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USDA survey finds farms’ financial health improving
A new USDA report shows farms are taking on more debt but improving their financial situation over time.
Brad Zwilling of Illinois Farm Business Farm Management tells Brownfield it’s a trend he’s been keeping an eye on.
“In Illinois, it went from just over $250,000 in 2004 to over $1 million in 2023,” he says, “not because they’ve taken on debt, but because the assets behind it have really increased. You can see that by looking at the cost of machinery, the cost of land.”
According to the USDA Agricultural Resource Management Survey, 23% of U.S. farms had debt in 2022. Large family farms had more debt than medium and small family farms combined, at about $2 million, while small family farms had less than $240,000 in debt.
Zwilling says debt-to-asset ratios can vary widely depending on age group and type of farm.
“For younger farmers under 30, the debt-to-asset ratio could be 40 to 50 percent,” he explains, “and once you’re over 60 to 70 percent, it might be as low as 10 percent.”
From 2021 to 2022, debt-to-asset ratios for farms of all sizes improved and remained lower than the 10-year average, according to the USDA.
In 2022, mid-sized family poultry farms had the highest debt-to-asset ratios, followed by small family poultry farms, medium family hog farms, and large family dairy farms.
Zwilling said livestock producers tend to have higher debt-to-asset ratios because they need more assets to run their businesses.
Audio: Brad Zwilling, Illinois Agribusiness, Farm Management
