The agricultural economy is currently experiencing a downturn, with lower farm incomes, flattening land values and cash rents, and increased levels of financial stress, according to Ohio State University agricultural economists speaking at the Farm Science Review Ask the Expert sessions. The outlook for the agricultural economy though is not as negative as we are not experiencing the conditions in the 80s when grain prices dropped, debt soared, and numerous farms went bankrupt.
“We are in a very different situation than the 1980s,” said Ani Katchova, an associate professor and Farm Income Enhancement Chair in the Department of Agricultural, Environmental, and Development Economics at Ohio State University. Farm mortgage interest rates now are only 4-5% as compared to the interest rates of 17% in the 1980s and much of the farm debt is now held by commercial banks and the Farm Credit System instead of individuals as was the case in the 1980s, she said.
The rate of farm bankruptcies during the last quarter was 2 out of 10,000 farms while during the farm crisis in the 1980s, the bankruptcy rate was tenfold, at 20 farms going bankrupt out of every 10,000 farms, according to Bob Dinterman, a postdoctoral researcher at Ohio State.
Farm income is forecast to be up after four years of decline and land values also seem to have flattened out after declines last year. “The worst seems to be over though as financial conditions seem to be improving but slowly,” Katchova said.
For more information:
Bumper profits aren’t in the picture for Ohio farmers, experts say (Columbus Dispatch)
Is the Farm Economy Repeating the 1980s? (Policy Brief)
Farm Science Review Presentation Recording