Farm Debt is Growing

Farm Debt is Growing

Last month the Kansas City Fed released a report indicating that farm debt is accumulating at a faster pace. CliftonLarsonAllen Principle and Farm CPA Today blogger Paul Neiffer explains more about the report results
Neiffer: “The Kansas City Fed issues a quarterly report on the credit trends for their district — that is most of the Mid-West not including the key corn belt states. In that trend, they’ve found that farm debt has continued to accelerate or accumulate. It has gone up for 10 straight quarters. The positive thing is that they still find that farmland prices have stayed fairly steady. The crop rents have gone down about 10 percent year over year. But they are seeing more farmers that have to either get more debt or on the carryover debt so if the farmer owed debt that is getting carried over, that is certainly increased quite a bit. As we know with lower prices, debt for the farmers is continuing to accumulate and the Kansas City Fed is just confirming that.”
According to the report, farmers with carryover debt increased from 18 percent of loans to 29 percent of loans in the first quarter of 2016.  Also, 18 percent of total loans made in the first quarter involved restructuring existing debt to meet short-term liquidity needs.

 

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