According to reports from AgWeb.com farm debt could reach the highest levels seen since 2007. Many factors play into the increasing debt and, like every year, the agriculture industry is a slope of highs and lows full of uncertainty and risk.
Even though the past few years have seen farmers reaping higher profits, at the same time costs have also increased, decreasing the profit margins. According to the USDA ERA-Farm Sector Income & Finances: 2014 Farm Sector Income Forecast, banks are reporting an increase in farm loans, renewals, and extensions on loan payments. Inflation, increased land prices, and increased equipment prices are to blame.
“It’s simple,” said Jason Sleeter a farmer from Moscow Mills, Missouri. “I have to have equipment and supplies to run my operation, if I can’t afford to do that myself, I would have to go get a loan for help.”
Farmers are spending more money to produce their crops and their value is expected to decline 10 percent in 2014 after coming down from a record high in 2013, according to the USDA. The price of corn is expected to drop in 2014, as well as wheat and soybeans. Overall, the production expenses for farmers in 2014 are expected to grow by $14 billion.
Ron Plain, professor of agricultural and applied economics at Mizzou, said the average Mizzou student and Columbia resident will feel the effects of the increased farm debt at the grocery store in higher food prices.
“As of right now consumers are paying record prices for meat, and that could continue to be the case or spread to other items if farm debt continues to increase,” Plain said.