Ohio corn and soybean farmer worried about future of business
Ohio crop farmer, Dave Kress, worries he won’t be able to pass his farm onto his sons because of mounting costs and pressures on farmers.
Iowa and other Midwest states have been inundated with deadly disasters this year, with damage totaling $7.7 billion.Farmers say they need zero-interest loans to help them get back on their feet.Iowa leaders say Agriculture Secretary Tom Vilsack can authorize the loans. The USDA says Congress, not Vilsack, has the authority.
DEFIANCE — Standing outside their west-central Iowa home in late April, Scott and Shawn McLaughlin watched a mile-wide tornado rise over a hill south of them and head for their farm.
The couple dashed for their basement, pulling their two dogs with them. Minutes later, they emerged to find their home standing but filled with broken glass, corn stalks, shredded insulation and dirt.
“It’s amazing the power that wind has,” says Scott McLaughlin, a fifth-generation Iowa farmer.
Outside, the farmstead was littered with twisted steel stripped from grain bins and other buildings, a downed power line, trees and other debris.
“You couldn’t get through the yard,” says McLaughlin, who lost seven bins, hog operations at two sites, a calving building, farm equipment and semis and trailers.
Iowa and other Midwest states have been inundated with deadly disasters this year, with damage totaling $7.7 billion, according to the National Oceanic and Atmospheric Administration’s National Centers for Environmental Information. Six Iowans died in tornadoes that slammed through the state, one in April in Minden and five in May in Greenfield and near Corning. In northwest Iowa, a man died in June flooding.
Dozens of other residents were injured in the severe storms.
In Shelby County, the April 26 tornado that struck the McLaughlins’ farm also hit 73 other farms, destroying much of the property on 22, and causing an estimated $95 million in damage. The twister started outside Lincoln, Nebraska, and hit Minden in Pottawattamie County before heading north into Shelby County.
Surprisingly, it and several other tornadoes that day missed the county’s 11 cities and towns, leaving mainly agricultural damage, says Shelby County Supervisor Steve Kenkel. Since then, the county has become ground zero in a dispute over whether the U.S. Department of Agriculture is doing enough to help farmers.
Last month, Gov. Kim Reynolds and Iowa’s congressional delegation, all Republicans, accused U.S. Agriculture Secretary Tom Vilsack, a Democrat and former Iowa governor, of refusing to use his power to make zero-interest loans available to farmers hit by disaster, unlike the financing offered to help small Main Street businesses get back on their feet.
“As Iowans begin to recover from the many disasters that have impacted them, the historical and continued lack of fairness in what rural communities are offered by USDA is having a meaningful and substantial impact,” Reynolds and the lawmakers wrote last month.
But the USDA says it’s not Vilsack who can ensure farmers get the financial assistance they seek. It says that power lies with the state’s six federal lawmakers, who along with the other members of the House and Senate decide the agency’s budget and authority. USDA says it sought “additional flexibilities for producers in need of emergency loan assistance, but Congress chose not to provide them.”
Kenkel says that even though most farmers have private insurance, they still face substantial costs to get back on their feet.
“I don’t understand why producers aren’t seen as small businesses,” he says. “Farmers are the lifeblood of our state.”
Why aren’t farmers entitled to no-interest loans made to businesses?
The weeds grow high at Jeff Sonderman’s farm near Defiance. He’s quick to say that’s not normally the case.
The tornado destroyed everything — two pig confinements, grain bins, a garage, a machine shop and sheds. The shell of his home — where he grew up — is all that remains. In the roofless kitchen, a cup and plate sit inside an open dishwasher, a snapshot of life before disaster hit.
Sonderman says his family razzes him for not mowing — almost a cardinal sin in rural Iowa.
But it seems pointless, he says. It’ll be weeks before his home is torn down, and months before a contractor builds a new one. And he’s not rebuilding the hog facility that had 500 head in it when the tornado hit. It was old, and he had little insurance on it. The other confinement was empty.
“I’ve pretty much lost everything,” he says.
Nearly four months after the tornado, Kenkel says, people are discovering what the disaster will cost. The insured value of homes, buildings and machinery falls far short of the replacement costs, he says.
Kenkel says only ag retailers like grain elevators qualify for USDA’s zero-interest, one-year deferred emergency loans, which the Small Business Administration has offered in past disasters.
“Why aren’t we looking at ag producers as businesses?” he asks.
Additionally, he says, the USDA requires that in order to be eligible for low-interest loans, farmers first must apply for and be denied loans from local lenders. It can be an insurmountable obstacle, he says, since local lenders often have existing operating, livestock or farmland loans with farmers.
“Bankers are not going to turn them away,” especially after a disaster, he says. But those loans come at a much higher interest rate.
McLaughlin says he’s gotten an SBA loan for part of his operation, but he’ll still need to lean heavily on USDA assistance to rebuild. Zero interest on the loans would help a lot, he says, adding that his farm operation is “no different than a business in town.”
Current federal disaster aid has some big gaps, farmers say
Repairs are under way on Dave and Nancy Boettger’s home near Harlan. It’s where Dave Boettger’s family has lived and farmed since 1890. Outside their home, only a concrete grain silo and corn crib — built when farmers picked corn by hand — remain.
