Farm Debt Expected To Increase In Coming Year

USDA expects farm income and farm asset values to fall this year, which could lead to additional farm debt.  Even though foreign cash receipts and government payments to farmers have been generally higher compared to last year, USDA Chief Economist Rob Johansson says that's not enough to offset rising expenses.  Because of that he anticipates that farm income could drop by 12%.  Farm interest expenses are likely to rise by 18% this year, partly because interest rates are higher, but farmers are also having to borrow more, contributing to a 4% rise in farm debt.  As far as 2018 is concerned.

"Farm assets and equity are expected to decline by about 1 percent following increases over the last two years," said USDA Economist Rob Johansson.

He noted if you look at farm debt compared to asset values, the percentage of debt will be up for the 6th year in a row.

"10% of crop farms and 6.2% of livestock farms are forecast to be highly or very highly leveraged."

While that's a substantial increase, it's still below the 1985 percentage during the farm crisis, when 22% of farms were highly or very highly leveraged.​

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