North Dakota Agriculture Commissioner Doug Goehring expects his department’s mediation service will be busy – working on issues between farmers and their bankers.
Goehring said the big problem in agriculture is low commodity prices. He said in his discussions with the bankers, they believe that most of the debt farmers incurred in 2017 will probably get taken care of. Goehring said the problem is in moving forward – and that’s because of low crop prices.
"When you start putting together a cash-flow statement, which is a projection for the 2018 cropping season, it doesn't pencil out," Goehring said. "They are in the red -- and not just a little bit. They're in the red a lot."
Goehring said the commodity prices can’t cover the expenses, because input costs haven't come down very much.
"With the expenses the way they are in agriculture, the producers know what they're turning into the banks isn't going to pass the smell test," Goehring said. "They're afraid if they don't have enough assets, banks are going to pull the pin on them."
The president of the North Dakota Bankers’ Association says most farmers came out of the 2017 crop year in pretty good shape. That, despite drought in parts of the state.
But Rick Clayburgh said there are on-going concerns about 2018. One concern is, it remains dry in much of North Dakota.
"This winter, the fact that we don't have a lot of snow over parts of the state, and the ground remains frozen, any rain we might get when the ground hasn't thawed completely just may run off, and not soak in," Clayburgh said.
Clayburgh said last year, farmers had good groundwater reserves – but this year, those reserves aren’t there.
Clayburgh said a larger, and longer-term concern, is the low commodity prices farmers have been seeing. But Clayburgh said the bankers will work with their farm borrowers.
"As we move into the 2018 growing season, there's no sign of any increase in commodity prices in the short term," Clayburgh said.
Goehring said analysts believe it may be another 18 months or so before farmers can see some recovery in ag prices.