While an “army of our church family was out here with rakes,” cleaning what they could, Nancy Boettger says, the couple still needed a local contractor and large equipment to remove the mass of steel, wood and other debris from the family farmstead.
The USDA is offering small grants to clear debris from fields, Kenkel says. Like the Boettgers’ church army, Harlan-area farmers say friends, family and other volunteers, including a group of high school students, quickly swarmed following the storm to pick up debris from their fields, many of which had yet to be planted.
Help is still needed to clean up farmsteads, says Kenkel, who’s heard that costs can range from $30,000 to $100,000. Farmers also need assistance replacing miles of fences used to contain cattle pastured in the fields following harvest to feed on the corn stubble.
The Boettgers estimate their cleanup costs could reach $90,000. Private insurance will cover a small part of it, but nothing is available for fencing, says Nancy Boettger, a former longtime Republican state senator who served on the Agriculture Committee.
Without fences, Sonderman says, he’ll lose out on rent from cattle producers who would use his fields. And without a hog facility, he’ll forgo rent from Smithfield Foods, the Virginia-based meatpacker he contracts with to raise pigs, as well as the manure he uses for fertilizer.
McLaughlin, who also raises hogs for Smithfield, agrees that farmers face a lot of unexpected costs. He, too, will see less income from his hog operation and higher fertilizer costs next year. Damaged farm equipment means less work he can get for his crew, hauling corn and soybeans as well as planting and harvesting. He wants to keep his handful of workers employed.
“It’s easier to find work than good people,” he says.
Who can expand loan programs to cover farmers’ disaster needs?
The USDA says it asked Congress in this year’s and next year’s budgets for flexibility to respond to disasters, including eliminating the requirement of written denials of credit before allowing farmers to seek its low-interest loans.
“It is very important to note” that actions like reducing interest rates on emergency loans are constrained by the USDA’s “regulatory authorities and budgetary limits — both of which are established by Congress,” the agency said in an email to the Register.
Last fall, the USDA reduced interest on emergency loans to 3.75%, as compared to the 8% to 9% on conventional loans. And new rules the agency adopted this month will enable farmers suffering some production loss to make interest-only payments at 3.75% for one year, potentially up to three years. Farmers with an existing USDA loan can get their interest rate lowered to 0.125% and deferred for a year, under a distressed borrower program.
The agency says it’s providing as much flexibility as it can. But the loan program has finite funding, and it must balance the needs of farmers hit with disasters with those of other financially stressed growers.
“We encourage the governor to work with these members of Congress to ensure they are doing their jobs to provide USDA with adequate resources and statutory authority” to meet the “increasing number of natural disasters that producers are facing across the country,” the USDA says.
The congressional delegation maintains that Vilsack has the power to expand disaster aid to Iowa farmers.
“We iterate our simple request to our fellow Iowan, Secretary Vilsack: Use your existing authority and funding to help the hardworking people of the Hawkeye state get through these challenging times,” U.S. Rep. Mariannette Miller-Meeks, a southeast Iowa Republican, says in a statement.
Reynolds is taking some action herself, announcing a program that will reimburse farmers up to $50,000 for interest on loans that are new or have been amended since disaster struck.
Kenkel says farmers complain to him about U.S. government spending, including sending “tens of billions of dollars” to Ukraine to fight Russia’s invasion. The Ukraine aid “isn’t even a loan,” he says. “They don’t have to pay it back.”
“How come we can’t help ourselves at home?” he asks.
The USDA says the Biden administration is working for Iowa and other U.S. farmers. For example, it has provided $43 million to lower energy costs for Iowa farmers; $13 million to expand domestic fertilizer production; $128 million to expand meat processing, a move expected to improve prices for livestock producers and strengthen the food supply chain; $14 million to expand biofuel access at gas stations, and $85 million in loans to about 2,125 farmers to ensure they can continue operating.
That’s in addition to annually subsidizing crop insurance, which helps cover farmers’ lost yield or revenue, and sharing the costs of conservation efforts, among other initiatives.
Without more aid, Iowa farmer faces years of recovery
Only a recently built grain bin occupies the hill where Trevor Langenfeld’s farmstead once stood near Harlan.
“It’s the only place I’ve known,” says Langenfeld, who grew up at the farm.
He and his family plan to rebuild their home, machine shop, sheds and a hog confinement. “We’ll get everything built back eventually,” he says. “But it will take time.”
Langenfeld and other farmers say it could take up to five years to get back on their feet financially.
More immediately, he’s waiting for a combine to be delivered so he can harvest his crops in a few weeks. It’s a little newer than his old combine, which sustained about $80,000 in damage and is now likely fit only to scavenge for parts.
Like other area farmers, Langenfeld is thankful his family safely survived the tornado. He was checking another hog site when it struck, and his wife and 3-year-old daughter weathered the storm in the basement.
“I was just happy no one was hurt in the family,” he says, adding that his parents’ home a few miles away also was destroyed.
With another baby on the way, Langenfeld says “you have to just keep moving forward.”
Donnelle Eller covers agriculture, the environment and energy for the Register. Reach her at [email protected] or 515-284-8457.
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Publish date : 2024-08-21 00:01:00
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