Debt Landscape for U.S. Farms Has Shifted

Fewer farm operators rely on borrowed funds, but farm debt is increasingly concentrated in larger farms.

J. Michael Harris   Robert Dubman   Robert Williams     John Dillard
AIS-87, USDA, Economic Research Service, November 2009.

Disruptions in U.S. credit markets have heightened concerns about the level of farm debt and the financial structure of U.S. farm businesses. These credit issues, combined with prospects for tightened cash flows and declining land values, have resulted in concerns about farmers’ ability to handle debt obligations. Growth in debt levels may be perceived as drawing down agriculture’s credit reserves and hastening debt repayment problems should farm financial conditions worsen. But if a firm has favorable long-term earnings prospects, debt financing may also be viewed as a way to invest in and grow a business.

See the entire article at: http://www.ers.usda.gov/AmberWaves/December09/Features/DebtLandscape.htm