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ND farm financial stress


Many North Dakota farmers are under financial stress.

NDSU state agricultural financial specialist Bryon Parman said you see it in higher loan demand, as well as loan restructuring. He said, for example, loans of over $1 million have drastically increased.

"You can pretty much attribute that to the fact that most of the working capital is burned up," Parman said. "So most of the operating expenses is coming from borrowed funds."

And the biggest reason for that?

"Production costs went up when commodity prices went up real high," Parman said. "Commodity prices have come back down, but production costs really haven't so much. They have come down, but not nearly to the same magnitude as commodity prices have."

Parman said he doesn’t expect commodity prices to rebound in 2020. He said some farmers are doing well – but for those “on the bubble,” they have some options on the margins.

"Pre-pricing inputs like propane and fertilizer may make thousands of dollars in differences," Parman said. "Those make real differences in terms of dollars per acre -- $10, $15, $20 per acre."

But Parman said the bottom line is – everyone needs to know the cost of production, before they can come up with options to cut costs.

"I realize that folks don't like sitting at a desk with spreadsheets," Parman said. "But a lot of those decisions are made right there in front of a computer screen."

Parman said we're talking tens of thousands of dollars -- maybe hundreds of thousands of dollars -- saved because of the time commitment.

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