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Debt-to-asset ratios worsen for farmers as interest costs climb

The vice president of data analysis with Illinois Farm Business Farm Management (FBFM) says debt is expanding in the U.S. farm sector.

Brad Zwilling tells Brownfield, “Debt was expected to increase by 5% from 2024, while the farm assets were supposed to increase only by 4.7%, so we know our debt is crawling a little faster up than our assets.”

He says a high-interest-rate environment is compounding the issue.

“We’ve really seen interest really ramp up in these last three years.”  He says, “That group we’re worried about, those ones that had the high debt to asset ratio, their interest per tillable acre went from about $33 all the way up to about $60. So those doubled in a three-year period.”

Zwilling says that increased interest costs limit an operation’s ability to invest in new assets and put an additional financial strain on producers, so prioritizing recordkeeping and monitoring debt ratios is critical in the current ag economy.

AUDIO: Brad Zwilling – Illinois FBFM