Wisconsin crop farmers face mounting economic stress, but steady interest rates and resilient land values are preventing a crisis. Rose Oswald Poels, President and CEO of the Wisconsin Bankers Association, says loan sizes are up, but bankruptcy filings remain stable.
Poels told The Mid-West Farm Report that rural America has struggled for the past four years. Wisconsin is no exception. Crop farmers feel the brunt of this pain.
“Our members certainly see some pockets of stress. Crop farmers in particular have had a lot of stress, as we’ve talked about over the years in the last four years, and that is not changing. But, our ag lenders are very much on hand and ready to help borrowers as they go through this challenging time. You know, economic headwinds are frequent in the ag sector. It eventually hits all aspects and unfortunately, crop farmers certainly have had their challenges these last few years.”
Economic cycles are inevitable. Experienced farmers know how to navigate them. Poels noted that lenders do not fear widespread over-leveraging.
No Spike In Farm Bankruptcies
“We have not seen any meaningful increase in loan defaults. I’m not saying there are none, but certainly, we’re not seeing a concerning trend yet in that space at all. You know, crop farmers in particular with input costs being high, commodity prices being low, all sorts of geopolitical issues that have come up this calendar year alone, just lots of headwinds- but they are managing through it, and clear, good communication with their lender, working together to develop a plan to sort of leverage your cash reserves with borrowing, is working.”
Many farmers remain “land rich and cash poor.” This dynamic provides a crucial lifeline. Furthermore, farmers eagerly buy nearby cropland whenever it hits the market.
Land Prices Resilient
“Land prices have been, you know, I guess you could say amazingly resilient. They’ve been incredibly strong for farmers and that has been very positive for them and is helping them to be able to have a very much appreciating asset to leverage against if they need to borrow money from a bank, so that has certainly been helping and that is certainly part of the collateral that lenders are taking as they work with their farm borrowers.”
Out of necessity, loan volumes and sizes continue to grow. Farmers anxiously watch for falling interest rates, but Poels sees no immediate relief on the horizon.
“I guess the good news is they’ve been relatively steady, right? Over these last twelve months, they haven’t really moved incrementally in any big way. They’ve gone up a little. They’ve gone down a little. Geopolitical issues have obvioiusly caused the rates to stay higher than what people expected. We expected a few rate cuts this year and you know, we’re obviously not seeing that for other unrelated reasons and so that’s going to continue to remain steady. I don’t see them drastically increasing either.”
