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Crop farmer financial vulnerability likely to increase

An ag economist says he’s concerned about the financial position of crop farmers over the next two years if low commodity prices continue.

Purdue University’s Michael Langemeier recently analyzed profit margins for farmers over the past five years.

“Looking at the farms with high debt-to-asset ratio and low-profit margin, if you look at 2023, approximately 3 to 5 percent of the crop farms are financially stressed and that’s not particularly high,” he says.

He tells Brownfield most balance sheets are strong and debt loads are low which will help farmers through the end of the year, but…

“At least in ‘24, we expect quite a few farms to have a low-profit margin, it’ll be at least a third, probably higher than that,” he estimates.

Langemeier says at-risk farmers could have trouble getting operating loans or become behind on principal payments.

“That’s more disconcerting even than not being able to get an operating loan because without making those principal payments, you’re probably going to have to refinance,” he shares.

He says farm size is not a major factor in financial vulnerability, but rather the level of experience and having a high percentage of rented acres.

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