Attention

The opinions expressed by columnists are their own and do not represent our advertisers

Monday, March 04, 2019

American Farm Debt Reaches 1980s Crisis Levels: Agriculture Secretary

Debt among American farmers has increased to $409 billion, Agriculture Secretary Sonny Perdue warned Wednesday. That is up from $385 billion last year and is currently at levels not seen since the agricultural recession (farm crisis) of the 1980s, reported Reuters.

“Farm debt has been rising more rapidly over the last five years, increasing by 30% since 2013 – up from $315 billion to $409 billion, according to USDA data, and up from $385 billion in just the last year – to levels seen in the 1980s,” Perdue said in his testimony to the House Agriculture Committee.

Purdue told lawmakers: “Relatively firm land values have kept farmer debt-to-asset levels low by historical standards at 13.5%, and continued low-interest rates have kept the cost of borrowing relatively affordable.”

“But those average values mask areas of greater vulnerability,” he added.

The agricultural sector has experienced tremendous headwinds in the last five years amid deflationary trends in commodity prices, storms damaging crops, and more recent - supply chain disruptions into China due to President Donald Trump’s trade war.

"As producers are not able to cover year to year expenses with operating loans, they are forced into transforming operating loans into term debt which erodes their creditworthiness," said Luis Ribera, an agricultural economist at Texas A&M University.

"On top of all that then we have the trade war which reduces the demand of US commodities given that tariffs make them more expensive and then depress the prices even more."

US Department of Agriculture chief economist Robert Johansson said farm exports are expected to drop by as much as $1.9 billion this year, citing the deepening trade war.

More

5 comments:

Anonymous said...

It's because most are now contract growers for big business. Same with the chicken farmers around here. All are broke because they are constantly borrowing money to make these upgrades. The companies dream up these upgrades and make them do it so they stay in debt and when you are in debt you tend to stay with what you know even though you aren't getting ahead just treading water.

Anonymous said...

Most farmers figured when they got old they could sell off to a developer like it used to be for retirement but since the rise in power of environmentalists those days are gone.

Anonymous said...

Exactly 11:16 They squeezed out the little guy. They get millions from special interests and government NOT to grow on land. It's ANOTHER SCAM that should be exposed. HELL I've heard of this SCAM years ago in H.S.

Anonymous said...

Chicken farmer in Fruitland bought Rinnier home for 600,000. Doesn't seem broke. Added an additional too.

Anonymous said...

Farmers around my house must be doing OK.