The Federal Reserve Bank of Kansas City says US farmers have greatly increased their debt levels over recent years and could be at risk of more financial stress.
Kansas City Fed economist Brian Briggeman says if incomes fall or interest rates go sharply higher producers will face even more financial stress in a short amount of time. Especially vulnerable, he says, are livestock producers and younger operators.
A report issued by the bank says real farm debt has risen nearly five percent a year since 2004, the fastest increase since the years leading up to the 1980s farm debt crisis.
Unlike the accumulation of farm debt in the 1970s, the report says the recent run-up is concentrated in real estate and within a small group of producers. Real farmland values have risen 40 percent since 2003.
Briggeman says “low interest rates and robust farm income” have kept “financial stress from spiking for the average farm operation” but that could quickly change.
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