The amount of farm debt has risen rapidly to $409 billion. That’s up from $385 billion in 2018. U.S. Ag Secretary Sonny Perdue says demand for loans remains “historically high.”
A Reuters article says the strain on the American farm belt is becoming more and more comparable to the agricultural crisis of three decades ago. The strain is being caused by multiple factors, including commodity prices remaining low for an extended period of time, storms damaging crops, and the loss of export markets due to trade disputes with key trading partners.
“Farm debt has risen more rapidly over the last five years, increasing by 30 percent since 2013,” Perdue said in testimony before the House Agriculture Committee. “It’s up from $315 billion in 2013 to $385 billion in 2018. That number has now risen to $409 billion this year. We last saw those levels in the 1980s.”
USDA Chief Economist Rob Johansson says USDA is concerned about a potential decline in farmland real estate values in the years ahead. Those real estate prices have been a key support for equity in U.S. agriculture. However, Johansson is quick to point out that it hasn’t happened yet.
The amount of farmland that may come up for sale in the future is a big concern to ag bankers. Lenders fear that could trigger an across-the-board drop in land prices.
Source: National Association of Farm Broadcasters