Figure 1 illustrates the capital debt repayment margin and replacement margin for the case farm since 2010. According to recently released Statistics Canada data, farm debt in 2017 was $102.3 billion—nearly double the level in 2000. Farm real estate debt accounts for 61.8 percent of total farm debt. Farm … The biggest increase was in long-term debt, such as land. From 1993 to 2017, real (inflation-adjusted) farm debt increased by 87 percent, or 4 percent per year on average. (All figures and comparisons adjusted for inflation.) Some analysts and government officials characterize the period since 2007 as “better times” for farmers. Barrett notes each year since 2009 has seen an increase in the average amount of total debt among farmers, and 2017 was no exception. This measure is an implied average annual interest rate across all farm debt. “When adjusted for inflation, total farm sector debt in 2019 is forecast to be 4 percent ($4 billion) below the peak reached in 1980.” ERS forecasts farm debt to increase 2 percent in both 2018 and 2019. Farm Debt-to-Asset Ratios by Age Finance & Business Planning - Choose - Business & Transition Planning Financial Management Financial Statements & Ratios Research Papers and … The term debt coverage ratio measures the ability to meet these payments. Net farm income, plus non-farm income must cover family living, income taxes and social security taxes, and then cover the payments on term (intermediate and long-term) loans. Farm debt has increased a lot over the last two decades. Bad news, right? Farm nonreal estate debt is expected to increase 1.9 percent in nominal terms to $163.0 billion in 2019.” “2019 Farm Sector Income Forecast- Assets, Debt, and Wealth,” March 6, 2019 (USDA-ERS). Figure 3 shows the implied interest expense from 1960 to 2019. To consider this relationship, we took annual interest expenses divided by average total farm debt for a given year. The debt-to-asset ratio compares farm debt obligations to the value of farm assets. Farm debt, at $416 billion, is at an all-time high. Yet the National Farm Survey showed for the 59pc of dairy farms with debt, the average amounts to just over €99,000 or €850 per cow. If anything is left over after the payments are made, that is the capital debt replacement margin. Average debt rose 10% to $1.3 million. Debt-to-asset ratios are seeing the same squeeze, with more farms moving into a ratio exceeding 80%. The relationship between total debt and interest expense is, of course, interest rates. Though both of these measures appear to be relatively low in 2019, the ten-year averages are positive indicating the case farm has been able to repay debt, replace assets, and expand during the last ten years. 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