"Customers with grain in their bins are being steered toward government-backed loans where the taxpayer would shoulder some of the risk," Huffstutter and Madden write. "The number of these marketing assistance loans from the U.S. Department of Agriculture—short-term credit backed by crops—rose to over 47,500 with $5.7 billion dispersed in 2015, up over 50 percent from when the downturn began in 2013, according to USDA data."
"The squeeze comes as most farmland rent payments—which can run into millions of dollars—are due March 1. Seasonal payment deadlines also loom for seeds, chemicals and equipment," Huffstutter and Madden write. "The crunch could also deepen the pain felt by input suppliers, grain buyers and equipment manufacturers. On Friday, Deere & Co. further cut its sales and profit outlook and said it now expected farming and construction equipment sales to fall 10 percent for the year ending in October."
USDA says that "farm sector debt soared past $364 billion last year and is forecast at over $372 billion in 2016—levels not seen since 1984," Huffstutter and Madden write. "USDA also predicts net farm incomes will fall for a third year in a row to $54.8 billion, down 56 percent from 2013's peak. Demand for loans has been rising for 11 consecutive quarters but repayment rates are falling. A survey by the Federal Reserve Bank of Chicago showed repayment rates at the end of 2015 at their lowest since early 1999." (Read more)