USDA’s 2018 Farm Sector Income Forecast projected farm sector debt at a record-high $409.5 billion, up 4.2 percent, or $16.4 billion, from 2017 levels. Real estate debt in 2018 was projected at a record $250.9 billion, up 5.4 percent or $12.8 billion. Non-real estate debt was also projected to be record-high at $158.6 billion, up 2.3 percent, or $3.6 billion, from prior-year levels.

There are a variety of creditors that lend into agricultural credit markets. These creditors include but are not limited to customer-owned Farm Credit institutions, commercial banks, life insurance companies, individuals, Farmer Mac and USDA’s Farm Service Agency. The largest creditors are the Farm Credit institutions and commercial banks, holding a combined $321 billion, or 81 percent, of agricultural debt in 2017.

At the end of 2017, data from USDA’s Economic Research Service revealed that commercial banks held a record $162 billion in farm-related debt. Second to commercial banks was the Farm Credit system, holding $159 billion in both real estate and non-real estate farm debt. The remaining creditors include individuals at $40 billion, life insurance companies at $15 billion, the Farm Service Agency at $10 billion and Farmer Mac at $6 billion. Figure 1 highlights the holders of farm-related debt.

While Farm Credit is the second-largest creditor in agriculture, these customer-owned cooperatives are the largest creditors in farm real estate. At the end of 2017, the Farm Credit system held $108 billion in farm real estate debt, representing 45 percent of total real estate debt. Second to Farm Credit were commercial banks. At the end of 2017, commercial banks held $89 billion in farm real estate debt. Figure 2 highlights the holders of farm-related real estate debt.

Summary

In 2018, agriculture-related debt is expected to be a record $409.5 billion. In 2018 inflation-adjusted dollars, farm debt in 2018 is the highest since the 1980s. The largest creditors in agriculture are commercial banks, holding 41 percent of farm debt, 47 percent of non-real estate debt and 37 percent of real estate debt. Following commercial banks, the customer-owned Farm Credit institutions hold 40 percent of farm debt, 33 percent of non-real estate debt and 45 percent of real estate debt. These farm lenders support rural communities by making loans on real estate, farm production and rural infrastructure initiatives.

Source: American Farm Bureau Federation

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