United States 

Department 

of Agriculture 

www.ers.usda.gov 

 A Report from the Economic Research Service

J. Michael Harris, jharris@ers.usda.gov

James Johnson, jjohnson@ers.usda.gov

John Dillard

Robert Williams, williams@ers.usda.gov 

Robert Dubman, bdubman@ers.usda.gov

The Debt Finance Landscape 

for U.S. Farming and Farm 

Businesses

AIS-87

November 2009

Contents

Approved by USDA’s 

World Agricultural 

Outlook Board

Executive Summary . . . . . . . . . 2

Introduction . . . . . . . . . . . . . . . 4

Trends in Agricultural Debt . . 7

Loans and Credit Access

 Approaches Differ 

 Among Farms . . . . . . . . . . . 32

Conclusions . . . . . . . . . . . . . . . 38

References . . . . . . . . . . . . . . . . 39

Appendix . . . . . . . . . . . . . . . . . 41

Abstract

Income and wealth for farm businesses have changed noticeably this decade. Debt 

levels have been rising, asset levels have outpaced debt despite a recent fall in land 

prices, and equity has more than doubled for farm businesses. However, recent declines 

in farm income and falling land prices have raised concerns about the financial position of U.S. farms. Total farm sector debt reached a record $240 billion in 2008, a 

$26-billion increase over 2007. Debt is expected to decline to $234 billion in 2009. 

The distribution of debt among farm operators has also been changing. In 1986, 

nearly 60 percent of farms used debt financing. By 2007, the number had dropped to 

31 percent. In essence, farm debt has become more concentrated in fewer, larger farm 

businesses. Lenders and farm operators indicate that real estate accounts for the largest 

use of farm debt. Debt repayment capacity utilization (DRCU) of farm operators has 

dropped since the 1980s. DRCU dropped from 27 percent in 2000 to 22 percent in 

2007. Larger farms are more likely to use more of their debt capacity.

Keywords: farm debt, farm financial structure, debt-free farms, debt repayment 

capacity, Agricultural Resource Management Survey

Acknowledgments

The authors would like to thank several reviewers for thoughtful and useful inputs: 

Dr. Michael Boehlje, Purdue University; Mitchell Morehart, Carmen Sandretto, and 

Kenneth Erickson of USDA’s Economic Research Service; and Steve Koenig, USDA’s 

Farm Service Agency.
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Recent disruptions to commodity and financial markets have raised concerns 

about the financial position of U.S. farms. The rise in commodity prices in 

2007 and early 2008 ended in late 2008. Since then, falling commodity prices 

have dimmed farm income prospects for 2009, and tightened cash flows have 

stalled the impressive growth in farm asset values experienced over the last 

20 years. Despite the sector’s long-term financial strength, these developments have created concerns that farmers may be unable to meet debt service 

obligations and pay household expenses if financial conditions worsen.

To put these developments into perspective, this report first looks at the farm 

debt situation. U.S. farm sector debt was an estimated $214 billion in 2007, a 

nominal record high for the third consecutive year. Preliminary forecasts are 

for farm sector debt to be an estimated $240 billion in 2008 and $234 billion 

in 2009.

Although debt is at record levels, this fact alone is not a reason for great 

concern. Until 2009, the growth in agricultural assets and equity had far 

outpaced growth in debt. Net farm income, although variable, has trended 

upward over the last two decades. Farm income growth, along with competition for farmland for nonfarm uses, has driven up the value of agricultural 

land, which accounts for 87 percent of farm assets. With higher farm returns 

and a larger collateral base, the farm sector is in a better position to borrow 

and repay farm debt than it was 20 years ago. The sector’s debt-to-asset ratio 

fell from 21 percent in 1986 to less than 10 percent in 2007. Put another way, 

lenders had a claim on more than one-fifth of farm assets in 1986; by 2007, 

they had a claim on only one-tenth of farm assets.

In addition to sectorwide trends, this report also examines financial trends 

among farm businesses. Not all stakeholders in U.S. agriculture are considered farm businesses—landlords and other stakeholders hold a significant 

amount of the agricultural sector’s assets and debt. To focus more closely on 

farm operators, the Agricultural Resource Management Survey (ARMS) is 

used to examine their financial health and behavior through 2007 (the most 

recent farm-level data available).

Farm businesses reported an estimated $140 billion of debt in 2007, which 

accounted for nearly two-thirds of the U.S. farm sector’s total debt. Much 

like farm sector debt, the amount of debt held by farm operators has 

increased substantially since 1990. Although farm business debt has been 

more variable, it remains near its nominal record high, set in 2006.

The distribution of farm business debt has also been changing. The share of 

farm operators that use debt to finance their operation is declining. In 1986, 

nearly 60 percent of farm operators used debt to finance their operation. By 

2007, this figure had dropped to 31 percent. Since loan volume has increased 

over time, this indicates that debt usage has become more concentrated in 

fewer farm businesses.

The distribution of debt among farm businesses is not uniform. Larger farms, 

with their greater asset bases and higher revenues, are much more likely to 

Executive Summary 
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use debt than smaller farms. Larger farms are more often operated on a fulltime basis and require more land, machinery, equipment, and input supplies 

than smaller farms. Additionally, farmers who operate poultry, hog, and 

dairy farms have adopted more intensive production practices and require 

larger facilities than the typical farm, and are much more likely to use debt to 

finance their operations.

The relationship between debt use and organizational complexity also 

emerges from our analysis. The majority of U.S. farms are small, part-time, 

or retirement operations, with a sole owner-operator. However, the majority 

of U.S. agricultural output is generated by large operations with multiple 

owners and operators. The share of large, complex business organizations 

using debt to finance their operations was much larger than that of smaller, 

less complex operations.

Debt is also not evenly distributed among farm operators. The share of 

farmers using debt is inversely related to both operator age and years on the 

farm. Furthermore, operators who farm as their primary source of income are 

more likely to use debt, as are farmers that rent some or all of the land they 

operate.

Lenders and farm operators both indicate that real estate is the single largest 

use of farm debt. This is not surprising since real estate accounts for such a 

large proportion of the farm asset base. Other significant uses of farm debt 

include equipment and machinery loans and short-term operating loans.

Lenders reported that 65 percent of funds loaned to farm businesses was 

intended for real estate purposes, while 20 percent was for intermediate-term 

loans and 15 percent for short-term operating loans.

Commercial banks and the Farm Credit System accounted for over threequarters of the farm sector’s loan volume (45 and 36 percent, respectively) 

in 2007. Their share of farm debt has been increasing as the share of loans 

extended by the Farm Service Agency and individuals (land contracts) has 

decreased. Nearly three of every five farm operators who used debt used only 

one lender and one loan to finance their business.

Unused debt repayment capacity for farm businesses has increased since the 

1980s. Debt repayment capacity utilization (DRCU), a measure that takes 

into account debt obligations in relation to maximum debt repayment capabilities, is a good indicator of financial stress. The DRCU for farm operators 

as a whole is relatively sound, having dropped from 27 percent in 2000 to 22 

percent in 2007.

As with farm debt, the level of DRCU is not uniform among farm businesses.

Larger farms are more likely to use more of their debt repayment capacity.

Operations with less than $100,000 in sales have a DRCU of 14 percent, 

while farms with over $1 million in sales have utilization figures that are 

twice as high at 28 percent. Capital-intensive farms—such as dairy, poultry, 

and hog operations—have a DRCU that is significantly higher than the 

national mean. In the case of dairy and poultry operations, the level of DRCU 

has increased since 2007.
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U.S. farm businesses have benefited from robust income and wealth gains 

this decade. Though debt levels have risen steadily, asset levels have risen 

faster, leading to a doubling of farm business equity since 2000. Despite 

healthy financial metrics, recent disruptions in domestic and global markets 

have raised concern about the financial position of U.S. farms.

The rise in farm commodity prices, particularly in 2007 and early 2008, 

ended in late 2008 as consumer spending stalled and credit became more 

difficult to obtain. The combination of lower prices for farm products, 

continued high prices for farm inputs, and tightened cash flows have created 

concerns that farmers may be unable to meet debt service obligations and pay 

household expenses.

Farm debt has been a topic of recurring and often intense interest on the part 

of lenders, regulators, and policymakers. To put concerns over farm debt 

into perspective, we examine both changes in debt levels and debt costs, and 

also changes in farmers’ income and asset values. Changes in income affect 

repayment capabilities and thus affect credit safety and soundness. Meanwhile, changes in asset values determine the leverage position or solvency of 

farms.

While a series of record income years enhanced farmers’ debt service capability and growth in farm asset values strengthened the collateral supporting 

farm loans, a recent downturn in both income prospects and real estate values 

may have spillover effects on farm lending (Morehart, 2009; Ellinger, 2009).

As credit conditions tighten throughout the U.S. economy, is the financial 

structure of farm businesses still sound enough to attract and service the debt 

capital the sector needs? 

To address this question, this report:

1. Looks at how much debt is used to finance U.S. agriculture and how debt 

use has changed over the last 20 years;

2. Determines how much business-related debt is used by farm operators;

3. Examines the characteristics of farms and farm operators owing businessrelated debt;

4. Examines the purposes for which farmers obtain debt financing;

5. Determines the types of loans used by farmers and their sources; and

6. Assesses the debt repayment capacity of U.S. farms.

Introduction 
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1For more information on calculating 

the sector-level farm financial statement, see the documentation at www.

ers.usda.gov/Briefing/FarmIncome/

Glossary/def_bsht.htm or ERS Publication Number 671, Volume 11 of Major 

Statistical Series of the U.S. Department of Agriculture.

