www.ers.usda.gov

What Is the Issue?

Farm businesses’ debt-use decisions can affect their growth and survival, as well as the economic 

vitality of farm-dependent rural communities. Thus policymakers, agricultural lenders, and other 

farm-sector participants closely follow trends in farm debt. During the early 1980s, farm income 

plummeted and interest rates rose rapidly, which contributed to numerous farm bankruptcies and 

rural bank failures. Today, the farm sector overall is in a strong financial position after several 

years of generally rising income. However, the potential for lower income and higher interest 

rates in the future has raised concerns about current trends in the use of debt by farm businesses. 

This study analyzes how farm businesses used debt from 1992 through 2011, with a focus on the 

considerable heterogeneity among farm businesses in their debt obligations.

What Did the Study Find? 

While total debt held by farm businesses increased 39 percent from 1992 to 2011 (after adjusting 

for inflation), the average farm business debt-to-asset ratio was 0.13 in 1992, rose to 0.15 in 1997, 

and declined to 0.09 in 2011. Further, the share of highly leveraged farm businesses (those with 

a debt-to-asset ratio greater than 0.40) has declined since 1992, as has the share of the value of 

production contributed by highly leveraged farms. 

The broad types of debt used by farm businesses were relatively stable from 1992 to 2011—total 

debt was comprised of about 60 percent real estate debt, 20 percent non-real-estate debt, and 20 

percent short-term debt throughout the entire period. 

Although stable overall, U.S. farm debt use varied widely by farm size, specialization, operator 

age, and other farm characteristics.

Key factors that influenced debt use include: 

• Farm business size and organization. Large-scale family farms (those with annual gross 

cash farm income of $1 million or more) hold the largest share of farm business debt (about 35 

percent). The share of debt held by these farms has increased since 1992, while the share held 

United States Department of Agriculture

A report summary from the Economic Research Service April 2014

ERS is a primary source 

of economic research and 

analysis from the U.S. 

Department of Agriculture, 

providing timely information on economic and policy 

issues related to agriculture, 

food, the environment, and 

rural America.

Find the full report 

at www.ers.usda.

gov/publications/eibeconomic-informationbulletin/eib122.aspx

Jennifer Ifft

Amirdara Novini

Kevin Patrick

Economic

Research

Service

Economic 

Information

Bulletin

Number 122

April 2014

United States Department of Agriculture

Debt Use By U.S Farm Businesses, 

1992-2011

Jennifer Ifft, Amirdara Novini, and Kevin Patrick

Debt Use By U.S Farm Businesses, 

1992-2011
by small-scale family farms with a farming occupation (farms whose principal operator has farming as his or her 

primary occupation and annual gross cash income less than $350,000) has declined. 

• Commodity specialization. Farm businesses specializing in dairy and poultry production have the highest average 

debt-to-asset ratios (0.19 and 0.18 in 2011, respectively) while field crop, specialty crop, and beef farm businesses 

have the lowest debt-to-asset ratios (0.10, 0.10, and 0.06 in 2011, respectively).

• Region. Debt-use levels vary by region, but these differences are not as substantial as between the other categories 

considered in this study. In 2011, farm businesses in the Northern Crescent had the largest average debt-to-asset 

ratio (0.12), and farm businesses in the Basin and Range had the smallest (0.07). These patterns largely reflect 

regional differences in the types of farm commodities produced.

• Operator’s age. Farm business debt-to-asset ratios decrease as operator age increases. While most age groups experienced an overall decline in debt-to-asset ratios over 1992-2011, the youngest group (age 34 or younger) did not 

experience a substantial decline in financial leverage. Farmland purchases and ownership may play an important 

role in these trends.

How Was the Study Conducted?

This study was conducted using data from the Farm Costs and Returns Survey (1992-95) and the Agricultural Resource 

Management Survey (1996-2011), which were both conducted jointly by the U.S. Department of Agriculture’s Economic 

Research Service (ERS) and National Agricultural Statistics Service. The study considered only farm businesses—family 

farms with annual gross cash farm income of $350,000 or more, smaller family farms whose principal operator reports 

farming as his or her major occupation, and nonfamily farms—which held about 79 percent of all farm debt and made 

up 42 percent of all U.S. farms in 2011. Farm businesses were separated into four subcategories (small family farms that 

had farming as their major occupation, midsize family farms, large-scale family farms, and nonfamily farms) based on 

the ERS farm typology. Gross cash farm income was adjusted for inflation when classifying farm businesses, and the key 

variables considered were debt uses, total debt, and debt-to-asset ratios.

www.ers.usda.gov

U.S. farm business debt share by type of debt, 1992 versus 2011 

Source: USDA, Economic Research Service and National Agricultural Statistics Service; 1992 Farm Costs and Returns 

Survey and 2011 Agricultural Resource Management Survey.

1992

Short-term

debt

21%

Non-realestate debt

 18%

Real estate debt

61%

2011

Real estate debt

59%

Short-term

debt

20%

Non-realestate debt

 21%