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Crop farmers’ economic vulnerability could further increase
An agricultural economist said if commodity prices remain low, there are concerns about the financial health of crop farmers over the next two years.
Purdue University’s Michael Langemeyer recently analyzed farmer profitability over the past five years.
“If we look at farms with high debt-to-asset ratios and low profit margins, about 3 to 5 percent of farms will be under financial stress by 2023, but that’s not particularly high.” says.
He told Brownfield that most balance sheets are strong and debt burdens are low, which should help farmers through the end of the year…
“We expect a significant number of farms to have low profit margins, at least in 2024. Profit margins will be at least a third, and probably higher,” he estimates.
Langemeyer said at-risk farmers may have difficulty obtaining business loans or may be unable to make principal payments.
“It’s more disconcerting than not being able to get a business loan, because if you don’t pay the principal, you’ll probably have to refinance,” he says.
He said farm size is not the main factor in financial vulnerability, but rather the level of experience and high percentage of leased acres.