Measuring Debt at the Sector and Farm Business Level

To assess debt use and the distribution of debt, USDA’s Economic Research 

Service (ERS) examines two measures of debt—sector debt and farm business debt. The following explanation contrasts the two measures and explains 

the procedure for estimating both series. 

Debt represents claims on a firm’s assets by creditors who make capital 

available for use in the business. ERS incorporates this definition into its 

estimate of the amount of debt used in U.S. agriculture by preparing balance 

sheet financial statements that summarize farm assets and debts for two 

distinct purposes. One provides estimates for farming as a sector of the U.S.

economy. At this level, the balance sheet includes the “value of all physical 

plants which the Census of Agriculture... calls farms” (Irwin, 1968). The 

other view examines farms as individual business units. The determination 

of who holds debt and is responsible for its repayment and who owns assets 

used in farming is a major difference between estimates prepared for the agricultural sector of the national economy and for farms as business operations.

A second major difference between the sector and farm-level estimates is the 

source of data used to prepare balance sheet financial statements.

At the sector level, agriculture is viewed as “one large farm.” Estimates 

of sectorwide business debt reflect only debt incurred by those involved 

in onfarm agricultural production. Debt held by firms or individuals that 

perform input supply, processing, distributing, or marketing functions for 

farms is excluded from debt and balance sheet measures.

1 Sectorwide estimates of the amount of debt used in farming are the sum of the amount of 

debt for farm business purposes that is either reported by lenders or derived 

from national survey and Census of Agriculture data (see Appendix for a 

discussion of debt at the farm sector and farm business levels). Survey and 

census-based data are also used to develop estimates of the amount of debt 

provided by individuals and other non-bank lending institutions.

Sector-level estimates of farm debt report aggregate lender data that do not 

identify who owes the debt. The borrower could be a farm business owner; 

an owner of assets--such as farmland, machinery, or livestock--leased by a 

farmer; or a nonfarm individual or firm involved in farm production, such as 

the production of livestock or crops under contract. Contractors, who tend 

to be large processing firms that are not considered part of production agriculture, may, for example, use debt financing to acquire young animals, buy 

feed, or purchase trucks for use in transporting animals or feed. Likewise, 

landowners may finance land purchases or, in their capacity as landlords, buy 

inputs for use in farm production. Lenders report these types of debt as farm 

debt based on their connection to farm production and assets.

At the farm level, ownership and business boundaries are taken into account.

Farm business debt is reported only for the farm as an individual business 

operation. Debt owed by others, such as landlords or contractors, who have a 

stake in the business operation, is not included in estimates of farm business 

debt. Likewise, assets and income that belong to these stakeholders are not 

considered in developing the farm balance sheet, income statement, or other 

financial statements, or in preparing performance indicators for the farm.
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2 For more information on the 

ARMS, please visit the ARMS Briefing 

Room at www.ers.usda.gov/Briefing/

ARMS/

For purposes of this report, sector-level estimates of debt are used to develop 

a comparative analysis of changes in total debt use over time for farming as 

a sector of the U.S. economy. Sector-level debt estimates are then used in 

conjunction with estimates of assets, equity, and income generated within the 

sector to provide a farm economy-wide view of debt use, capital structure, 

and debt service capability.

Since sector-level estimates are developed using aggregate data from a 

variety of sources, they cannot be used to address issues related to the distribution of debt among farms. Distributional issues are addressed through 

use of farm-level estimates obtained from USDA’s Agricultural Resource 

Management Survey (ARMS). The ARMS is an annual survey of farms, 

conducted jointly by the National Agricultural Statistics Service (NASS) 

and ERS. ARMS provides data needed to construct financial statements and 

performance indicators for farms and farm households.

2 The characteristics 

of farms and farm operators that use debt in their business operations and the 

attributes of their farm loans are also identified. Since similar survey instruments have been used by ERS since the 1980s, farm-level data can also be 

used to conduct a comparative analysis of changes in the level and concentration of debt among farms over time.
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•	The nominal value of debt held by farm businesses and other agricultural stakeholders has increased steadily since the mid-1980s. 

However, debt peaked in 2008 and is projected to decrease slightly in 

2009, while still remaining above its 2007 level. 

•	 The amount and share of farming assets owned by farm operators 

has increased as the share of claims held by lenders has decreased. 

Lenders’ share of farm assets fell from 22 percent in the 1980s to 14 

percent in 2008.

•	Farm income growth and the decrease in leverage have reduced the 

sector’s debt repayment capacity utilization (DRCU) over the last 20 

years. However, DRCU is projected to increase in 2009.

In this section, we look at changes in debt and associated measures since the 

1980s. Estimates of debt are used in conjunction with estimates of assets, 

equity, and income generated within the sector to provide a farm economy-wide view of changes in debt use, capital structure, and debt service 

capability.

Sector Debt Levels on the Rise

Since undergoing a multi-year retrenchment in the 1980s, with debt for farm 

purposes bottoming out at $131 billion in 1989, nominal farm debt has exhibited a near steady annual increase over the past two decades. In only 3 of the 

past 20 years did farm debt not expand, and in one of those years (1992), debt 

was down less than 0.5 percent. As a result, year-end debt levels reached new 

nominal records in 2005 and in each year thereafter through 2008 (fig. 1).

Based on data assembled from lending institutions or acquired from farm 

surveys, U.S. farm sector debt reached an estimated $240 billion by year-end 

2008 and is forecast at $234 billion for 2009.

3 While not a record, 2009’s 

0

50

100

150

200

250

$ billion

1984 86 88 90 92 94 96 98 2000 02 04 06 08

Non−real estate Real estate

Figure 1

U.S. farm sector debt, 1984-2009f

Source: USDA, Economic Research Service.

3 An updated forecast of 2009 farm 

sector debt will be available on November 24, 2009.

Trends in Agricultural Debt
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4 The ARMS and its predecessor 

survey, the Farm Costs and Returns 

Survey, were developed to provide data 

needed to derive a farm-level balance 

sheet consistent with a farm’s income 

statement. Data obtained from respondents to USDA survey instruments 

provide a basis for assessing the level 

and distribution of debt among farms 

and in relation to income, returns to 

assets, and debt service.

forecast year-end debt would still be the second largest nominal amount for 

the sector. Annual changes in farm sector debt, while highly variable, have 

still trended higher in recent years (fig. 2).

Debt classified by lenders as being for real estate purposes accounted for 53 

percent of total farm sector debt in 2007 and 52.6 percent in 2008. While 

this is down slightly from the 54-55 percent of sectorwide debt registered 

in the mid-1980s, real estate debt has remained roughly 50-53 percent of 

farm sector debt over the past two decades. The relatively stable share of real 

estate and non-real estate debt likely reflects farmers’ ongoing need to use 

debt financing for a fairly stable mix of inputs—from acquiring increasingly 

expensive machinery, equipment, and inputs to the purchase of farmland, 

buildings, and other structures.

Changes in land prices have been key to changes in the demand for real estate 

debt (Lins, 1972). Meanwhile, changes in non-real estate debt are positively 

associated with expenditures for production inputs and capital items, such 

as machinery and equipment (Williams, 1987). Additional factors that affect 

the demand for non-real estate debt in U.S. agriculture include the amount 

of working capital available to farm stakeholders and non-real estate interest 

rates.

Total Debt Use Also on the Rise for Farm Businesses

The agricultural sector includes farm businesses, institutional farms (e.g., 

reservations, prison farms, etc.), and nonoperator landlords, along with 

other stakeholders such as individuals or businesses engaged in contractual 

arrangements with farm operators. ARMS data allow us to examine the 

portion of the farm sector accounted for by farm operators. USDA began 

tracking debt use among farm operators at the individual farm level in the 

mid-1980s.

4 Farm debt volume reported by farm operators tracks changes in 

sectorwide debt use. Like sectorwide estimates of debt, the volume of debt 

reported by farm businesses bottomed out in 1989 (at about $80 billion). In 

-20

-30

-10

10

0

20

30

$ billion

Figure 2

Changes in U.S. farm sector debt, 1970-2009f

Source: USDA, Economic Research Service.

-15

-10

-5

10

15

20

25

Percent

1970 75 80 85 90 95 2000 05 09

Value

Percentage

0

5
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5 ARMS based, farm-level estimates of 

debt and associated farm and farmhousehold finance data for 2008 will 

be released publicly through the ERS 

website on November 24, 2009

the 20 years since, farm-level business debt has trended upward and stood at 

$140 billion at the end of 2007, the last year for which farm survey data are 

available (fig. 3).

5 Comparisons of sectorwide and farm business-level debt 

indicate that debt has expanded slightly faster for farm businesses than for 

other stakeholders or for non-business uses of farm debt by farm households 

(see box, “Farm Operators Only a Subset of Farm Sector Borrowers”). At 

the farm level, the annual increase in debt averaged 4.2 percent from 1989 

through 2007; the comparable change for sectorwide debt was 3.5 percent.

Debt Stays Low Relative to Stakeholders’ 

Asset and Equity Values

An increase in the level of debt used in farming may be perceived as drawing 

down the farm sector’s credit reserve. And depending on the prevailing view 

of prospective farm earnings and underlying collateral values, growth in 

Farm Operators Only a Subset of Farm Sector Borrowers

Responses to USDA surveys indicate that farm owner-operators owed 64 

percent of total farm sector debt in 1986 and 65 percent in 2007. Between 1986 

and 2007, farmers’ share of the farm sector’s total business debt varied between 

65 and 80 percent. The remainder of farm sector debt is owed by farmers who 

use farm assets to secure debt for major household purchases or to fund other 

activities; by non-operator landlords, persons, or businesses that engage in farm 

production contracts; and by other stakeholders that participate in farming. An 

example of sectorwide farm-related debt that would be excluded from farmlevel business debt is farm operator debt used to finance a limited liability 

company to hold land, machinery, or equipment leased to a farming operation.

