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Farmers turning to high-interest loans to get financed

An extension farm business management specialist is concerned about farmers turning to high-interest operating loans.

David Bau with the University of Minnesota says going into 2019, he anticipated about 20 percent of farmers would be unable to securing financing with their current bank.

“Then at the launch of renewal season I think it got down to 10 percent, so those are the people we’re talking about that had to go somewhere else to get financing for their input costs. And when they went to the co-ops or whatever, their inputs might’ve been double for interest rates.”

He tells Brownfield that could result in an extra 19 cents per-bushel for soybeans and additional seven cents for corn.

Bau says unfortunately, 2020 budgets don’t look much better.

“The average break-even for corn next year on cash-rented ground is going to be about $4 dollars, and on beans it’s going to be at $9.70. So it’s still big numbers they’ve got to cover.”

Bau expects more farmers to seek out alternative lenders until the economics for producing corn and soybeans improves.