Continued Surge in Land Prices, Low Debt Ratio Suggests Hardy Farm Economy

Record-breaking sales of farmland throughout much of the United States, particularly in the Midwest, have raised eyebrows for those who remember the crash in the 1980s. However, one thing remains starkly different now than four decades ago; a much lower debt-to-income ratio. Nearly ten points lower, to be exact. At the start of the farm crisis, the average farm debt-to-income ratio was 13.1. These days, a much healthier 3.9 ratio signals stability in an often volatile market. While sky-high land prices dot the country, much-higher commodity prices, lower interest rates and a reassuring debt-to-income ratio keep those concerns at bay. And though farm economic downturns are forecasted – even one as early as 2022 – the lower debt-to-income ratio should help farmers withstand the turbulence. Read more on land values and farm economy forecasting here.