Another example is debt used to finance the purchase of cattle placed in a feedlot by an individual or firm that had no other connection to farming. A land 

ownership survey in Iowa confirms the participation of stakeholders other than 

farmers in farm real estate markets (Duffy and Smith, 2008).

0

20

40

60

80

100

120

140

160

Figure 3

Farm-level debt (1986-2007)

$ billion

1986 89 92 95 98 01 04 2007

Source: USDA’s Agricultural Resource Management Survey, sponsored jointly 

by NASS and ERS.
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debt outstanding may be regarded as financially troublesome. But debt, by 

itself, is only part of the story. Debt levels need to be examined relative to 

the value of equity contributed by farmers and other stakeholders, and relative to the amount of income available to meet debt service and other funding 

requirements.

Asset values are important in the broader view of farm debt. The relationship 

between debt and its underlying collateral base indicates both the degree of 

leverage in U.S. agriculture and the share of total assets provided by creditors, farm owners, or other stakeholders engaged in agriculture.

Asset values for the U.S. farm sector have steadily increased in the two-plus 

decades following the farm crisis of the 1980s, recording annual increases 

each year from 1986-87 through 2007 (fig. 4). After reaching a low of $722 

billion in 1986, sectorwide asset values increased nearly three-fold to $2.1 

trillion in 2007. In 2008, however, the nominal value of farm sector assets 

decreased for the first time since 1986, and is projected to decrease again in 

2009.

Land, the single largest asset in farming, has underpinned the increase in the 

sector’s asset values. The per-acre value of land has increased nearly every 

year over the last two decades. Real estate, which accounted for 75 percent 

of total farm sector assets in 1986, stood at 85 percent of farm sector assets 

in 2007. Lower farm sector asset values in 2008 and 2009 are largely due to 

reduced farm real estate values.

Farm-sector equity (the difference between asset values and debt) has also 

risen significantly, reaching a nominal record high nearly every year between 

1996 and 2007 (fig. 5). Quite simply, increases in sectorwide asset values 

outpaced the increases in debt during these years (fig. 6). Not only did equity 

rise to new nominal highs, but the share of total assets accounted for by 

owner equity rose from 79 percent in 1986 to 90 percent in 2007. Even with 

0

500

1,000

1,500

2,000

2,500

$ billion

Figure 4

Farm sector assets, 1986-2009f

1986 88 90 92 94 96 98 2000 02 04 06 08

Source: USDA, Economic Research Service.

Total farm assets

Real estate
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2008’s reduction in asset values and the projected decline in 2009, equity will 

still account for about 88 percent of the total value of assets in U.S. agriculture. In 1980, equity accounted for 83 percent of the sector’s total asset value.

The increase in the value of assets and equity has altered the farm sector’s 

capital structure. Debt relative to the total value of assets used in agriculture 

has fallen over the past 10 years, particularly between 2003 and 2007 when 

sectorwide asset values rose 10 percent per year in nominal terms. Thus, 

creditors’ claims on assets have fallen from more than one dollar out of 

five during the 1980s, to about one dollar out of eight in 2009 (fig. 7). As a 

result, the risk exposure of both farm asset owners and farm lenders has been 

reduced.

0

400

800

1,200

1,600

2,000

$ billion

Figure 5

Farm sector equity, 1984-2009f

1984 86 88 90 92 94 96 98 2000 02 04 06 08

Source: USDA, Economic Research Service.

75

80

85

90

95

100

Percent

Equity

Equity’s share 

of assets

0

-5

-10

-15

5

10

15

1987 89 91 93 95 97 99 2001 03 05 07 09

Figure 6

Comparing farm sector asset growth to debt growth, 1987-2009f

Source: USDA,Economic Research Service.

Percent

Farm assets Farm debt
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6See www.ers.usda.gov/Briefing/

FarmIncome/Wealth.htm for a discussion of specific sources of data for farm 

business assets and debt.

Debt Relative to Assets and Equity 

at the Farm Level

For farm business operators, asset values increased in nominal value from 

$445 billion in 1986 to $1.9 trillion in 2007--nearly 300 percent (fig. 8).

6

The increases recorded for farm-level asset values greatly surpass the expansion in debt use. In the more than two decades of ongoing annual measurement of farm-level debt and asset values, year-over-year asset values have 

dropped only three times (fig. 9). In most years, not only did the rate of 

increase in asset values exceed debt use, but the absolute increase in asset 

values far surpassed the change in debt. As a result, farm operators posted a 

365-percent increase in equity from 1986 to 2007.

Debt in relation to both equity and assets has dropped significantly to less 

than half the level it was when farm-level balance sheets were first estimated.

The farm-level debt-to-asset ratio was estimated to be 0.22 in 1986, but stood 

at 0.08 in 2007, a drop of nearly two-thirds. The drop in debt volume in relation to the amount of assets owned means that farm operators are providing a 

much larger share of the capital used in farming, and that farms have become 

significantly less leveraged (fig. 10).

Changes in equity in relation to debt also indicate that the capital structure of 

farm operators has been much improved during the past two decades. Debt 

stood at 27.8 percent of the equity held in farm businesses in 1986; this ratio 

fell to 8.6 percent by 2007 (fig. 10). This means that farm operators have a 

greater ownership stake in their businesses. Consequently, across all farmers, 

lenders have a smaller stake in farm assets and both farmers and lenders have 

less financial risk exposure from farm business debt than was the case when 

farm businesses emerged from the 1980s crisis years and throughout the 

1990s.

0

5

10

15

20

25

30

Percent

Figure 7

U.S. farm sector debt-to-asset and debt-to-equity ratio, 1986-2009f

1986 88 90 92 94 96 98 2000 02 04 06 08

Source: USDA, Economic Research Service.

Debt-to-asset

Debt-to-equity
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Debt Declines Relative to the Income and Cash-Flow 

Earned by Stakeholders in U.S. Agriculture

While the rise in sectorwide asset values, particularly for farmland, substantially enhanced the financial position of U.S. agriculture, it is earnings and 

funds available to agricultural stakeholders, not assets or equity, that service 

farm debt. Lenders and borrowers alike learned hard lessons during the 1980s 

when loans based on collateral proved problematic as income and land values 

fell from pre-crisis highs. By the mid-1980s, lower prices for commodities, 

0

2,000

1,800

1,600

1,400

1,200

1,000

800

600

400

200

1986 88 90 92 94 96 98 2000 02 04 06

Figure 8

Farm business capital structure, 1986-2007

$ billion

Farm operation debt

Farm assets = debt + owner equity

Farm operation equity

Source: USDA’s Agricultural Resource Management Survey, sponsored jointly by NASS and ERS

−20

−10

0

10

20

30

40

1987 89 91 93 95 97 99 2001 03 05 07

Figure 9

Growth in farm business assets and debt, 1987-2007

Percent

1986

Assets $445 B

Debt $96.8 B

2007

Assets $1,762 B

Debt $140.1 B

Farm assets Farm debt

Source: Agricultural Resource Management Survey and Farm Costs and Returns Survey, 

USDA, National Agricultural Statistics Service and Economic Research Service.
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particularly crops, and rising input costs--especially the costs of servicing 

record high amounts of debt--led to the bankruptcy of thousands of farms and 

the failure of hundreds of farm lenders.

Nominal farm earnings, as measured by net income, and cash availability, 

as measured by net cash income, have trended upward since the late 1980s 

(fig. 11). Even after adjusting for inflation, net farm income rose to challenge the levels earned three to four decades ago. With the drawdown in net 

farm income projected for 2009, net farm income adjusted for inflation will 

likely fall below $50 billion (in 2000 dollars) for only the third time since the 

1980s. Cash income will also be at its lowest inflation-adjusted level since 

the early 1980s. Still, income gains over the last decade mean that sectorwide 

debt use relative to net cash income dropped from a ratio of 5 or more in 

the 1980s to less than 3 for most of the last 20 years (fig. 12). In 2009, the 

sectorwide debt use is expected to remain at near-record levels, but net farm 

income is projected to fall due to higher input costs and lower commodity 

prices, particularly for livestock. At 3.4 times net cash income in 2009, debt 

burden will have been higher in only one other year (3.45 in 2002) since 

1985.

Net cash flow measures the cash resources available to farm sector stakeholders for investment and to service debt. It differs from net cash income 

in that it accounts for both internal and external sources of funds available 

to stakeholders; net cash income only accounts for the cash earned from the 

production and sale of farm goods and services. Cash flow is determined by 

net cash income along with changes in farm business debt, financial asset 

values, net rents, interest expenses, and expenditures on capital items (see 

box, “Net Cash Flow”).

Net cash income has trended upward since the mid-1980s, with nominal 

records established in 2004 and again in 2008. Changes in sectorwide debt 

use and asset values have been largely positive, as have net rents paid to 

0

5

10

15

20

25

30

1986 88 90 92 94 96 98 2000 02 04 06

Source: Agricultural Resource Management Survey and Farm Costs and Returns Survey, 

USDA, National Agricultural Statistics Service and Economic Research Service.

