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Farmer debt levels rising

An ag economist at the University of Illinois says farmer debt levels in terms of dollars are rising.

However, Nick Paulson says that’s mostly attributed to the modern cost of farming.

“The assets that debt is using to finance is just becoming more costly and more valuable.”  He says, “Increasing machinery costs, increasing land values, and you know, on the short-term side carrying more short term debt just because we’re putting in more and more dollars per acre on the cost side.”

He tells Brownfield, “If we look at it in relative terms, that’s where we see the opposite trend.”  He says, “The asset values on farm balance sheets have been increasing at faster rates than those debt levels have. So, we look at leverage, the debt to asset ratio, that is at pretty historic lows, which is a positive thing.”

Paulson says lower farm incomes have most lenders more closely examining farmer financials when considering loan approvals.

AUDIO: Nick Paulson – University of Illinois