Road Warrior

Perspectives on U.S. Farm Debt



There is considerable discussion among agricultural economists and lenders concerning the status and trends of U.S. farm debt. Let’s dig deeper into the subject and provide perspective.

Yes, the U.S. farm debt-to-asset ratio is near historically low levels, in the 10% range. During the farm crisis years in the 1980s, this metric increased to over 22%. However, one should not become complacent with farm debt levels because there appears to be a concentration of debt. For example, of the 2.3 million American farms and ranches, 270,000 farms generate 80% of production and carry 60% of U.S. farm debt. Debt is very concentrated among larger growing agricultural producers rather than dispersed across the spectrum as it was in the 1980s farm crisis years. The debt is interconnected; that is, many producers have business relationships, alliances, partnerships or contractor arrangements with other producers or agribusinesses. This leads to third-party counterparty risk. If one entity has difficulty, it can easily ripple to others.

Total farm debt has dramatically increased particularly since 2004, increasing from $180 billion to over $230 billion, accelerated by the commodity super cycle that has put growth into high gear. While the ascent in debt is not as steep as the trend from 1974 to 1980, this trend bears watching.

Switching from the debt aspect, there is some evidence that institutional money is flowing into agriculture as pension funds and big block investors purchase farmland. This has historically been a trend in the timber industry and to some extent in tree fruits. Now it appears to have the strongest prevalence in the Mississippi Delta region and in pockets on the East and West Coasts. Investors still feel there are reasonably priced blocks of land with which they can get a return on their investment.

The agricultural debt and investment scene is quickly evolving as global economics and transition of agricultural assets alter the landscape.


Editor’s note: Dave Kohl, Corn & Soybean Digest trends editor, is an ag economist specializing in business management and ag finance. He recently retired from Virginia Tech, but continues to conduct applied research and travel extensively in the U.S. and Canada, teaching ag and banking seminars and speaking to producer and agribusiness groups. He can be reached at

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Dave Kohl is an ag economist specializing in business management and ag finance. He can be reached at

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