From Boom to Bust? Farmlands Are In Trouble

Many farmers are facing higher debt as a multiyear drop in prices for corn, wheat, and other commodities plagues on. That is pushing more farmers out of business. The Farm Belt will soon have fewer than 2 million farms, the lowest in years.

Still, economists aren’t predicting the crisis to be as severe as the one that struck the Farm Belt in the 1980s, in which farmland values plummeted and interest rates soared.

Economists expect farmland values to fair much better this time around. After all, farm incomes had record highs in 2013. Many farmers still have significant cash reserves. Plus interest rates are still relatively low.

Lenders say farmers are going through their saving fast. They say younger farmers – without sufficient reserves — and large growers – those who may have expanded too much during the boom years — may be the most vulnerable. Large growers may have accumulated too much debt in recent years as they expanded operations and also locked into multiyear land leases at high rents.

Source: “The Next American Farm Bust Is Upon Us,” The Wall Street Journal (2017)