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Report: Farm Debt Continues to Grow in Midwest
USAgNet - 02/21/2017

Agricultural debt on a nominal basis in Illinois has been increasing since 1991. Data from the U.S. Department of Agriculture and Illinois Farm Business Farm Management are shown to see if increasing debt levels pose problems for the financial health of Illinois farms. With the continued downturn in the farm economy, increasing debt levels need to be monitored closely.

USDA publishes estimates of total agricultural debt outstanding in the United States. This series is available from 1960 onwards and gives the amount of debt outstanding as of the year-end.

Nominally, agricultural debt reached a peak in 1984 of $188.8 billion. From 1984 through 1989, agricultural producers retired debt and agricultural lenders wrote off some debt, resulting in a decline in total debt. By 1989, agricultural debt had declined by 31%, reaching a level of $131 billion.

Since 1990, agricultural debt increased an average of 4.1% per year. The rate of increase varied from year-to-year but exhibited no escalating or decreasing trends. The highest rate increases occurred between 2006-2007 and 2007-2008 when increases were 11.6 and 8.4%, respectively. Increases of less than 3% occurred 6 times in this period while decreases happened in 3 years with the greatest at negative 3.2% in 2002-2003.

At the end of 2004, agricultural debt reached $197.6 billion, surpassing the previous high set in 1984. Increasing debt levels may cause concerns that financial stress occurring during the 1980s may repeat. However, the above debt levels are stated in nominal terms and do not take into consideration inflation's devaluing impacts on the dollar.


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