Farmer-lender mediation window could be extended a third time

Minnesota farmers who fall into financial hardship this year could have more time to renegotiate debts with creditors, a move advocates say would help them navigate practical difficulties caused by the COVID-19 pandemic.

In Minnesota, farmers who have collateral-backed debts of more than $15,000 can request the help of trained mediators in reaching agreements with creditors.

Mediation doesn't preclude creditors from collecting on the debts, though they can't do so for at least 90 days once mediation is requested.

In the spring, with the pandemic delaying meetings and business, the Legislature extended the collection window to 150 days for farmers who requested mediation by Sept. 1, 2020.

HF80, heard Monday by the House Agriculture Finance and Policy Committee, would extend the collection window to 150 days for farmers who request mediation by Oct. 1, 2021.

The bill, which has no companion in the Senate, is being held for further consideration.

Bill sponsor Rep. Todd Lippert (DFL-Northfield) said the extension is necessary because the pandemic continues to slow normal business processes.

"Many things just take longer," he said.

Farmer-lender mediation helps Minnesota farmers renegotiate hundreds of millions of dollars of debt each year, often reducing tension and improving communication between parties, according to the University of Minnesota Extension, which runs the program.

Mediators have been conducting sessions over the internet and by telephone during the pandemic.

Program director Mary Nell Preisler said the pandemic has caused a lot of stress for farmers and that 90 days isn't enough time, even under normal circumstances, for the mediation process.

Lippert's bill is supported by several farm groups, who say it could help prevent bankruptcies. But David Krause, immediate past chair of the Minnesota Bankers Association and CEO of Pioneer Bank, urged lawmakers to focus more on improving technology for mediators. He said the Legislature should be judicious in granting extensions, noting one case last summer at his bank where a farmer used the extension to delay collection of collateral.

An amendment unsuccessfully offered by Rep. Paul Anderson (R-Starbuck) would have shortened the 150-day collection window to 135 days.