Percent

Figure 10

Farm business debt-to-asset and debt-to-equity ratios, 1986-2007

Debt-to-asset

Debt-to-equity
15

The Debt Finance Landscape for U.S. Farming and Farm Businesses / AIS-87

Economic Research Service/USDA

1986 88 90 92 94 96 98 2000 02 04 06 08

Source: USDA, Economic Research Service.

0

20

40

60

80

100

120

$ billion

Figure 11

U.S. farm sector income and net cash income, 1986-2009f

Income for debt coverage

Net farm income

Net cash income

0

1

2

3

4

5

6

Ratio

Figure 12

U.S. farm sector debt-to-net-cash-income ratio, 1984-2009f

1984 86 88 90 92 94 96 98 2000 02 04 06 08

Source: USDA, Economic Research Service.

Net cash flow (after interest expenses) is defined as:

Net cash income

+ change in farm business debt

+ net change in other financial assets

+ net rent to non-operator landlords (excluding capital consumption)

- capital expenditures (excluding operator dwellings)

- interest expenses (excluding operator dwellings).
16

The Debt Finance Landscape for U.S. Farming and Farm Businesses / AIS-87

Economic Research Service/USDA

7This is the nominal amount of 

net income that accrues to farms as 

business establishments. It does not 

include any portion of net cash income 

generated from agricultural activities 

that accrue to other stakeholders in U.S.

agriculture, such as the income earned 

by contractors that establish production contracts with farmers. ERS has 

estimated that contractors received 11.9 

percent of the net value added generated by U.S. agriculture in 2007.

landlords. As a result, net cash flow expanded over the last 20 years both in 

absolute terms and relative to debt owed by agricultural stakeholders. Debt 

relative to net cash flow surged in 2 years, 2000 and 2002, when net cash 

income fell to levels earned in the mid-1980s and early 1990s while debt 

remained largely on an upward trend (fig. 13). Even with the reduction in 

cash flow projected for 2009, the ratio of debt to net cash flow is projected 

to be about 3.1. Agriculture’s stakeholders, as a whole, have had more cash 

available to pay off debt in most years since the early 1990s than was the case 

in the mid-1980s.

Debt Also Declines Relative to Cash Income Earned 

by Farm Businesses

The trends in debt use and earnings among farm businesses roughly mirror 

farming as a whole, with the percentage increase in the level of cash earnings 

exceeding the increase in the level of debt by a wide margin. Net cash income 

earned by farm businesses, as measured from farmers’ survey responses, 

increased almost four-fold during the past two decades, rising from about $13 

billion in 1986 to nearly $49 billion in 2007.

7 Meanwhile, farm business debt 

reported by farmers for their businesses increased by a factor of about 1.5 

over the same period. As a result, debt in relation to net cash income earned 

across all farm businesses dropped from 7.5 times income in 1986 to 2.9 

times income in 2007 (fig. 14).

1987 89 91 93 95 97 99 2001 03 05 07 09f

Source: USDA, Economic Research Service.

0

1

2

3

4

5

6

7

8

Ratio

Figure 13

Farm sector debt/net cash flow 1987-2009f
17

The Debt Finance Landscape for U.S. Farming and Farm Businesses / AIS-87

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8There is more information on the 

DRCU in the Farm Income and Costs 

Briefing Room, www.ers.usda.gov/

Briefing/FarmIncome/Wealth.htm

Debt Repayment Capacity Utilization Down 

in U.S. Agriculture Sector

Debt repayment capacity can be defined as the maximum amount of debt 

that can be supported by net cash income available for loan repayment (see 

box, “Components of sectorwide DRCU calculations”). At the farm-sector 

level, debt repayment capacity utilization (DRCU)8 is the ratio of farm stakeholders’, including operators’, farm debt to the maximum feasible debt in any 

given year based on current earnings of the sector. 

At the sector level, DRCU is a measure of the ability of farm stakeholders, 

including operators, to repay their debt over time through the production and 

1986

0

1

2

3

4

5

6

7

8

Figure 14

Debt owed in relation to net cash income, 1986-2007

88 90 92 94 96 98 2000 02 04 06

Source: Agricultural Resource Management Survey and Farm Costs and Returns Survey, 

USDA, National Agricultural Statistics Service and Economic Research Service.

Ratio

 Components of sectorwide DRCU calculations

Income for Debt Coverage = Net farm income + interest on capital debt1

Debt Repayment = Principal and interest on capital debt + capital lease payments

Total Debt Coverage Ratio = Income for debt coverage / debt repayment

Debt Coverage Margin = Income for debt coverage – debt payment

Minimum debt coverage ratio = lender requirement; based on a coverage ratio of 1.25 which requires that no 

more than 80 percent of the loan applicant’s income be used for repayment of principal and interest on loans.

Maximum Loan Payment = Income for debt coverage / minimum debt coverage ratio

Debt Repayment Capacity = Maximum loan payment x (1-(1+r)-n)/r, where (1-(1+r)-n/r = present value of an 

annuity of $1, at r percent for n periods (7 years).

Debt Repayment Capacity Utilization = Debt / debt repayment capacity.

1 Interest payments (deducted from net farm income as a cost of production) are added back in to measure all of current farm income 

available for debt repayment.
18

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sale of farm products and services. DRCU indicates the potential for farm 

repayment problems, given farm earnings and interest rates on debt owed 

by the sector (fig. 15). Overall, the relationship between debt owed and debt 

levels that could be supported from current earnings suggests that farm sector 

asset owners have maintained a sizeable repayment cushion since the crisis 

years of the 1980s. Falling interest rates and rising incomes have supported 

the repayment cushion. Repayment capacity is projected to shrink in 2009.

Despite little change in interest rates and nominal farm debt levels, a decrease 

in farm income will result in higher debt repayment capacity use for farm 

stakeholders (fig. 16).

1970 75 80 85 90 95 2000 05 09f

0

100

200

300

400

500

$ billion

Figure 15

Farm sector debt and repayment capacity, 1970-2009f

Maximum feasible debt 

of farm operators

Farm sector debt 

Unused repayment capacity

2009 forecast.

Source: USDA, Economic Research Service.

0

20

40

60

80

100

120

1970 75 80 85 90 95 00 05 09

Note: 2008 and 2009 forecast.

Source: USDA, Economic Research Service.

Figure 16

Farm sector debt repayment capacity utilization (DRCU), 1970-2009f

Percent

DRCU
19

The Debt Finance Landscape for U.S. Farming and Farm Businesses / AIS-87

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Debt Repayment Capacity Use Varies Over Time 

at the Farm Level 

Farmers’ use of their farm’s debt carrying capacity has declined in recent 

years. In 2007, debt repayment capacity use (DRCU) for all farm businesses 

(see box, “Components of DRCU calculations for farm businesses”) stood at 

less than 20 percent, while farms with debt outstanding used about 41 percent 

of their debt repayment capacity (fig. 17). DRCU fell both for all farms and 

for farms with debt over the decade. Despite mounting debt in recent years, 

rising farm incomes and lower interest rates--plus fewer farmers using debt--

have lowered the utilization ratio.

While DRCU has varied over time, use of debt repayment capacity also 

varies considerably across farm size categories (fig. 18). Larger farms, those 

with $5 million or more in annual sales, used nearly 37 percent of their debt 

0

10

20

30

40

50

60

2001 03 05 07

Figure 17

Debt repayment capacity utilization at the farm level, 2001-07

Percent

Source: Agricultural Resource Management Survey.

All farms Farms with debt

0

10

20

30

40

50

2001

2007

$10,000-

$99,999

$100,000-

$499,999

$500,000-

$999,999

$1 million- 

$499,999,999

$5 milion + All

Source: USDA, Agricultural Resource Management Survey.

< $9,999

Percent

Figure 18

Debt repayment capacity utilization by farm size, 2001 and 2007
20

The Debt Finance Landscape for U.S. Farming and Farm Businesses / AIS-87

Economic Research Service/USDA

repayment capacity in 2007. Larger farms are more capital intensive than 

smaller farms and tend to carry more debt on their balance sheet. Smaller 

farms tended to have much lower utilization numbers in 2007. DRCU was 

less across all farm size groups in 2007 than in 2001.

Debt repayment capacity also varies considerably across farm types (fig. 19).

Poultry operations had the highest DRCU in 2007 (over 60 percent). These 

operations use high levels of borrowed capital to finance contract operations.

Poultry is followed by dairy and hog farms. Cash grains also had a fairly high 

DRCU in 2007—over 25 percent. DRCU values fell between 2001 and 2007 

for some types of operations, such as cash grain and soybeans, but increased 

for poultry and dairy.

DRCU values also vary by region (fig. 20). Geographical variations in financial markets and types of farms tend to drive these differences. The highest 

0

10

20

30

40

50

60

70

2001 2007

Percent

Figure 19

Debt repayment capacity utilization by farm typology, 2001 and 2007

Cash grains/ All

soybean

Other field 

crops

High-value 

crops

Beef cattle Hogs Poultry Dairy General 

livestock

Source: USDA, Agricultural Resource Management Survey.

0

10

20

30

40

2001 2007

Percent

Figure 20

Debt repayment capacity utilization by farm region, 2001 and 2007

Northeast Lake All

States

Corn 

Belt

Northern 

Plains

Appalachia Southeast Delta Southern 

Plains

Mountain Pacific

Source: USDA, Agricultural Resource Management Survey.
21

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DRCU values for 2007 were found in the Lake States, Northeast, Pacific, 

and Northern Plains regions. The lowest DRCU in 2007 was in the Southern 

Plains. Debt repayment capacity utilization was lower in most regions in 

2007 compared to 2001—Appalachia and the Southeast were exceptions.

