WILLMAR, Minn. — Congressman Collin Peterson has some dire predictions for agriculture.
During a talk Tuesday, July 2, in Willmar with members of the National Federation of Independent Business, Peterson said land prices will fall, crop prices will not go up significantly and there will be farm bankruptcies in the next year that could rival the ag crisis of the 1980s.
“Nobody knows for sure how bad it’s going to be … but it’s not going to be good,” said Peterson, D-Minn., who is chairman of the U.S. House Agriculture Committee.
He said the “chickens are coming home to roost” for the ag economy, and they may be roosting for a good long time.
“I don’t think this thing is going to turn around anytime soon,” he said. “I hope I’m wrong, but I don’t think I am.”
Low crop prices – which Peterson said were brought about by overproduction, the Trump administration’s tariffs and the lack of markets for soybeans because a widespread swine flu is killing millions of hogs in China – has taken its toll on agriculture.
What Minnesota farmers needed this year was a bumper crop, Peterson said.
But the cold, wet spring – along with recent hail and floods in some regions – has dashed many of those hopes.
Peterson said he was honestly surprised most farmers were financed for the 2019 crop given several years of low prices, but he said those on the edge this year may be pushed off the edge next year.
“I think next winter is going to be a different story,” Peterson said. “I’m hearing this from bankers.”
Peterson predicts that agriculture is heading into an economic cycle that will look like the 1980s, when foreclosures and bankruptcies put thousands of farmers out of business across the Midwest.
“It means foreclosures, it means land prices coming down, it means rent coming down,” he said. “And it could last. It could just be that this winter is the tip of the iceberg and it could get worse.”
Believing that an economic horror show was about to begin, Peterson said he tried building in extra safety nets to the new farm bill last year, but it didn’t gain needed Republican approval.
Yet Peterson said some of the action taken in the '80s to save farmers, like debt restructuring and mediation between farmers and bankers, may have kept some farmers in business longer than they should have been. He said when they finally did go out of business, many lost their equity.
His advice to farmers who may be on the brink of going broke now is to preserve what equity they have.
Peterson, whose 7th District is the largest and most rural congressional district in Minnesota, said about a quarter of the district’s economy is tied to agriculture.
Peterson predicts the first wave of a sharp ag downturn will hit individual farmers first and the year after that the pain could ripple down Main Street.
“You don’t know what’s going to happen exactly. All I can tell you is that it’s not going to be good,” he said.