According to a report by the Extension Service, the number of notices received in 2010 totaled 3,064 – up from 2,801 last year. This year, more than 1,200 notices were completed.
The total amount of debt addressed by the program has nearly doubled, according to the report. In 2009, the debt addressed totaled more than $320 million. This year, it exceeded $620 million.
The problem is dire for many livestock producers, who have been dealing with slumps in demand for several years, Brian Buhr, Extension Service economist, said.
“We’ve seen a softening in overall demand [for livestock products],” he said. Products such as meat and dairy are usually considered a more expensive food during a recession, and people tend to buy less of them.
While the demand for livestock has decreased, there has been a dramatic increase in demand for grains, placing a further strain on livestock producers.
Other factors, such as the H1N1 virus put a damper on meat sales, creating a tough interim period, Buhr said.
Steady declines in export markets have also played a role in driving farmers into debt, he said.
Farmers whose debt has reached at least $5,000 and who own or lease at least 60 acres or have at least $20,000 in gross sales are able to seek help from the Farmer-Lender Mediation Program, said Dick Senese, Extension Service associate dean for community vitality and public engagement.
The program employs mediators, who establish clear communication between creditors and farmers so a solution can be reached.
“It’s a process, it’s not arbitration where the mediator decides something,” Senese said.
The meditor, creditor and farmer work together for 90 days to resolve the debt. Solutions range from scaling back operations to selling assets, making new investments or sometimes shutting down an operation, although “it rarely happens,” he said.
The program helps to fulfill the University’s mission of reaching out to the community, Julie Christensen, Extension Service coordinator, said.
“One of the missions of a land-grant is to make sure that the University’s resources extend out to the people of Minnesota,” she said.
Farmers right now need mediations assistance, so the Extension Program positions the University as a neutral party to bring farmers and lenders together to reach a solution, Christensen said.
Buhr said he expects the number of farmers needing to use the program for assistance will eventually drop.
“We’ve had signs of moving out of this financial crisis, and that will push along overall demand,” he said. “I tend to be an optimist.”