By ED SEMMLER

South Bend Tribune

It’s a daily ritual.

A group of farmers gather around 8 a.m. each day at Frick Services in Wyatt to talk about the weather, news of the day and issues facing farmers. It’s a scene that plays out in agricultural communities across the country.

They know crop farmers who are struggling. They know dairy farmers who have folded in recent years as agriculture has been battered by low commodity prices, tariffs that have withered their markets and even changing consumer preferences.

But this group of farmers is different than many. They’ve been through the wringer more than once, so they generally avoid debt and aim to maintain some reserves to get them through slides that are measured in years.

Some have been forced to take jobs outside of farming in the worst down cycles, coming home at night to work the fields.

“That’s why the equipment has lights,” one quipped.

But caution comes from experience.

“Some of the guys who are in trouble have overspent or are paying too much to rent,” said Larry Enders, who farms about 700 acres south of Wyatt. “If I can’t make money on rented land, I’m not going to plant.”

Enders said he won’t be borrowing money to plant this year’s crop because he still has some corn to sell from last year’s harvest and some cash reserves set aside from when times were good.

But Enders is more the exception. Most have to take out loans because it costs about $392 to plant an acre of corn and roughly $282 to plant soybeans, said Roger Mochel, manager of Frick Services where the coffee confab was taking place.

The sums, which only include the cost of seed, fertilizer, crop insurance, herbicides and fuel, are staggering — $196,000 to plant 500 acres of corn and $141,000 to plant soybean — and the costs to borrow have gone up thanks to higher interest rates.

Though it might be possible to squeak by, even modest profit margins disappear when the cost of land, labor and machinery is included in the equation, said Michael Langemeier, an agricultural economist at Purdue University.

The fact is that more farms are starting to show stress as a result of commodity prices, which have been sliding since 2014, said Langemeier, adding that farm liquidity has been declining “rather dramatically” over the past few years.

Though farm loans in general still have a lower delinquency rate than mortgages and even auto loans, they have been going up, said Brady Brewer, who also is an agricultural economist at Purdue.

Non-performing agricultural loans have now risen to about 1.42 percent, said Brewer, citing Federal Reserve statistics. Though that’s still very low by historical standards, it is about the highest it’s been in the past 10 years, he explained, and a national survey of bankers indicates that 52 percent of those surveyed believe the number of underperforming loans is going to increase this year.

Despite his conservative spending habits, even Enders admits things have been tight.

Just up the road from where the farmers were meeting, a nice assortment of New Holland tractors, combines, sprayers and other equipment are on display at Burnips Equipment Co.

Sales associate Steve Williams said business is brisk for parts, service and even gently used equipment, but soft for the new machinery that can easily cost hundreds of thousands of dollars.

The dealership and other farm-related businesses also have to compete against the rising number of auctions that often include equipment, as well as livestock and even land, as some farms — especially dairies — have gone out of business or are looking for ways to generate some cash.

Though farmers are always hopeful this time of year as they get ready for planting, the lengthy downturn could continue another couple of years, according to the agricultural economists.

One of the few positives from the past few years is that land prices have remained relatively stable, meaning that farmers can continue to go to the well to borrow against the value of their land.

Though soybean provides better margins than corn, the crop would be much more profitable to grow if the trade war with China came to an end, said Brewer, adding that elimination of the Chinese tariff would necessarily improve the supply-demand imbalance.

But if the trade war doesn’t come to an end, there could be dire consequences for years to come.