With the legislative session winding down, two local legislators played a key role in helping to secure assistance for farmers struggling to stay afloat amid severe economic challenges.
Under state law, farmers at risk of foreclosure and repossession are required to enter into a period of mediation. Coronavirus response legislation passed by the legislature earlier in the session extended that period for a period of up to two months.
Under a bill authored by Rep. Todd Lippert, DFL-Northfield, and Sen. Mike Goggin, R-Red Wing, that mediation period has been extended further. Farmers will now see their mediation periods lengthened by 180 days or until Dec. 1, whichever is later.
Local farmers have been hit hard over the last several years by falling commodity prices and less than ideal growing conditions. 2020 was expected to be a bounce back year for production and stronger markets, thanks to a reduction in conflicts with key trading partners.
But the global pandemic has thrown a monkey wrench into those plans. Corn farmers have been hit particularly hard, as the price of oil has crashed amid falling demand and an international oil price war, taking the price of ethanol down with it.
With markets continuing to suffer after the state’s first coronavirus relief bill, Goggin said that it quickly became apparent that farmers needed more help. By pushing the deadline past harvest season, he said the new legislation could help farmers to get through the most difficult times.
“After we passed the second relief package, we wanted to see what transpired,” he said. “The more data we got, the more we realized that we needed to wait until harvest season is over for mediation.”
Rice County Farmers Union President Steven Read agreed that pushing the mediation deadline past the harvest season will help farmers, by giving them a clear opportunity to show their operation’s financial viability.
“This bill will allow farmers to have a complete growing season to show that their farms are profitable, or can be profitable,” Read said.
That aid could come at the expense of a short-term hit to small community banks across the state. Goggin said that although the banks are hardly excited about the bill, they understand the need and the importance of keeping the agricultural economy afloat.
Tim Kluender, president and CEO of Community Bank Owatonna, said that mediation can play a key role in helping to achieve outcomes satisfactory to both sides. Ultimately, a more beneficial outcome can often be found than the bank taking over a farmer’s land.
“Extending meditational help, and more importantly improving between the bank and borrower… is a crucial tool in the tool box for lenders to help our customers,” he said.
For his part, Lippert said that with the current economic and public health situation, farmers are in much need of stability. He touted the legislation as a simple, affordable way to provide relief for an agriculture industry that is as unstable as at any time since the 1980s.
“This is the not the time to throw any farmer off of their land,” he said.
The bill passed unanimously in the House on May 14 and is expected to be taken up by the Senate before session ends Monday. Minnesota Farmers Union Government Affairs Director Stu Lourey praised the legislation as an important measure to help family farms.
“There are a lot of unanticipated financial pressures on family farms of all types and sizes right now,” Lourey said. “Farmer-lender mediation is a critical tool in providing solutions that work for family farms.”
Part of the justification for the provision is also logistical. Lourey said that pushing the deadline out to December will hopefully give farmers an opportunity to meet with the lenders in person, at a time when the pandemic may have calmed somewhat.