American farmers are holding a rapidly increasing level of debt not seen since the 1980s. The levels have reached $409 billion from $385 billion last year, and with loan demand still “historically high,” according to US Agriculture Secretary Sonny Perdue.
In the 1980s, thousands of farms collapsed financially with low crop prices pushing producers farther behind on high-interest land and equipment loans.
Farm incomes and credit conditions continued to erode in the second half of last year and a major concern is that the amount of farmland that could come up for sale in the coming months could trigger an across-the-board drop in land prices.
The figures reflect pressure on US farms that is comparable to the agricultural crisis of three decades ago. The crisis is being driven by commodity price weakness and loss of key export markets in China due to trade disputes.
“Farm debt has been rising more rapidly over the last five years, increasing by 30 percent since 2013 – up from $315 billion to $409 billion, according to USDA data, and up from $385 billion in just the last year – to levels seen in the 1980s,” Perdue said to the House Agriculture Committee, “Relatively firm land values have kept farmer debt-to-asset levels low by historical standards at 13.5 percent, and continued low interest rates have kept the cost of borrowing relatively affordable.” Adding, “But those average values mask areas of greater vulnerability.”