American farmers are stretching to make payments as debt levels have reached $409 billion in 2019—$24 billion higher than the prior year. According to U.S. Agriculture Secretary Sonny Perdue, Reuters reported, "commodity prices, storms damaging crops and loss of key export markets" are behind the rising debt.
Similar debt levels were last seen about three decades ago when interest rates increased on land and equipment, the report states, leaving thousands of farmers unable to pay their loans. Perdue recently told the House Agriculture Committee that farm debt has risen 30% in the past six years; however, there was some glimmer of hope.
"Relatively firm land values have kept farmer debt-to-asset levels low by historical standards at 13.5%, and continued low interest rates have kept the cost of borrowing relatively affordable," Perdue's testimony states. "But those average values mask areas of greater vulnerability."
Farmland real estate is also making headlines, raising concerns from bankers and the U.S. Department of Agriculture. Reuters reported farm incomes and credit conditions are worsening, which could lead to more farmland sales at low prices.
"The Trump administration has pledged up to $12 billion in aid for farmers to offset their losses from the trade fights," Reuters reported, with more than $8 billion already paid, according to Perdue's testimony.
—Andrew Michaels, editorial associate