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Midwestern bankers are tightening the purse strings on farm credit lines amid some of the toughest financial times for farmers in decades.

A survey of bank CEOs by Creighton University’s Heider College of Business found they expect the percentage of farm loan defaults over the next 12 months in a number of Midwestern states, including Illinois, to be double the default rates for 2017.

The survey is a part of Heider’s Rural Mainstreet Index, which fell below “growth neutral” for the first time since last November.

“Each time you get beyond one obstacle, another comes up,” said Ernie Goss, the Jack A. MacAllister Chair in Regional Economics at Creighton University’s Heider College of Business. “The trade tensions and tariffs are hammering the farming economy. Grain farmers throughout the region continue to experience losses produced by trade issues and plentiful global supplies. On the other hand, the expanding U.S. domestic economy is supporting livestock producers in the region. For May, according to bankers, the negatives far outweighed the positives.”

One in four bankers said they had rejected loan requests due to low farm income.

To help farmers deal with the tariffs, President Donald Trump’s administration is distributing relief, but Goss said flooded farms won’t qualify for that because they must plant first.

“If you’re knee-deep in mud or water, it’s not like you can take advantage of the $16 billion that’s being made available,” he said.

The college’s May RMI for Illinois rose to 46.3 from 44.2 in April, largely due to the farmland-price index dropping to 40.5 from April’s 43.6. The state’s new-hiring index did rise to 52.7 from 41.9 in April.

Heider will conduct the survey again later in June. Goss predicted it will be worse.

Staff Reporter

Cole Lauterbach reports on Illinois government and statewide issues for The Center Square. He has produced radio shows for stations in Bloomington/Normal and Peoria, and created award-winning programs for Comcast SportsNet Chicago.