Applying a minimum debt coverage ratio requirement to any farm operation 

permits us to determine the maximum amount of debt that can be repaid from 

any level of income. ERS has traditionally used a total debt service ratio of 

1.2:1. At this point, a farm would owe 20 percent more debt than could be 

serviced with annual income (Ryan and Morehart, 1992). Farms with debt 

repayment capacity use above 1.2 may have difficulty meeting debt service 

obligations from current farm household income.

The share of farms with DRCU values over 1.2 was nearly 5 percentage 

points, or more than a fifth, lower in 2007 than in 2001 (fig. 21). In addition, the level of debt held by these potentially distressed farms was over 7 

percentage points lower in 2007 than it was in 2001. This decrease parallels 

overall decreases in the DRCU of farm businesses.

0

10

20

30

40

50

60

Figure 21

Share of farm businesses with a DRCU over 1.2, selected years,

2001-07

Percent

Share of farms Share of debt

2001 2003 2007

Source: USDA, Agricultural Resource Management Survey.

Income for Debt Coverage = Net farm income + 

Depreciation + Interest on capital debt + Capital lease 

payments – Income taxes 

Off-farm income, living expenses, and income taxes 

were excluded from the computation of income for 

debt coverage in the preliminary analysis presented 

here

Debt Repayment = Principal and interest on capital 

debt + Capital lease payments

Total Debt Coverage Ratio = Income for debt 

coverage / Debt repayment

Debt Coverage Margin = Income for debt coverage – 

Debt payment

Maximum Loan Payment = Income for debt coverage / 

Minimum debt coverage ratio

Debt Repayment Capacity = Maximum loan payment 

x (1-(1+r)-n)/r, where (1-(1+r)-n/r = present value of an 

annuity of $1, at r percent for n periods (7 years).

Debt Repayment Capacity Utilization = Debt / Debt 

repayment capacity.

Components of DRCU calculation for farm business
22

The Debt Finance Landscape for U.S. Farming and Farm Businesses / AIS-87

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•	Thirty-one percent of farms held debt in 2007, compared to 60 percent 

in 1986.

•	Debt is concentrated in larger farms, and in dairy, poultry, and hog 

farms.

•	The Northern Plains, Corn Belt, and Lake States have the highest 

percentage of farms with debt. 

Farmers’ responses to annual ARMS survey questions about debt use indicate that the share of operators that finance business activities with debt 

capital has dropped over the past two decades (fig. 22). Overall, farms as 

individual businesses mirror changes in the farm sector as a whole, with 

debt comprising a smaller share of their capital structure. However, neither 

a sectorwide nor an aggregate farm business-level perspective about debt 

use relative to assets or income is sufficient to understand the debt-use landscape facing U.S. farms. Aggregate industry and “all-farm” views fail to 

indicate which farm operators use debt to finance their farm operations or the 

potential severity of financial distress within farming. Sector-level data, for 

example, cannot be used to align who holds debt with who owns assets and 

earns income (see Appendix).

Likewise, while the financial position of farms as businesses across production agriculture could appear favorable, a misalignment of debt and debt 

service obligations with income, assets, and equity may exist at the firm 

level. Farmers who owe debt could be substantially different from farmers 

that are generating positive earnings and cash flows. Moreover, farmers that 

owe debt may differ from farmers that have substantial asset and equity positions in their businesses.

Which Farms Hold Debt?

Figure 22

Farm operator debt use, selected years, 1986-2007*

*Based on debt outstanding at year’s end.

Source: Agricultural Resource Management Survey and Farm Costs and Returns Survey, 

USDA, National Agricultural Statistics Service and Economic Research Service.

1986

1991

1996

2001

2007

0 20 40

Percent

60 80 100

Debt free Borrowers
23

The Debt Finance Landscape for U.S. Farming and Farm Businesses / AIS-87

Economic Research Service/USDA

9An outgrowth of the 1980s farm 

financial crisis was to enact programs 

enabling lenders to obtain a guarantee 

against the loss of a predominant share 

of principal and interest on a loan. In 

these programs, a farmer or rancher 

applies to a lender for debt financing for either farm ownership or farm 

operating purposes. The lender arranges 

the guarantee. Businesses are eligible 

to obtain a guarantee if they have an 

acceptable audit history, as determined 

by the lender, and are otherwise unable 

to obtain a loan without a guarantee.

The availability of guarantees for lenders making loans to farmers that may 

otherwise be credit-constrained not 

only helps expand farm loan volume 

but also lessens the risk of loan losses 

for participating lenders.

Sector-level data could mask highly diverse financial experiences among 

farms and among lenders, as was apparent during the 1980s farm crisis 

(Johnson and Morehart, 1987). Farm-level data can help identify those 

farmers unable to access credit markets without government-based loan guarantees.

9 These guarantee programs shift some of the risks associated with 

farm lending from lenders to government agencies.

Distribution of Debt Among Farm Businesses

Large farm businesses, as measured by value of sales, more frequently report 

use of debt than smaller farms (fig. 23). Nationally, 31 percent of farms owed 

debt at year-end 2007. Not only do larger farm businesses more frequently 

use debt, the average amount of debt, per farm, that is acquired by these businesses is also substantially larger. For example, in 2007, the average amount 

of debt carried at year-end rose from about $94,000 for farms with sales of 

$100,000-$250,000 to $319,000 for farms with sales of $500,000-$999,999 

and to $2.8 million for farms with sales of $5 million or more. Although 

smaller farms are more numerous, the higher frequency of debt use by large 

farms and their greater debt load results in debt being concentrated among 

larger farm businesses. Data reported by farmers for 2007 showed that the 5.4 

percent of farms with sales over $500,000 owed about 46 percent while the 2 

percent of farms with sales over $1 million owed 29 percent of farm business 

debt (table 1, p. 29).

−20% 0% 20% 40% 60%

17%

−10%

−2%

25%

38%

36%

−8%

−8%

18%

6%

−11%

5%

27%

35%

43%

36%

Cash grain and soybeans

Other field crops

High-value crops

Beef cattle

Hogs

Poultry

Dairy

General livestock

Full owner

Part owner

Full tenant

Less than $10,000

$10,000 to $99,999

$100,000 to $499,999

$500,000 to $999,999

$1,000,000 to $4,999,999

Greater than $5,000,000

0% 20% 40% 60% 80%

48%

21%

31%

29%

56%

69%

67%

23%

23%

49%

37%

20%

36%

61%

74%

74%

67%

Figure 23

Use of farm business debt in 2007, by farm typology

Sales:

Proportion of operations with debt Deviation from national mean

Source: Agricultural Resource Management Survey, USDA, National Agricultural Statistics Service and Economic Research Service.

Tenure

Sales

Farm type
24

The Debt Finance Landscape for U.S. Farming and Farm Businesses / AIS-87

Economic Research Service/USDA

Cash expenditures for farm inputs have risen from $110 billion in the 1980s 

to $238 billion in 2007. Farmers’ cash expenses are forecast to rise by 

another $10 billion by the end of 2009. Meanwhile, expenditures for capital 

items such as machinery, equipment, or structures such as housing for hogs, 

poultry, or greenhouse products have also more than doubled since the 

1980s. Expenditures for operating inputs and capital items, like sales, tend 

to be concentrated among larger farm businesses. For example, in 2007, the 

5.4 percent of farms with sales over $500,000 accounted for 60 percent of 

production input expenses, while the largest 2 percent of farms--those with 

over $1 million in annual sales—accounted for 44 percent of expenses. Given 

the expenses of larger farm businesses, it is not surprising that debt use also 

tends to be centered on these farms. The sheer volume of inputs needed to 

generate farm products and services results in large farms having greater 

needs for capital, including debt capital, than smaller farm businesses.

Larger farms are also generally more dependent on earnings from the farm 

business for their household income than are operators of smaller farms.

Small farms (less than $250,000 in annual sales), which make up the vast 

majority of farm operations, are more dependent on off-farm sources of 

income—such as off-farm jobs, pensions, or retirement savings—for household expenses. Off-farm sources of income, whether from current earnings or 

from savings and investments, may reduce the need to use debt financing on 

many small farm operations.

For farms with sales over $500,000, over two-thirds reported owing debt 

at year-end 2007 (fig. 24). This is much higher than the debt use of farms 

in the smaller sales classes. Larger farm businesses have consistently used 

more debt since the 1980s. In 1986, for example, 86 percent of farms with 

sales over $500,000 reported debt while 43 percent of farms with sales less 

than $10,000 had debt. While the share of farms with debt has declined for 

all sales classes, the relationship between large and small farm operations 

has not changed—in 2007, farms with sales over $500,000 accounted for 72 

percent of farm business debt, while farms with under $10,000 in sales held 

less than 20 percent.

0

20

40

60

80

100

Percent of farms with debt

Figure 24

Use of farm business debt by sales class, selected years, 1986-2007

All $9,999 

or less

$10,000- 

$19,999

$20,000- 

$39,999

$40,000- 

$99,999

$100,000- 

$249,999

$250,000- 

$499,999

$500,000 

or more

Source: Agricultural Resource Management Survey and Farm Costs and Returns Survey, USDA, National Agricultural Statistics Service, 

and Economic Research Service.

