Alternative farm lender the single biggest trade aid recipient - Entrepreneur Generations

A high-interest alternative farm lender, Ag Resource Management, is the single largest recipient of federal trade aid, according to an analysis by the Midwest Center for Investigative Reporting. Over the past two years, ARM has received about $75 million bailout money out of the $15.5 billion the government has disbursed to help farmers hurt by the trade war with China.

More and more farmers have been obliged to take out high-interest loans from lightly regulated alternative lenders like ARM. "Under USDA rules, farmers can assign government payments they’re eligible for to third parties. If a producer has debt with ARM, it’s required," Sky Chadde and Lucille Sherman report. Chadde is the Midwest Center’s Gannett Agricultural Data Fellow, and Sherman is a Gannett Data and Investigations reporter.

ARM's loan volume has grown at a 40 percent rate over the past three years, partly owing to government payments from farmers. Farmers seek such loans because they're easier to qualify for than loans from traditional banks. And loans of some sort are often necessary to keep a farmer from bankruptcy; farm debt was projected to hit a record $416 billion last year, up almost 40% since 2012.

However, many farmers are having a hard time making good on loans. "This year, the share of loans with 'major' or 'severe' repayment problems hit a 20-year high, according to a survey released in August by the Federal Reserve Bank of Chicago, which examines economies in Illinois, Indiana, Iowa, Michigan and Wisconsin," Chadde and Sherman report.

Glen Smith, the chairman and chief executive officer of the Farm Credit Administration, which regulates some agricultural lenders, said that "the development of turning to riskier loans shows how desperate some farmers have gotten to stay in operation."

from The Rural Blog https://ift.tt/2QQTYC8 Alternative farm lender the single biggest trade aid recipient - Entrepreneur Generations

Posted by Entrepreneur Generations

Tweet