Our friends at recently posted a eye-opening blog that had some alarming statistics. Those statistics include the following:
*The farm sector’s debt-to-income ratio is the highest it’s been in three decades.
*Farm real estate values represent a huge portion of farm assets in a given year, and thus are critical to the viability of farms. In 2016, key regions experienced declines in real estates values, including the Northern Plains and Corn Belt, which declined by 4.3% and 0.9%, respectively.
*2017 represents the fifth consecutive year that farm solvency ratios have weakened, while liquidity ratios and working capital have deteriorated to their weakest levels since 2002.
What does this mean for farmers and ranchers? A couple of things. One, a decreasing farm economy can lead to increased interest rates for farmers who need to borrow capital for equipment and other necessities. It’s also means that it’s likely that the much of the funds typically available to farmers and ranchers will decrease, or simply disappear. This can be especially difficult for those just starting out in the field. And while most corporate and business farms won’t feel the effects of the downturn, small to mid-sized farmers and ranchers, and their local communities surely will. If economic conditions continue to deteriorate, more farmers and ranchers will find themselves forced to leave their land.
As Farm Aid says, “when farmers do better we all do better.” They further state “without sound policies, it is nearly impossible for farmers to consistently make a good living from the land.” At HMI, we couldn’t agree more.
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