Farm debt levels have been steadily rising since the 1980s, but asset levels have outpaced debt despite a recent fall in land prices, and equity has more than doubled for farm businesses, according to a recent USDA report, "The Debt Finance Landscape for U.S. Farming and Farm Businesses.”
U.S. sectorwide farm debt reached $234 billion by the end of 2009. Despite these high debt levels, debt relative to assets and income remains relatively low. Asset values in the U.S. farm sector have steadily increased since the farm crisis of the 1980s and increased even more rapidly after farmland values jumped in 2004.
Even though asset values dipped some by 2009, they still stand at 2.7 times their mid-1980s farm crisis low.
Meanwhile, the share of farm businesses that end the year with unpaid debt has declined, according to a recent USDA Agricultural Resource Management Survey. While many farm businesses use credit cards and lines of credit to finance input purchases, most pay off their loans during the current production cycle, according to the survey. The majority of remaining debt comprises loans with balances carried on the farm business balance sheet from one year to the next.