Strong Farm Land Values Help Farmers in Debt

Ag Secretary Sonny Perdue told the House Agriculture Committee last week that “firm land values” are helping to sustain farmers who are leveraging their land to continue to invest.

His remarks were part of his testimony positioning the USDA to receive full funding in the federal budget.

He said the amount of debt held by America’s farmers rose to $409 billion from $385 billion last year, with loan demand remaining “historically high.” Since 2013, farm debt has risen by 30 percent.

The figures reflect a strain on the U.S. farm belt driven by lingering weakness in commodity prices, storm-damaged crops and loss of key export markets such as China.

Farm values distinguish this economic challenge from others the industry has faced, Perdue said.

“Relatively firm land values have kept farmer debt-to-asset levels low by historical standards at 13.5 percent,” he said, “and continued low interest rates have kept the cost of borrowing relatively affordable.”

USDA chief economist Robert Johansson said that the department is concerned about a potential decline in farmland real estate prices but has seen no sign of that happening so far.

Source: Reuters