Farmers take loans to plant crops for a season, then hopefully pay off the loan after harvest, with something left over as profit. With farmland values on the wane and the trade war hitting agriculture especially hard, farmers are having a tough time.
The share of farm loans at all FDIC-insured banks that are at least 90 days past due or are no longer accruing interest because of repayment doubts stood at 1.5% at the end of June, according to data from the FDIC. That’s the highest rate since 2012.
But the problem is especially acute in Wisconsin, where the share of farm loans at community banks that are long past-due rose to 2.9%, the highest rate since record keeping on those metrics began in 2001, according to a Reuters analysis of loan delinquency data published by the Federal Deposit Insurance Corporation.
The noncurrent rate at Wisconsin’s community banks now stands higher than in any other of the top 10 U.S. farm states as measured in production – a list that includes California, Iowa and Texas.
Farmers there could be feeling the pinch more than in other big farming states like Iowa because Wisconsin’s crops are touched by multiple fronts of Trump’s trade wars, including with China, Canada and Mexico, said John Newton, chief economist at the American Farm Bureau Federation, an agricultural lobby group.
In a state where more than 10% of the jobs are connected with agriculture, this is a problem.
Dave Daniels, a corn and dairy farmer in Kenosha County, Wisconsin, voted for Trump in 2016 and still supports the president.
The drop in grain prices has helped his dairy by making it cheaper to buy feed for his animals. But neighboring grain businesses are suffering and there are few signs of things getting better ahead of the 2020 election year.
“The trade deals are in the back of everyone’s mind right now. The thing everyone is saying is, ‘we have to make some money this year.'”
Trump, a Republican, won Wisconsin in 2016 by just over 20,000 votes – less than 1% of ballots cast.
Democratic candidates hoping to challenge Trump next year are seizing on the growing economic pain in the Farm Belt to peel away some of Trump’s support in rural America.