Farm Real Estate Debt: Analyst warns government may not be painting the full picture

Farm real estate debt is expected to reach a record high this year at more than $370 billion, but one analyst says the data from USDA’s research arm does not tell the whole story.

“It’s true, but you have to reference it to everything else to get the full picture. Total debt for the U.S. farm sector, inflation-adjusted, that’s reached a peak. The real estate has taken off. It took off in 2005, 2006, or 2007 timeframes when land value started to go higher. And you can see that went up, but if we plotted that against land value increases, they’ve been that steep, or even steeper, so they followed right along with land values, so to speak, so that’s not concerning,” said Randy Dickhut.

Dickhut says while farmers carry the majority of real estate debt, investors hold a chunk of that as well. This all comes as the Federal Reserve continues their aggressive rate hike campaign, sending interest rates up a quarter point this month with the markets expecting another hike next month.