Sometimes it takes just one event to put a farm in financial peril.

For Jessica and Chad Hofschulte, it was a less than honest fertilizer company. They paid, but the company didn't deliver.

The lack of fertilizer led to a late planting, causing a poor crop on the southeast Minnesota farm in 2011. After the harvest, Jessica Hofschulte said, they checked their bottom line. It wasn't pretty.

"We lost about $60,000," said Hofschulte. "Couldn't meet our obligations."

When the bank threatened to foreclose, the couple accepted mediation, giving them time to find a new bank, get a federal loan guarantee and work out a deal to keep farming.

Low commodity prices are causing lots of financial pain on Minnesota farms.

Corn and soybean prices have fallen to below the break-even point, and the dairy, hog and cattle sectors have also struggled.

But bankruptcies are rare for Minnesota farms, thanks in part to the state mediation program in which lenders have to offer struggling farmers the chance to renegotiate debt terms with the help of a mediator before repossessing any property.

The farmer-lender mediation program got its start in the farm crisis years of the 1980s. Low crop prices, high interest rates and crashing land values sent thousands of hopelessly broke farmers into financial collapse.

Jim Nichols, state agriculture commissioner under then-Gov. Rudy Perpich, said a phone call from Carl Pohlad, one of the state's best known bankers, put the idea of a mediation program in motion.

Pohlad told Perpich that bankers weren't able to loan the struggling farmers any more money because they hadn't even paid their debts, Nichols recalled.

Minnesota and other states enacted mediation laws to ease the pressure on bankers and farmers, and to give them time to do some thinking.

In successful cases, mediation usually leads to some sort of modification that lowers debt payments. Some lenders challenged the programs saying they violated constitutional protections for private contracts.

But University of Illinois law professor Robert Lawless said the courts rarely agreed with that argument: "Generally it's very hard to win one of these challenges."

Last fiscal year, Minnesota lenders sent out just over 3,000 mediation notices to struggling farmers. That's roughly triple the rate of three years ago.

First Minnesota Bank executive Scott Wakefield has been involved in several mediations and supports the program.

But he said it still rankles some bankers who contend it delays settlements unnecessarily.

"A lot of them would love this program to go away," said Wakefield. "Because, either you pay it or you don't. And if you don't we're going to take our collateral, liquidate it, and pay the loan off."

But for Wakefield, making loans is about more than making a profit. He said he's also trying to keep his local economy strong.

"It's all up to the attitude," Wakefield said. "Are you there for the almighty dollar? Are you thinking more about community, and keeping somebody in business?"

MPR News reporter Catharine Richert contributed to this story.