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“It’s certainly not a time of prosperity like we saw in 2012 to 2014, but it’s also not a complete collapse of the ag economy like we saw in the 1970s and 1980s,” said Jackson Takash, Economist with Farmer Mac.

Heading into 2017, farmers are faced with more of the same: lower commodity prices depicting a dubious outlook for the new year. 

“There is some level of optimism, but there is definitely a high level of concern going into the 2017 crop year,” said Alan Hoskins, CEO of American Farm Mortgage.

While 2016 wasn't a record breaker in farm income, it panned out better than expected for many. 

“The yields were exceptional, and honestly, the timing of the government payments was very helpful,” said John Gehrke, President of the National Association of Credit Specialists. “That is going to make a difference to the bottom line, which is something we didn’t' see a year ago.”

Moods differ by region, largely dependent on yields. For AgStar, an association of Farm Credit covering portions of Minnesota and Wisconsin, their farmer customers saw bin buster yields, helping paint a rosier picture. 

“I do believe that a lot of farmers sold soybeans and that helped keep, I call it ‘overall operating line usage,’ a little bit lower than what we anticipated,” said Mark Greenwood, Senior Vice President, AgStar Financial Services.

In southern Illinois, yields suffered, swaying finances. 

“Unfortunately, across the board, I would say there wasn't nearly enough working capital retained,” said Hoskins.

Hoskins says about a quarter of farmers face negative margins, creating a  prevailing attitude  that worries him. 

“There are some producers that are trying to save their way to prosperity,” he said. “In today's world, I just don't think that's feasible. You have to manage expenses, but controlling your operation by the management of expenses, I’m not sure is a good long-term strategy.”

From crops to livestock, times are tight. 

“We've seen a slowdown in the poultry market, overall, at least in our footprint,” said Tom Sloma, Vice President, Farm Credit Mid-America, covering Indiana, Kentucky, Tennessee and Ohio. “There was some expansions happening this summer, some of have been put on hold.”

Out west, the dairy cycles in 2016 took its toll on producers. 

“They eroded a bit of that liquidity in 2016,” said Curt Covington, Senior Vice President, Farmer Mac. “We're going to see some additional erosion of the liquidity in their balance sheet in herd equity, but in my mind, I think this industry is set pretty well to deal with some additional stress into early 2017.”

Despite all of the talk around negative margins, USDA's Farm Service Agency (FSA) says they aren't seeing a flood of requests for farm loans. 

“Actually, our activity and demand as it stands today is down slightly compared to the same time last year,” said Jim Radintz, Deputy Administrator for FSA farm loan programs. “That's not what we had anticipated and certainly not what we're hearing to be expected for the season from the countryside.”

Radintz says loan needs may just be behind as farmers work on record keeping and accounting following a late harvest. 

“Even though our demand is down slightly over last year, last year broke all the records,” he said. “So, the fact we're just slightly off that, that still points to the fact that demand and need is extremely high.”

More than just loan demand, loan delinquency rates in FSA are also on track with last year.  

“Our delinquency rates have been not at historic lows, but in that range,” said Radintz.

“I think everyone expected it to be worse than it is,” said Takash. “There was an uptick in both the Farm Credit system, as well as the ag bankers’ delinquency numbers, but it's very small compared to what we've seen in prior economic downturns.”

“We do have some distressed credit in our portfolio, but it did not uptick as much as we thought it would this season, which is great, but we do know that's going to continue, or we have projections that it may  continue for the next couple years,” said Sloma.

A stronger farm economy than anticipated to start 2017, but not every farmer prevailed, and experts say the balance sheets need attention. 

“If I look at one single thing, $400 cash rent per acre in certain parts of our territory does not make economic sense,” said Greenwood.

While short price rallies and higher yields helped many farmers survive, that's not a guarantee in the new year.

“We're probably not going to see a drop in oil prices,” said Takash. “So, some of the benefits we saw in ‘16, in terms of lower fuel costs and lower fertilizer costs, we're not likely to see those again. 2016 is kind of a one shot deal.”

That's why he won't be surprised if 2017 turns out better that what many expect today.

“You always prepare for the worst and hope for the best,” said Takash.

While lenders are prepared for tough conversations as lending season gets into full swing, bankers like Hoskins are still bullish overall.

“I think it's a good time to take stock of how effectively are we managing the risk as it relates to agriculture, how effectively are we looking at our living expenses, and looking at ways to find that we can work with producers to help them navigate the times that we're dealing with,” he said.