The Federal Deposit Insurance Corporation (FDIC) warned Thursday that farmers across the Central and Midwest US were quickly falling behind on agriculture loans held by community banks, according to Reuters.
In a quarterly report of loan delinquency data of US banks, published by the FDIC, there was no direct reference to President Trump’s trade war with China. But the report noted that credit deterioration in agriculture loans, specifically in Wisconsin, were alarming.
“We continue to monitor risks in the agriculture sector connected to low commodity prices and farm incomes,” the FDIC said in a statement.
The report showed the percentage of overdue farm loans rose to 2.9% at community banks across the state as of June 30, the highest rate since 2001.
The rate of delinquent farm loans nearly doubled in Wisconsin since President Trump took office and have accelerated since the trade war began early last year.
President Trump was the first Republican to win Wisconsin since Ronald Reagan in 1984, defeating Democrat Hillary Clinton in the 2016 election. His promise of “Making Farmers Great Again” and revitalizing manufacturing was why he won.
Wisconsinites might have a difficult time digesting the president’s message in 2020 because of the trade war’s damaging effects on the state’s agriculture complex. A farm crisis will likely materialize before the 2020 election.
New data on farm bailout payments through mid-May showed Wisconsin farmers received the short end of the stick. Their payments in the first government bailout were the smallest than any other state. This pushed many farmers into bankruptcies as incomes collapsed, some resorted to more leverage earlier this year, with hopes that the trade war would be resolved by late summer. As of September, there’s no end in sight, despite the meeting next month – but even then, a no-deal scenario will likely play out as the Chinese will wait until after the 2020 election to make a deal. To make matters worse, China has halted all purchases of agriculture products from the US, which has dramatically affected Wisconsin farmers and could lead to a jump in the rate of delinquent farm loans in 2020.
The farm crisis in the state could radiate outwards and trigger layoffs — that is because one in nine jobs are tied to the state’s $88 billion agriculture industry.
And with incomes collapsing and bankruptcies mounting, some farmers in Wisconsin are resorting to suicide.
Brenda Stark’s husband died by suicide last October. She and others have started meetings at their Wisconsin church to offer help for farmers who they say are often too proud to ask for help.@kevtibs reports. pic.twitter.com/UM5D1qRGGg
— NBC Nightly News with Lester Holt (@NBCNightlyNews) September 3, 2019