How Is The Financial Health Of The Ag Sector?

The latest USDA farm income forecast has average net cash income for farm businesses dropping this year by almost 20%, the fourth yearly decline in a row.  USDA chief economist Rob Johansson said this is just one factor leading to what seems to be a drop in the general health of the farm sector. He added another factor, farm debt, which could increase by 3.5% to nearly $407 billion.

"Highest debt levels in real terms since 1982,” Johnasson noted.  “We did see an increase in debt-to-asset ratios, to 13.4%. It has been rising, and we do know the cost to finance that debt is increasing as well as a percentage of net farm income."

Interest payments on debt is expected to rise 17% this year. That leaves one in every ten commercial-sized farm business as either highly leveraged with a debt-to-asset ratio 40%-70%, or very highly leveraged with that ratio over 70%.

If you have a story idea for the Washington Ag Network, call (509) 547-1618, or e-mail gvaagen@cherrycreekradio.com