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Financially stressed farms on the rise, still better than 1980’s

An ag economics professor says financial stress in farm country is currently much higher than 2013 but not as bad as the 1980’s.

Michael Langemeier with Purdue University tells Brownfield farms with a negative profit margin ratio and a debt-to-asset ratio greater than 70% are considered financially stressed.

“Land values are still holding up pretty good and so those who are financially stressed tend to be people who don’t own very much land. They are in a very tough situation because they don’t have that equity to fall back on.”

Langemeier says based on USDA data, about 5% of farms nationwide are financially stressed with larger pockets in the great plains and areas with heavy dairy populations.

He says if farms do fall in that category the focus needs to be on increasing profitability.

“Just because you are financially stressed, it does not mean that bankruptcy is the next step. There is still a little wiggle room there to improve profitability and try to start repaying that debt.”

Click below to hear Langemeier outline the formulas for measuring financial stress.