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December 03, 2014

Mediated ag debts, and amounts owed, continue decline

For the second year, the number of lenders sending notices under Minnesota's Farmer-Lender Mediation program was lower than at any other point in nearly a decade. The overall amount of debt taken to mediation also decreased.

Media contacts: Allison Sandve, U of M Extension, ajsandve@umn.edu, 612-626-4077
ST. PAUL, Minn. (12/3/2014)—For the second year, the number of lenders sending notices under

Minnesota's Farmer-Lender Mediation program was lower than at any other point in nearly a decade. The overall amount of debt taken to mediation also decreased.

For the fiscal year ending September 30, 1,659 notices from creditors were filed, with 499 requests sought by debtors. A year ago, the same figures were 1,566 and 569 from creditors and debtors, respectively. The requests addressed a total of $70.3 million, compared to $92 million the year before.

But officials at the University of Minnesota Extension cautioned that debt is vulnerable to volatility in the agricultural economy. Increased crop yields and prices in recent years also drive up costs such as land rental and land purchase prices.

"Two years ago, we saw increased yield and increased prices for commodities," said David Werner, chief financial officer of the University of Minnesota Extension, which administers the mediation program. "That also drives up cost of farming. Plus, farmers are now facing those higher costs at a time when they've had variable yields and lower prices."

The 2014 Farm Bill has the potential to alleviate some of the financial stress that farms may experience the next couple of years, said Kevin Klair, Extension agriculture economist and director of the Agriculture Business Management program at the university. Farmers are currently making farm program decisions that will lock them into five-year commitments under provisions of the farm bill, Klair said
"It's important as ever to make the right choices as the new farm bill goes into effect," he said. "We encourage farmers to attend one of the upcoming educational seminars presented by Extension and the Farm Service Agency to help learn about the decisions the new farm bill requires."

More on farm bill education is available here:   http://www.extension.umn.edu/agriculture/business/farm-bill/
About Farmer-Lender Mediation

Minnesota law requires creditors with a secured debt of more than $5,000 against an agricultural asset to offer mediation before proceeding with foreclosure, repossession, cancellation of a contract or collection of a judgment.

Farmers who are offered mediation can take advantage of a 90-day period to work with lenders to renegotiate, restructure or resolve the situation. A team of mediators, financial analysts and other University of Minnesota Extension professionals serve as neutral parties to guide and manage mediation.

Mediation is an informational, confidential process that generally requires less cost and time than adversarial court action. To be eligible for mediation, an agricultural borrower must own or lease more than 60 acres and earn more than $20,000 in gross agricultural products the preceding year.
Extension's Farmer-Lender Mediation Program is part of the United States Department of Agriculture's Certified State Agricultural Mediation Program. The number of notices received is far more than the number of farms involved in mediation. Most Minnesota farm enterprises involve multiple family members and each member or entity whose name appears on a debt obligation may receive a notice offering mediation.

For more information on Extension's Farmer-Lender Mediation Program, visit
http://www.extension.umn.edu/agriculture/farmer-lender-mediation/


For more news from U of M Extension, visit www.extension.umn.edu/news or contact Extension Communications at extnews@umn.edu. University of Minnesota Extension is an equal opportunity educator and employer.
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