Mississippi Sen. Cindy Hyde-Smith and Arkansas Sen. John Boozman have raised serious concerns about the plight of farmers. With a sharp decline in farm income this year, they fear that one in five farmers could be pushed out of business. At a Senate hearing on disaster aid, they emphasized the need for significant government help.

Dire Situation in Farm Country

Boozman highlighted the dire situation in farm country, especially for crop producers. Despite stronger livestock prices than expected, the combination of high production costs and lower commodity prices is taking a toll. Federal intervention is seen as crucial as bankers are reluctant to loan money for 2025 crops. 1: The USDA has forecast a 25% plunge in net farm income this year, but it still remains the fourth highest on record at $116 billion and 15% above the 10-year average. However, for individual producers, the situation is different. Hyde-Smith pointed out that with high costs and interest rates, 20% of good producers are expected to lose out. This is truly an emergency and a crisis for farmers. 2: As Congress makes hard choices about disaster funding and other economic assistance, it is essential to identify which farmers are struggling. USDA deputy secretary Xochitl Torres Small has spoken to farmers and understands their input cost-related challenges.

Senator Boozman's Perspective

Boozman, who is set to become Senate Agriculture Committee chair, emphasized that even with higher-than-average farm income in the past, the current situation with high interest rates and costs is dire. He questioned how rural America can endure this without significant help. 1: The Kansas City Federal Reserve reported a more than 40% growth in the volume of new operating loans during the summer compared to the third quarter of 2023. But weak profit margins in the crop sector continue to weigh on the farm economy, while the cattle industry shows strength. Farm operating debt has grown rapidly alongside lower crop prices and high production costs, and lending activity for other types of loans has softened. 2: Interest rates on farm loans averaged slightly more than 8% during the third quarter before the Federal Reserve's rate cuts. Bankers in the central Plains reported a slight increase in the rate of problem loans during the same period, with about 6% of loan portfolios on the "watch list." In the Midwest, agricultural credit conditions weakened, with 42% of responding bankers predicting a lower volume of farm loan repayments over the next three to six months. Forced sales or liquidations of farm assets by financially distressed farmers are expected to rise.