1986 1996 2007
25

The Debt Finance Landscape for U.S. Farming and Farm Businesses / AIS-87

Economic Research Service/USDA

The average size of a farm, in acres operated, with no year-end debt was 

290 acres in 2007; the average size of a farm reporting debt was 684 acres 

(fig. 25). Businesses that used debt financing also had a larger percentage of 

rented property than operations functioning without debt. Farmers that did 

not have debt payable at year-end were much more likely to be full owners 

than were farmers who owed debt.

Capital needs vary significantly by type of farm business as measured by the 

predominant commodity, or group of commodities, produced by the business.

Dairy, hog, specialty crop (fruit or vegetable), cotton, rice, and cash grain 

farms produce a larger share of the total value of production and use a larger 

than proportionate share of inputs, as reflected in annual cash expenses.

These farms also have a much larger asset base than all farms, on average.

General cash grain and corn farms operate more acres, while specialty crop 

and dairy farm businesses have a larger value of assets per acre operated. On 

the other hand, general crop and livestock operations account for relatively 

small amounts of output relative to the share of farms they represent.

Given inputs used and assets owned, it is not surprising that the highest 

average amount of debt is reported by dairy producers and poultry growers 

(over $226,000, on average, in 2007), followed by hog, general cash grain, 

and corn producers. These farm types were also the most likely to report 

year-end debt.

The largest deviation between the reported share of farms with debt and 

the share of farm debt occurred for dairy businesses, followed by corn and 

general cash grain operators. Dairy operations accounted for only 2.9 percent 

of all farms but owed 13.3 percent of reported farm-level debt. Corn farms 

were 6.2 percent of farms but held 13.2 percent of debt, while general cash 

grain businesses were 3.9 percent of farms and owed 9.4 percent of debt 

at year-end 2007. Poultry operations were next at 1.8 percent of farms and 

6.4 percent of debt. Poultry farms reported generating 10 percent of total 

0

200

400

600

800

1,000

Average acres per farm

Figure 25

Farm acreage by farm operator borrowing class and tenure, 2007

Owned

Rented in

Rented out

Debt−Free Borrower

206

117

34

336

370

22

Source: Agricultural Resource Management Survey and Farm Costs and Returns Survey, 

USDA, National Agricultural Statistics Service and Economic Research Service.
26

The Debt Finance Landscape for U.S. Farming and Farm Businesses / AIS-87

Economic Research Service/USDA

production value when value under contract is taken into account. But a 

large share of the output and expenses used in poultry production accrue to 

the contractor with which the farm does business. Farmers that run poultry 

farms typically supply housing and other structures used in production. Thus, 

having almost three times as many poultry operators reporting real estate debt 

as non-real estate debt is consistent with how these farms operate. Corn and 

general cash grain farms also have a slightly higher percentage of farmers 

reporting real estate loans. For dairy, a larger share reported non-real estate 

loans at year-end 2007, and this is probably associated with purchased feed 

and livestock for use in the dairy enterprise.

At the other end of the spectrum, general crop farms accounted for 21 percent 

of farms and 5.6 percent of debt at year-end 2007, while general livestock 

accounted for about 22 percent of farms and 11 percent of debt. Only about 

one in five operators of these farms reported owing debt at year-end 2007.

Nearly three-quarters of the operators of general crop/livestock businesses 

report working off-farm or being inactive in the work force. Thus, they may 

be at a stage of life where farm debt is paid down or have access to funds 

from off-farm jobs or prior investments that can be used to fund current farm 

activities.

Debt use in the Northern Plains, Lake States, and Corn Belt is higher than the 

national mean, with the share of farms reporting debt at year-end 2007 10 to 

14 percentage points higher than for farms nationwide. The share of farms 

reporting debt use was highest in the Northern Plains, at 45 percent, followed 

by the Lake States at 38 percent (fig. 26). The Corn Belt accounted for nearly 

21 percent of farm debt and, together with the Northern Plains and Lake 

States, 47 percent of all farm-based debt. The Southeast had the smallest 

share of farms with reported debt use at 18 percent of farms.

All

Northeast

Lake States

Corn Belt

Norhtern Plains

Appalachia

Southeast

Delta

Southern Plains

Mountain

Pacific

Debt−free Borrowers

Percent

0 20 40 60 80 100

Figure 26

Farm business debt use in 2007, by region

Source: Agricultural Resource Management Survey, USDA, National Agricultural Statistics 

Service and Economic Research Service.
27

The Debt Finance Landscape for U.S. Farming and Farm Businesses / AIS-87

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Geospatial tools allow us to examine the intensity of farm-level debt use on a 

much more granular basis than the broad production regions discussed above.

The highest concentration of farm business debt in 2007 was in the Corn 

Belt, the Southeast, the Mississippi Valley, the Northern Plains, and the MidAtlantic (fig. 27). These are all areas that feature a larger than proportionate 

share of grain, hog, poultry, and dairy operations, which are heavy users of 

debt capital.

A traditional farm is typically portrayed as consisting of a single individual 

or family that owns the operation, makes management decisions, and runs 

day-to-day operations (Boehlje and Erickson, 2007). These traditional 

farmers are presumed to largely finance their operations through retained 

earnings or by borrowing modest amounts from lenders or family members.

Employees are usually family members or neighbors, and when the primary 

operator retires or dies, the farm is usually transitioned to the next generation 

of the family or sold.

Many 21st century farms do not fit this traditional farm model. Some operations have multiple owners, which may include non-family members.

Managers who oversee daily operations may not be related to farm owners.

The farm may be incorporated and have a board of directors that dictates strategic and operational decisions for the business. These operations may seek 

financing from a wide variety of avenues, including investors or stockholders 

1 - 10

11 - 20

21 - 40

41 - 50

51 - 75

76 - 100

Farm business debt index*

Figure 27

The Corn Belt, Northern Plains, and South had greater debt use in 2007

Source: USDA, Economic Research Service using data from USDA’s Agricultural Resource Management Survey. 

 *1 = lowest avg. farm debt, 100 = highest avg. farm debt
28

The Debt Finance Landscape for U.S. Farming and Farm Businesses / AIS-87

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10Some farms make use of intrayear debt financing but do not have an 

outstanding loan balance at year-end.

Overall, 39 percent of farmers reported 

an interest expense in ARMS.

as well as traditional lenders. Data reported by farm operators for 2007 show 

that farms with multiple owners and multiple operators tend to have a larger 

than proportionate share of farms with debt (fig. 28). Multiple owners and 

operators increase the number of individuals with whom lenders may need 

to interact (Klinefelter and Penson, 2005). Likewise, identifying responsible 

parties for loan service obligations may become more difficult.

Concentration of Debt Among Farms

The most recent Census of Agriculture, conducted for the 2007 calendar 

year, reported that 30.3 percent of farms had interest expenses. The comparable statistic for the previous census, concluded 5 years earlier, was 35.6 

percent.

10 At 31 percent, the share of farms reporting debt at year end 2007 

in ARMS was similar to the 30.3 percent of farms that reported interest 

expenses in the Census. Both show that a smaller share of farms reported 

using debt at year-end 2007 than at any time in the past two decades (fig. 29).

Even though a smaller proportion of farms rely on debt than in the past, some 

farms remain highly leveraged. The 2007 ARMS indicates that 0.5 percent 

of farms owed more debt than they had assets (table 1), similar to the level 

in 1991. Farms with more debt than assets in 2007 owed 5.5 percent of total 

farm business debt, versus 2.4 percent in 1991.

Figure 28

Debt use by farm business organizational complexity, 2007

Sole owner

2−3 owners

4 or more

Sole operator

2−3 operators

4 or more

Individual

Legal partnership

C−Corporation

S−Corporation

Legal form

Number of

 operators

Number of

 owners

−7%

6%

6%

−4%

7%

14%

−1%

4%

27%

11%

24%

37%

37%

27%

38%

46%

31%

35%

59%

43%

0% 20% 40% 60% −20% 0% 20% 40%

Source: Agricultural Resource Management Survey, USDA, National Agricultural Statistics Service and Economic Research Service.

Proportion of operations with debt Deviation from national mean
29

The Debt Finance Landscape for U.S. Farming and Farm Businesses / AIS-87

Economic Research Service/USDA

11Debt-asset ratios up to 70 percent 

may be acceptable in some farming circumstances where income and 

cash flows are more readily available 

to meet debt service requirements; 

although lenders become more cautious 

with debt-asset ratios over 50 percent 

(Blocker, et al., 2003).

Although the share of highly leveraged farms is about the same today as it 

was in 1991, one fundamental difference is the profitability of these highly 

leveraged farms. Using return on assets and operating profit margin as 

measures of financial performance, farms were generally more profitable 

in 2007 than they were in 1991. Also, the more highly leveraged operations 

generated greater returns on their investment in 2007 than did farms with 

less debt relative to assets—a marked change from the financial performance 

picture in 1991.

Farms that either held debt equal to 71-100 percent of asset values or that 

were technically insolvent (with debt levels in excess of the current market 

value of assets) have decreased since the 1980s and include all sizes of 

farms (fig. 30 and 31).

11 Poultry and high-value crop farms had a larger 

than proportional share of insolvent farms in 2007. Farms with debt equal to 

71-100-percent of asset values included a more than proportionate share of 

hog, dairy, and poultry operations. General livestock farms, which tend to be 

among the smallest farms both in terms of the acreage operated and value of 

production, also reported a larger than proportionate share of highly leveraged and technically insolvent farms in 2007. Overall, general livestock farms 

accounted for more than one in four insolvent farms; together with high-value 

crop operations, they accounted for over half.

