Farm debt is increasing as access to capital contracts, leaving the question of how to avoid another 1980s farm debt crisis. The issue came up at a recent Senate farm bill hearing.
Top Senate Ag Republican John Boozman raised the fear of an Eighties style debt crisis, summing up the plight of farmers today this way; “Over the past several years, the debt-to-asset and debt-to-equity ratios have increased, while working capital is expected to decrease by more than ten percent in 2023, according to USDA forecasts. Meanwhile, land values have continued to climb and farming incomes are set to decline by double digits.”
And as balance sheets decline on lower equity from higher costs, Farm Credit Council’s Phillip Morgan told lawmakers; “It is just critical that we continue to have the safety net in the farm bill, that those producers are, in some ways, assured that that safety net is there, that they’re going to be able to continue.”
And not just established farmers according to Morgan; “For our young, beginning and small farmers, they need a guarantee that there’s going to be a living there, that they can earn as they continue to see the risk increase in agriculture.”
And keeping farmers on the farm is no small matter. James Korin with the American Association of Crop Insurers on the reflection of an Australian group about farmers.
Korin; “The typical person may occasionally need a doctor or an attorney, once or twice in a lifetime, but that same person, three-times a day, every single day, needs a farmer.”