by David Widmar
Given USDA’s current projections for net farm income, 32% lower than in 2014, its natural to wonder about producers’ financial ability to weather the current conditions. As profitability slips, or even turns negative, some producers may find it difficult to service their debt, creating financial hardships and sometimes even business failures. Difficulty servicing debt, mainly farmland debt, is what comes to mind when reflecting on the farm financial crisis of the 1980s.
This led us to wonder if farmers are currently struggling to repay their debt. For this, we took a look at the farm debt data posted in the Agricultural Finance Databook published by the Kansas City Federal Reserve. The Agricultural Financial Databook is a collection of survey work the Federal Reserve collects and is extremely valuable for monitoring the farm financial system.