0

10

20

30

40

50

60

70

Figure 29

Share of farm businesses that report inter-year use of business debt, 1986-2007

Percent

1986 88 90 92 94 96 98 2000 02 04 06

Source: Agricultural Resource Management Survey, USDA, National Agricultural Statistics Service and Economic Research Service.

Table 1

Distribution of farms and debt by leverage class, 1991 and 2007

No Debt 0.00 to 0.40 0.41 to 0.70 0.71 to 1.00 Over 1.00

1991 2007 1991 2007 1991 2007 1991 2007 1991 2007

% farms 59.8 68.8 35.3 25.5 3.8 4.3 0.6 1.0 0.5 0.5

% debt - - 73.8 63.4 20.2 24.0 3.5 7.0 2.4 5.5

ROA1 0.2 0.3 0.2 3.2 2.2 5.5 3.0 7.3 -6.0 11.9

OPM2 1.9 2.6 1.2 15.3 6.3 13.9 5.5 12.5 -11.4 16.5

1Return on assets.

2Operating profit margin.

Source: Agricultural Resource Management Survey and Farm Costs and Returns Survey, USDA, 

National Agricultural Statistics Service and Economic Research Service.
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Nearly three-fourths of farms with sales of $500,000 or more reported debt, 

compared with well under half of farms with sales less than $100,000 in 

annual sales (fig. 31). While farms with sales over $500,000 accounted for 

just over 5 percent of all farms, they accounted for about 14 percent of farms 

with debt and held 46 percent of farm debt at year-end 2007.

To further assess the degree of debt concentration, farms were ordered by 

decile groupings to enable measurement of the fewest number of farms that 

held 50, 25, and 10 percent of debt at different points in time over the past 

20 years (table 2). In 1991, 50 percent of farm business debt was held by 

23 percent of farm operators. By 2007, this proportion of debt was held by 

15 percent of farm operators. Between 1991 and 2007 the number of farms 

needed to account for half of farm business debt fell from over 488,000 to 

about 333,000 or nearly a third. About 67,000 farms were needed to account 

for 10 percent of farm-level debt in 2007, down from nearly 98,000 farms 

in 1991. USDA surveys began to track farm-level debt in the 1980s, but the 

early surveys did not fully reflect the population of farms in U.S. agriculture, 

0

20

40

60

80

100

Percent

1986 1991 1996 2006 2007

No debt or negative equity

.01−.10

.11−.40

.41−.70

.71−1.00

Over 1.0

Figure 30

Distribution of farms by debt-to-asset ratio, selected years, 1986-2007

Source: Agricultural Resource Management Survey, USDA, National Agricultural Statistics 

Service and Economic Research Service.

Table 2

Concentration of U.S. farm debt in selected years, 1986-2007

Item 1986 1991 1996 2001 2006 2007

Top 50 percent of debt 

Number 458,483 488,318 468,002 459,078 366,401 333,453

Percentage 30.2 23.3 23.1 21.4 17.6 15.2

Top 25 percent of debt

Number 226,438 250,804 233,946 224,478 184,418 167,448

Percentage 14.9 11.9 11.6 10.4 8.9 7.6

Top 10 percent of debt

Number 90,562 97,712 93,520 90,298 75,341 66,723

Percentage 6.0 4.7 4.6 4.2 3.6 3.0

Source: Agricultural Resource Management Survey and Farm Costs and Returns Survey, USDA, 

National Agricultural Statistics Service and Economic Research Service.
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particularly small farms. Even so, the data still show an increasing concentration of debt on fewer farms.

For farms with debt, the gini coefficient, which measures the dispersion of 

debt among farm businesses, remained relatively flat (fig. 32). This suggests 

that the composition of farms that owe debt has remained relatively stable.

When the dispersion of debt is examined across all farms, however, the gini 

coefficient increases by about 10 percentage points, from 79 in 1986 to 90 in 

2007, indicating that debt use has become more concentrated.

0

20

40

60

80

100

Percent

$9,999

or less

$10,000-

$19,000

$20,000-

$39,000

$40,000-

$99,000

$100,000-

$249,000

$250,000-

$499,000

$500,000

or more

No debt or negative equity

.01−.10

.11−.40

.41−.70

.71−1.00

Over 1.0

Figure 31

Distribution of farms by economic size of farms and 

debt-to-asset ratio, 2007

Source: Agricultural Resource Management Survey, USDA, National Agricultural Statistics 

Service and Economic Research Service.

1986 88 90 92 94 96 98 2000 02 04 06

0

0.2

0.4

0.6

0.8

1.0

Figure 32

Gini coefficients of debt for all farms and for farms that report debt use, 1986-2007

All farms Farms with debt

Source: Agricultural Resource Management Survey, USDA, National Agricultural Statistics 

Service and Economic Research Service.
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•	Compared to 1998, commercial banks and the Farm Credit System 

account for a higher share of farm lending, while the Farm Service 

Agency and individuals and others have lower shares.

•	Farm operators’ choices and access to different types of credit vary by 

farm size, type, and region. 

•	Half of farms that use debt have one loan from one lender.

•	While real estate is the single largest type of loan and the primary 

purpose for debt, farm operators with debt were found to frequently use 

multiple types of loans for multiple purposes.

Farmers Secure Debt Financing From Commercial, 

Government, and Individual Sources

Of the 686,000 farm operators that reported owing debt at year-end 2007, 

365,000 or 53 percent reported obtaining loans only from commercial banks, 

while 13 percent reported owing debt only to individuals and others and 11 

percent only to the Farm Credit System (fig. 33). Twenty-two percent of 

farmers reported debt financing from a combination of lenders. Farmers that 

reported borrowing from a combination of lenders tended to operate larger 

farms in 2007, averaging over 1,130 acres per farm (66 percent more acres, 

on average, than all farms with debt and 175 percent larger than all farms).

Overall, farms that reported owing debt at year-end 2007 span all sizes, 

types, and regions, regardless of lender. Farms that reported debt owed to a 

combination of lenders were disproportionately in larger sales classes, with 

24 percent of these farms reporting over $500,000 in sales. Farmers who 

reported borrowing only from individuals and others or commercial banks 

were slightly more likely to have sales of less than $100,000 than all farmers 

Loans and Credit Access Approaches 

 Differ Among Farms

0

10

20

30

40

50

60

Percent

Figure 33

Farm operators’ reporting of the source of debt owed at year end, 2007

Only Farm

Credit System

Only Farm

Service Agency

Only 

commercial

banks

Only 

individuals 

and others

Combinations

of lenders

Debt owed at year end

Farms with debt

Value of production

Source: USDA, Agricultural Resource Management Survey.
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The Debt Finance Landscape for U.S. Farming and Farm Businesses / AIS-87

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who reported debt (fig. 34). Cash grain, beef, and dairy operations accounted 

for over 63 percent of farmers who reported a combination of lenders. Thus, 

these farm types were not only proportionately more likely than other farms 

to owe debt at year-end, they were more likely to have acquired this debt from 

multiple lenders.

Debt, as reported by farm operators for their businesses, is heavily concentrated among three lender groups (fig. 35). Commercial banks, the Farm 

0

20

40

60

80

100

Figure 34

Distribution of farms by reported lender source for year-end debt 

and economic size of farm, 2007

Percent of farms

$9,999 or less

$10,000−$99,999

$100,000−$499,999

$500,000−$999,999

$1,000,000−4,999,999

$5,000,000 or more

Only Farm 

Credit System

Only FSA 

lenders

Only 

commercial 

bank lender

Only life 

insurance 

companies

Only 

individuals 

and others

Combinations 

of lender

Source: Agricultural Resource Management Survey.

0

20

40

80

100

60

Percent

Figure 35

Distribution of debt owed at year-end 2007 as reported by farmers 

for their businesses and for the U.S. farm sector

Farmers’ report for 

their business

Sectorwide total for 

all farm stakeholders

Farm Service Agency

Undesignated

Commercial banks

Individuals and others

Farm credit System

Life insurance companies

Source: Agricultural Resource Management Survey and Farm Sector Balance Sheet for 

U.S. agriculture.
34

The Debt Finance Landscape for U.S. Farming and Farm Businesses / AIS-87

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Credit System, and individuals together held 95 percent of the debt 

outstanding at year-end 2007. For the entire U.S. farm sector (which accounts 

for all stakeholders engaged in farming), these lenders accounted for 92 

percent of debt owed in 2007. While the total share of debt is similar for 

the three lender groups, the composition of debt holdings differs between 

the farm and sector-level estimates. Farmers report a larger share for banks 

while sectorwide estimates show a larger share of debt owed to both the Farm 

Credit System, and to individuals and others.

Operators Differ in How They Access Credit 

At the end of 2007, 65 percent of farmers reported neither owing debt nor 

accessing a line of credit during the year to finance farm activities (fig. 36). 

Self-financed farms were the smallest farms in terms of land operated at an 

average of 258 acres. Farms with no debt at year-end, but with a line of credit 

that they used during the year, averaged 846 acres, while farms with both 

lines of credit and outstanding loan balances were the largest, averaging 968 

acres.

Over 7 out of 10 debt-free farms reported less than $10,000 in sales. Farms 

that had an established line of credit against which they could draw funds 

(with or without an outstanding loan balance) were much more likely than 

other farms to have sales over $500,000 and especially over $1,000,000.

Farms that functioned without a line of credit or an outstanding loan were 

primarily beef cattle, general livestock, or general field crop farms. Dairy, 

poultry, hog, and cash grain and soybean producers were active users of both 

farm loans that extended across years and lines of credit. While farms in all 

regions used lines of credit and debt financing, farms in the Northern Plains, 

Lake States, and Corn Belt were more likely to make use of these financing 

options.

