Relief might be on the way for Minnesota farmers struggling to stay afloat in the face of recent poor commodity prices.

The Minnesota Department of Agriculture (MDA) will submit a $20 million bonding request to the state legislature during the 2018 session for the Rural Finance Authority (RFA), which was created during the Farm Crisis of the 1980s to help financially struggling farmers.

Though the current situation has not reached 1980’s levels, many Gopher State farmers face huge financial challenges.

“It certainly was a lifeline for those trying to meet the demands of paying off debt in the early 80s, by restructuring outstanding loans,” said Minnesota Department of Ag Commissioner Dave Frederickson. “And that continues to be the case today.”

Frederickson said the farm economy is in poor shape across the entire state, with farmers from all regions applying to the RFA for help. Frederickson is seriously concerned about the dairy industry, as well as the overall cash flows on each of the state’s operations that raise major program crops.

“What I’m even more concerned about is the federal approach to farm policy,” Frederickson said. “I had an opportunity to visit with Secretary of Agriculture Sonny Perdue. The president’s budget proposal doesn’t line up with the problems we’re experiencing across rural Minnesota. We’re sending the wrong message on topics like trade and crop insurance.”

Frederickson said he was hoping for a more positive message to come out of Washington, as not all problems can be solved at the state level. While the state can run programs to assist farmers, Frederickson expects federal legislators will put some serious effort into this year’s farm bill.

The RFA has grown in Minnesota since the 1980s and now includes a variety of unique programs, including Beginning Farmer and Seller Assistance Loan Programs, as well as the Ag Improvement and Livestock Expansion Loan Programs.

One of the most important programs under the RFA umbrella is the Restructuring Loan Program. Overall, the Rural Finance Authority plays an important role in the Minnesota economy.

“Rather than making loans directly to farmers, the RFA partners with more than 400 community banks across the state, as well as members of the Farm Credit System and the Farm Service Agency,” Frederickson said. “Farmers borrowing funds through the RFA pay a lower interest rate than they would otherwise.”

Since its creation in 1986, the RFA program has issued over 3,000 loans worth nearly $249 million, and has leveraged over $750 million in financing from the RFA’s partners across the state. Frederickson said nearly $1 billion has flowed into rural Minnesota from both private and state programs.

“Most of those loan participants would likely not have gotten loans from other sources to continue or expand their operations without the partnership of the Rural Finance Authority,” Fredrickson said. “There’s been a 60 percent increase in loan volume compared to the previous five years. The RFA has used up $25 million of last year’s $35 million appropriation from the legislature.”

The increase in loans is largely due to low commodity prices, rising interest rates, and increasing interest from young men and women who want to get into agriculture as a career.

Typically, bonding requests are done every two years, but during this year’s session Governor Mark Dayton will request an additional $20 million in funding from the state legislature to make money available through the RFA.

“This money would help meet the additional demands we’re currently seeing for the program,” Frederickson said. “Without this additional $20 million, the program will no doubt run out of money by the middle of this year. That’s why this is a priority for the governor and I hope it will also be a priority for the legislature.”

Minnesota has twice as many farmers over the age of 65 as it does under the age of 35. That’s why Frederickson said it’s important to make sure that young farmers have a chance to stay on the land.

The cost of entering into farming has been, and continues to be, a major hurdle to young people who want to get into the business. Frederickson said the situation has had “a crippling impact on the health of rural main streets, schools, transportation funding, and the overall rural economy.

“The Beginning Farmer Tax Credit passed during the session last year,” Frederickson said. “It will provide assistance to beginning farmers to rent or purchase farmland and other assets. The program is just now launching and we’re encouraging landowners and beginning farmers to learn more about this program by taking a look at our MDA website.”

Frederickson said the tax credit has been an important tool to help rural Minnesota and the next generation of farmers. Frederickson doesn’t expect it to be a tough sell to the legislature “This is a critical thing for all members of the legislature,” he said. “They want to be able to go home and say, ‘We are supporting young and beginning farmers and keep the land moving from one generation to the next.’ I don’t anticipate that this is going to be a problem politically. I think this would be a dangerous thing to politicize. We always like to boast (at the Capitol) that ag issues are non-partisan, so we hope to make our case as we move ahead.”