CoBank reposted this
The Farm Credit System remains the largest source of debt financing for the country’s agricultural sector, according to a new report on farm debt from USDA. Farm Credit accounts for 45% of total farm loans, compared to 35% for commercial banks. However, commercial banks are a larger source of credit than the FCS for non-real estate loans. Other noteworthy statistics from the report include: -- Total farm debt in the U.S. rose 34% to $504 billion in the decade between 2012 and 2021. -- Total debt as a percentage of cash receipts increased from 74% to 109% over the same period. -- The aggregate debt-to-asset ratio for American farmers was 13.6% in 2021, which USDA said “indicates sound financial risk exposure at the sector level.” One issue for the study is that the period it covers concludes prior to start of the Fed’s tightening cycle and therefore does not reflect the impact of higher interest rates over the past two years. Link to report (chart on page 8): https://bit.ly/4cLnsK5
The Farm Credit System is a critical backbone to the U.S. agricultural sector and U.S. economy.
Inflation and high interest rates are very burdensome this year. I don't agree with the "sound risk exposure" conclusion. I'm sure they say the same thing about the National Debt.
Where are mortgages or 'Other' real estate loans in comparison.... Or rather Small Business Loans, since farming is business? Only a question. ?
Very informative
Interesting data!
--Advocating for all of Agriculture
3wThere's nothing worse than receiving notice of an interest rate increase when there are such tight margins in our budgets. When the farmers are streched/stressed, America won't be far behind. We are like the "canary in the mine", warning.