Farm loan delinquency rates low in S.D.

By Steve Miller, Journal Staff Writer | Monday, March 20, 2006

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HURON — Strengthened by high cattle prices and good crop yields last year, farmers and ranchers in South Dakota have continued to pay off farm loans, keeping delinquency rates low.

In South Dakota, the Farm Service Agency loan delinquency rate based on the dollars loaned were 2.1 percent for February, according to Arnie Claeys, chief of the farm loan division at FSA’s South Dakota headquarters in Huron.

That means payments were behind on 2.1 percent of the dollars loaned. The South Dakota “dollar delinquency” rate was low in 2005, too, 2.2 percent, Claeys said.

The South Dakota dollar delinquency rate had been as high as 5.1 percent on Jan. 31, 2002, according to Steve Magedanz, farm loan specialist with FSA. The national rate was 13.3 percent at that time.

On Jan. 31, 2003, the delinquency rate in South Dakota had fallen to 2.8 percent; the national rate dropped to 12.3 percent. On Jan. 31, 2004, the delinquency rate in the state fell to 2.6 percent, and the national rate went to 12.5 percent.

“It’s been low for the past couple of years,” Claeys said. “As everyone knows, livestock prices have had a lot to do with that.”

Nationally, the dollar delinquency rate now is about 10.3 percent, Claeys said.

Magedanz said the state rate is lower than the national rate because most producers in South Dakota are conservative and make their payments if they can.

Factors in helping shore up farm income include good crop yields last year, crop assistance payments and federal disaster assistance programs for livestock and pastures, Claeys said. Relatively low interest rates also have helped.

“You have to give borrowers some credit, too,” he said. “They have been diligent in making those payments.”

Claeys said better weather overall the last couple of years has helped, too, with fewer ranchers having to buy hay in most areas.

But, especially until last Sunday’s snowstorm, West River ag producers have been concerned about a lack of moisture.

Claeys said moisture is always a worry and other reasons for concern include high costs of fuel, chemical, fertilizer and land.

The FSA farm loan division provides both direct loans and guaranteed loans for farmers and ranchers to pay for land, livestock equipment, and operating expenses.

Contact Steve Miller at 394-8417 or steve.miller@rapidcityjournal.com