Nov 10, 2008 - 04:05:22 CST
FARGO (AP) - Farmers remember the soaring crop prices of the 1970s were followed by a dramatic plunge, and they worry history may be repeating itself.North Dakota and Minnesota each lost about 8,000 farms from 1975 to 1985.
"There's concern that a replay is coming," said Mary Nell Preisler, director of Minnesota's farmer-lender mediation program, which works with farmers and lenders to resolve credit problems.
Prices of most area crops shot to record highs last year, but tumbled this year. Still, many think things will not get as bad as they were 30 years ago.
"I am troubled by the current situation. But I don't know if we'll see a repeat of what happened in the late '70s and '80s," said North Dakota Farmers Union President Robert Carlson.
Carlson remembers farmers in the late 1970s were borrowing money at 18 percent.
"It was just very difficult to make payments with interest rates that high," he said.
John Bollingberg of Bremen, who remembers when crop prices and producers' profits soared in the mid-1970s, says farmers have reason to worry about their costs, but he does not expect a repeat of the '70s.
"There are differences today. I don't think things will get that bad again," he said.
North Dakota farmers had net income last year of $2 billion, nearly triple the $680 million in 2006, a year in which farmers were hurt by widespread drought.
North Dakota's 2007 total also got a boost from soaring wheat prices.
Minnesota farmers had net income in 2007 of $3.4 billion, up from $2.6 billion in 2006.
The federal Agriculture Department says the value of North Dakota cropland has risen 19.5 percent to $800 per acre in the past year and the value of Minnesota farmland rose 12.8 percent to $2,820 per acre.
But costs are higher, especially the cost of fertilizer, and crop prices have dropped.
Nitrogen, a key fertilizer for most crops, costs about $1,200 a ton, up from $350 a ton three years ago.
"These input costs (such as fuel and fertilizer) really are troubling," said Dennis Walsh, a Harvey-based regional president for First International Bank & Trust, which serves 11 communities in North Dakota and two in Minnesota.
The Chicago Board of Trade contract for wheat for December delivery has fallen from $7.40 in late summer to about $5.40 last week.
Given current costs, Red River Valley farmers will need about $6.50 per bushel for wheat to break even next year, said Andrew Swenson, a North Dakota State University Extension Service agricultural economist.
"Things really turned on a dime this fall," Swenson said.
"Unless prices improve, we won't even make enough to cover the cost of putting the crop in the ground next year," said Richard Schilling, president of the Minnesota chapter of the National Farmers Organization.
Still, Walsh said, farmers today generally are wary of taking on more debt, and they are paying interest rates that are one-third or one-half of what they were in the late 1970s.
"That makes a big difference," he said.
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