The nation’s farmers and farm economy are not in as bad a shape as back during the farm crisis of the 1980s, but the USDA’s chief economist Rob Johansson says there are some troubling trends. Among them, is the increase in farm debt.
“The current levels of debt are approaching the levels we saw back in the 1980s, at more than$400 Billion, with real estate debt to exceed the record of $218 million set in 1981.”
Johansson said borrowers are also finding it hard to maintain payments on both operating real estate loans. The percentage of farmer debt compared to assets has been rising. It’s currently about 13% now, which is a long way from the 22$ of the 1980’s, but it’s growing. The final concerning trend Johansson sees has to do with interest rates.
“Interest rates as a share of net farm income has been increasing more steeply than has the debt-to-asset ratio, a serious trend that we’re going to continue to follow,” Johannson said.
On the positive side, farm bankruptcies are still very low. In 1987, 23 out of every 10,000 farmers declared bankruptcy. Last year the rate was only about 2.5 farm bankruptcies out of every 10,000 farms.