Farm Debt Outlook: What producers need to watch out for after this year’s ag economy saw hurdles

The ag economy saw its ups and downs this year, and high inputs and inflation are still a concern.

Ag economists say farm debt is something to keep a close eye on as the next year approaches.

“How are the debt sides of the farm operations playing out? One of the things we’ve seen is new farm loans. Let’s say machinery loans; the payment terms have been stretched out. That means for every $1,000 of farm machinery debt one takes on, the payments are going to be about the same as they were the last few years. That payment hasn’t changed. What has changed is that stretching out means more payments get added to the backside, so that extra interest expense is gonna get back-loaded in the form of more additional payments. So, interest expense is increasing, and it means more payments to maintain the same level of debt that we’ve been having in the past,” said Dave Widmar.

Widmar says when it comes to farm debt, it is a good sign that lenders are regaining their confidence, and he reminds borrowers that just because you are offered certain terms on a loan, does not mean you have to accept them.

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