February 28, 2019
Contrary to some media reports, Agriculture Secretary Sonny Perdue did not say the state of farm credit has reached levels of the 1980’s during his hearing with lawmakers Wednesday.
He told RFD-TV’s Sarah Mock after the hearing, “It’s not as bad as it was in the 1980’s, we started out with more assets, better debt to asset ratios, that are still not bad because of the firmness of ag land. We saw a real deflation in the 1980’s, we haven’t seen that, or in rental rates. Which is atypical in a downturn lasting 5 years.”
Even though we aren’t at 1980’s levels, American farmers and ranchers face another year of uncertainty and tight margins.
“Farm income has fallen 50 percent and over the last five years there are few businesses that can survive that kind of revenue decrease,” said Perdue.
Lower incomes and growing liabilities are keeping farmers from reinvesting in their operations.
“Farmers, just like any other business, depend on working capital to fund their operations. That has decreased by 70 percent since 2012,” said Perdue.
Despite an economic downtrend, the Secretary didn’t equate farm debt to 1980’s levels when he was in front of lawmakers.
Instead, his remarks were as follows, “Farm debt has been rising more rapidly over the last five years, increasing by 30 percent since 2013. Fortunately, we are not to the levels of the early 80’s and I don’t think we’ll get there.”
Perdue offered farmers one silver lining. According to USDA economists, the 2019 net farm income is projected to hit $77.5 billion, a $14 billion increase from last year’s forecast.