January 23, 2020

ERS: Less production and debt concentrated in highly-leveraged farm businesses than 20 years ago


From USDA’s Economic Research Service (ERS), April 25- “While the average leverage of farm businesses—as measured by debt-to-asset (D/A) ratios—has decreased over time, some farms remain highly leveraged. The D/A ratio that implies financial vulnerability varies with individual farm business characteristics, but a commonly used threshold to indicate high leverage is a D/A ratio greater than 0.4. Using this definition, highly-leveraged farms consistently accounted for a disproportionate but declining share of the total value of production by all farm businesses between 1992 and 2011. In 2011, 5.3 percent of farm businesses were highly leveraged and contributed 13.4 percent of farm businesses’ total value of production; by comparison, in 1992, 9.5 percent of farm businesses, responsible for 19.6 percent of production, were highly leveraged. The declining role of highly-leveraged farms suggests the sector’s financial resiliency has increased over time because financial shocks—such as an unexpected drop in income or a sudden jump in interest rates—would likely affect fewer farm businesses, producing a smaller share of the value of production. This chart appears at, “Farm Businesses Well-Positioned Financially, Despite Rising Debt,” in the April 2014 Amber Waves online magazine.”


Trans Pacific Partnership (TPP) – Brief Overview

President Obama was in Japan this week (April 21, 2014) where he met with Prime Minister Shinzo Abe. Joint meetings between the two countries included negotiations over the Trans Pacific Partnership (TPP), and specifically focused on agricultural trade barriers.


Farm Bill; Ag Economy; Regulations; and, Immigration

Farm Bill- Policy Issues

DTN Political Correspondent Jerry Hagstrom reported yesterday (link requires subscription) that, “The next bill may be more difficult to develop and pass as a pair of farm-bill lobbyists urged advocates of all types to begin thinking about how to work together again.

“The lobbyists analyzed the political divisions created trying to pass the 2014 farm bill during a panel discussion Wednesday at the Consumer Federation of America’s National Food Policy Conference.

Bill O’Conner, a former House Agriculture Committee staff director and USDA official, noted that the relationship between the farm titles and the nutrition title has ‘changed, and not just in one direction.’”