With economists at the U.S. Department of Agriculture predicting farm debt will reach a record high this year, Wisconsin agricultural leaders are warning farmers against the dangers of unregulated lenders.
Frank Friar is an economic development specialist at the state Department of Agriculture, Trade, and Consumer Protection’s Farm Center. He says that after multiple years of low commodity prices, DATCP officials are worried about farmers turning to unregulated lenders this spring if they are unable to secure an operating loan from their community banks or credit organizations. “When you see your neighbors planting corn and beans, when you see your neighbors cutting first crop hay and if you don’t have money to do that, any of us may grab for fast cash,” Friar said. “I’m not worried about how I’m going to pay it back. I just want the money so I can be planting my crops. Because if I don’t plant a crop, I’m definitely out of farming.”
While the concept of fast cash may lure in farmers to predatory lending agencies, Katie Wantoch, an agricultural agent with the University of Wisconsin-Madison-Extension, advises against turning to such agencies. “With credit cards or some of these quick access loans, the interest rates are probably going to be more than the traditional banks would be able to provide,” Wantoch said. “There might be some more fees that they didn’t anticipate and that will certainly take a chunk out of their cash flow.”
What is the solution? The consensus among agricultural specialists is communication. Farmers can reach out to their current lenders, local UW-Extension agents, or other trusted sources for assistance in evaluating their financial situation.
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With Farmers Taking On More Debt, Wisconsin Officials Warn Against Unregulated Lenders: Agriculture Officials Worry More Farmers Will Be Tempted By Quick Access Loans, Credit Cards