Two drought years could mean end for many farms

TARKIO, Mo. -- For nearly two years, northwest Missouri farmers have been praying for rain, but it has come only in spurts.

Now there are clouds on the horizon, but they're dark and ominous and have nothing to do with rain.

Without lots of springtime precipitation, farmers with a lifetime devoted to agriculture could find themselves out of business.

Even worse, the rural communities whose existence revolves around farming could find themselves in a downward slide even after the drought has broken.

"For many of these people, another bad year and they're done," said Sam Graves, the area's congressman and himself an Atchison County farmer. "We could see a 40 percent shakeout of farmers. There are many on the brink of failure."

It's not the drought alone that's causing all of the problems for farmers, but it's certainly not helping.

Besides dealing with almost two years of low rainfall, producers have faced five years of low prices, a federal agriculture policy that they say falls woefully short of meeting their needs, rising crop insurance premiums and scares related to mad cow and hoof-and-mouth diseases.

Hauling water

While water supplies in small communities are holding up so far, many wells in rural areas are drying up. Some farmers are being forced to haul water while others are spending tens of thousands of dollars to dig deeper wells.

Ron Thompson, 39, a fourth-generation farmer who lives in the house his great-grandfather built about eight miles west of Tarkio, echoes the feelings of many farmers in Missouri's northwestern corner who would rather not talk about the fears that are gripping them all.

"We don't dwell on it a whole lot," he said. "There's nothing we're going to be able to do about it. We're going to go on as long as we can."

His twin brother, Don Thompson, said if this year turns out dry like the last one, he'll be looking for another job.

"Five years ago, if a banker would have said I have to get out, it would have killed us," he said. "But now, we really don't care."

Last year when there was no rain and crops suffered, many farmers went to the bank and either refinanced loans or borrowed more. The ones who own their land are borrowing against equity, but as the debts rise and loans get refinanced, the equity is going down fast.

"They're cutting their throats and we're letting them," said Craig Livengood, vice president of Farmers State Bank in Tarkio. "When we lend to farmers, we go up to 70 percent of what their asset's worth. It's a good thing land values are high, and if the price of land keeps going up, the collateral is there. But they're borrowing themselves right out of cash flow."

Start cutting losses

Once debt reaches the value of collateral, banks -- even small-town ones where the bank executives went to high school with the farmers -- will have to start cutting their losses.

If a farmer gets to where he can't borrow any more money, and has no money to pay what loans he does have, that's when things get to the breaking point.

"There are a lot of loans that won't be paid back this year," Livengood said. "Many will refinance, but if we have back-to-back drought years, there will be a bunch of farmers who this will be their last year."

Another problem facing rural communities is the rising number of absentee landowners who are draining ag proceeds from the local economies.

"It used to be every dollar generated stayed in the community," said Livengood, a lifelong Tarkio resident. "Now, the retail dollars are disappearing."

Graves said there is little incentive for young people to farm, and he doesn't see that changing. With the price of a good combine about as much as it would cost to buy a farm, and the headaches associated with the inevitable bad years, being a farmer doesn't hold the charm it once did.

"People I went to college with work 40 hours a week and make $30,000, they pay their bills and that's it," said Graves, a University of Missouri graduate. "If a farmer thinks he can make more money at Pizza Hut, why would he want to keep beating himself on the head doing this?"

Dean Rolofson, who farms about 500 acres in addition to his job as a teacher and coach in the local school district, worries about the future of the town he's called home for more than 30 years.

"This drought is going to affect everyone around here," he said. "Nobody is buying anything. Several here are second- and third-generation farmers, but without water, they're going to be out of money."

Rolofson said two of his wells have gone dry. Last summer one of his bulls died after getting stuck in the mud while trying to reach water behind a beaver dam.

"It's as dry as I've ever seen it," he said. "I've been here since 1969, and I've never seen it like this. A lot of older people don't know when it was this dry, either.

There was some rain, but not nearly enough.

Ron Thompson opened a small planner where he kept track of weather conditions last year. May 6, an inch of rain. May 23, 1.1 inch of rain. Aug. 20, 5 1/2 inches of rain.

"In between, there were three months when we didn't get at least an inch of rain," he said.

Last year's total rainfall in Tarkio was 23.2 inches, which is about 30 percent lower than the 30-year average for the area, according to Missouri state climatologist Adnan Akyuz.

Jim Crawford, a University of Missouri Extension agent in Rock Port, said the next two months will be critical.

"Corn has to be in the ground by May 1. Soybeans by the last week of May," Crawford said. "Everyone is pretty much nervous about what's going to happen between now and April 1, when it's time to start planting."