Some farmers loaded up on easy credit when grain prices were high - and kept borrowing after they crashed. Now debt and delinquencies are rising fast, raising fears of broader turmoil in U.S. agriculture.
NEWTON COUNTY, Indiana - A third-generation farmer, Matt Gibson eyed a big expansion of his family’s business in late 2011, as grain prices soared in a searing Midwestern drought.
By August of 2012, days before corn prices peaked, the Gibson family had borrowed nearly $18 million in a series of loans from Chicago-based BMO Harris Bank.
The Gibsons took on more debt after the drought broke the following spring, sending grain prices tumbling. By 2015, with grain prices at half their peak, BMO and others creditors sued the Gibson businesses seeking to recoup more than $30 million.
The travails of Matt Gibson, 39, and his family are emblematic of a new class of “go-go farmers,” a term coined by fellow Midwest growers and agricultural economists. Many, like the Gibsons, borrowed heavily to expand their farms, then borrowed more in an effort to plant their way out of a commodity price crash, according to dozens of interviews with Midwest farmers, lenders and agriculture experts.
Their distress could foreshadow broader economic turmoil in the grain sector, which includes corn, soybeans and wheat.