No debt or

line of credit

0

20

40

60

80

Figure 36

Farm business use of lines of credit, 2007

Percent

Source: USDA, Agricultural Resource Management Survey.

No debt but had 

line of credit

Had debt but no 

line of credit

Debt plus line 

of credit
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Farms Holding Debt Usually Have Only One Loan 

From One Lender

Nearly three-fifths of farms that use debt only had one loan from one lender 

at the end of 2007 (fig. 37). Farms with one loan obtained from a single 

lender tend to be much smaller, whether measured by acres operated or sales 

volume, than farms that had multiple loans. Forty-six percent of farms with 

one loan and one lender had sales less than $10,000 while another 31 percent 

had sales between $10,000 and $99,999 in 2007. While only about 2 percent 

of all U.S. farms reported sales over $1,000,000 in 2007, they accounted for 

9 percent of farms that had multiple loans and multiple lenders. Even when 

only one lender is used, large farm operations still more commonly use 

multiple loans than smaller farms.

Farmers with one lender and multiple loans accounted for 5.5 percent of 

farms, but 24 percent of debt reported by all farm operations. The 5.8 percent 

of farms with multiple lenders and multiple loans reported 31 percent of all 

farm-level debt in 2007.

The presence of multiple loans and multiple lenders can complicate the 

relationship between lenders and borrowers, particularly when a farm has 

multiple operators, because of issues involving collateral and sources of earnings for repayment. These issues are more likely to arise as electronic loan 

submissions and interactions between borrowers and lenders in different 

regions become more commonplace. In 2007, for example, operators of 

$5-million farm businesses that owed debt at year-end reported traveling 

nearly 3 times as far as all farms, on average, to obtain farm credit, averaging 51 miles in comparison to the 18 miles travelled by smaller farms, on 

average. Operators of $5-million farm businesses also travelled about twice 

as far to acquire financing as they did to buy machinery or purchase other 

inputs, a clear indication that they were willing to go beyond the local credit 

market to acquire financing (table 3).

No loans

0

20

40

60

80

Figure 37

Operators using one or multiple lenders, by percent, 2007

Percent

Source: Agricultural Resource Management Survey.

One lenderone loanOne lendermultiple loansMultiple loans 

and lenders
36

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Farmers Obtain Debt Financing 

for a Wide Range of Reasons

As a part of the annual ARMS survey, farmers are asked to report the type of 

loan and primary purpose for their farm-related debt Respondents are first 

asked to classify loans into one of three broad groups that indicate length 

of term and likely type of underlying collateral. Namely, farmers are asked 

if loans are (1) production or other loans for less than 1 year, (2) non-real 

estate loans for more than 1 year, or (3) real estate loans for more than 1 year.

About two-thirds of the outstanding balance on reported farm loans was used 

to finance real estate purchases (fig. 38). This comes as no surprise since 

land and buildings make up the largest portion of most farm balance sheets.

Non-real estate loans are farm loans that pay for equipment, inputs, or other 

projects and are expected to take more than a year to repay. Non-real estate 

loans of more than a year account for 20 percent of farm-level debt reported 

by farmers. The smallest category of farm loans, in terms of outstanding 

balance, is production loans, which are used as seasonal infusions of cash to 

pay for inputs such as feed and fertilizer. Loans of this type account for about 

15 percent of farm debt.

Table 3

Distances farm businesses traveled to purchase farm inputs in 2007

Annual farm sales

$9,999 $10,000 - $100,000 - $500,000 - $1,000,000 - $5,000,000

or less $99,999 $499,999 $999,999 $4,999,999 or more All

Miles

Machinery 23.5 26.5 31.7 24.7 27.0 28.0 26.5

Credit 16.8 17.1 19.5 18.3 23.6 51.0 18.1

Other 16.7 16.8 22.1 17.0 20.3 25.8 18.1

Source: 2007 Agricultural Resource Management Survey, USDA, National Agricultural Statistics Service and 

Economic Research Service. 

Production loans (15%)

Nonreal estate loans (20%)

Real estate loans (65%)

Figure 38

Outstanding farm business loans by purpose, 2007

Source: 2007 Agricultural Resource Management Survey, USDA, National Agricultural 

Statistics Service and Economic Research Service.
37

The Debt Finance Landscape for U.S. Farming and Farm Businesses / AIS-87

Economic Research Service/USDA

Farmers were also asked to report the primary purpose for which they 

obtained debt financing, regardless of length of term or underlying assets.

Response options typically include purchasing real estate (including building 

or livestock, poultry, or grove development), purchasing feeder livestock, 

buying other livestock, funding current operating expenses, purchasing 

machinery and equipment, or consolidating debt. Nearly three-fifths of 

farmers reported real estate purchases as the primary purpose for borrowing 

(fig. 39). The next two largest purposes for acquiring farm debt were to pay 

current operating expenses and to buy machinery and equipment.

Undesignated (2%)

Machinery and equipment (9%)

Debt consolidation (3%)

Real estate (59%)

Feeder livestock (3%)

Breeding livestock (5%)

Current operating expenses (19%)

Source: 2007 Agricultural Resource Management Survey, USDA, National Agricultural 

Statistics Service and Economic Research Service.

Figure 39

Purpose of farm business loan as identified by farm operators, 2007
38

The Debt Finance Landscape for U.S. Farming and Farm Businesses / AIS-87

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Although the future, as always, remains uncertain, agriculture as a whole 

is relatively safe from a solvency viewpoint. Even though farm debt level 

has risen in the face of decreasing net farm income, most of the farm sector 

is well-positioned to weather hard times. However, some farm operators—

particularly hog, dairy, and poultry producers—are, on average, more leveraged than other farmers. While these farms are the most highly leveraged, 

they have also generally been the most profitable. With falling commodity 

prices shrinking their profit margins, these operations may find themselves 

at higher risk of financial stress than in past years. This financial stress may 

manifest itself in a couple different ways. Mild financial stress may result 

in farmers having difficulty obtaining loans on favorable terms. In more 

burdensome cases, farms faced with loan repayment problems may need to 

negotiate new terms with their lender. A prolonged period of unusually low 

commodity prices or high costs would bring about much more severe financial circumstances and structural adjustments.

Conclusions
39

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Economic Research Service/USDA

Blocker, A., G. Ibendahl, and J. Anderson. 2003 Interpreting Farm Financial Ratios, Extension Circular, Department of Agricultural Economics, 

Mississippi State University.

Boehlje, Mike, and B. Erickson. 2007. Adapting Your Management Style, Top 

Farm Crop Workshop Newsletter, Department of Agricultural economics, 

Purdue University, March.

Boyelle, Deborah K., and Fred C. White. 1987. “Factors Affecting Demand 

and Supply of Agricultural Real Estate Debt,” Western Journal of Agricultural Economics, 12(2): 174-181.

Brake, John R. 1983. “Financial Crisis in Agriculture: Discussion.” American 

Journal of Agricultural Economics, 65(5): 953-954.

Castle, Emory N., M.H. Becker, and A.G. Nelson. 1972. Farm Business 

Management: The Decision-Making Process, Macmillan Publishing 

Company, New York.

Duffy, Mike, and Darnell Smith. 2008. Iowa Land Value Survey. Iowa State 

Cooperative Extension, FM 1825, Dec.

Ellinger, Paul. 2009. “Financial Markets and Agricultural Credit at a Time of 

Uncertainty”, Choices, 24(1): 32-35.

Hesser, Leon F., and Edward G. Schuh. 1962. “The Demand for Agricultural 

Mortgage Credit,” Journal of Farm Economics, 44(5): 1583-1588.

Irwin, George A. 1968. “Three Myths about the Balance Sheet: The 

Changing Financial Structure of Farming,” American Journal of Agricultural Economics, 50(5): 1596-1599.

Johnson, James D., and Mitchell Morehart. 1987. “Measurement of Farm 

Financial Performance: Empirical Issues and Current Status,” W.I. Myers 

Memorial Lecture, Department of Agricultural Economics, Cornell 

University, Ithaca, NY, Oct.

Johnson, James, M. Morehart., K. Poppe, D. Culver, and C. Salvioni, 2009.

“Ownership, Governance, and the Measurement of Income for Farms and 

Farm Households,” Wye City Group Workshop, Rome, Italy, June.

Klinefelter, Danny A., and John B. Penson. 2005. “Growing Complexity of 

Agricultural Lending Decisions,” Choices, 20(1): 7-10.

Lins, David. 1972. “Determinants of Net changes in Farm Real Estate Debt”, 

Agricultural Economic Research, 24(1): 1-8.

Morehart, Mitch. 2009. “Implications of Macroeconomic Instability for Agriculture Income and Land Values”, Choices 24(1): 23-31.

References
40

The Debt Finance Landscape for U.S. Farming and Farm Businesses / AIS-87

Economic Research Service/USDA

Ryan, James T., and Mitchell Morehart. 1992. “Debt Repayment Capacity of 

Commercial Farm Operators: How Much Debt Can Farmers Afford? Agricultural Income and Finance, USDA, ERS, AFO-45, May, pp. 14-22.

U.S. Department of Agriculture, Economic Research Service. 1989. Major 

Statistical Series of the U.S. Department of Agriculture, The Balance 

Sheet, Agricultural Handbook, No. 671, Vol. 11, May.

U.S. Department of Agriculture, National Agricultural Statistics Service.

1999. Agricultural Economics and Land Ownership Survey, Volume 3, 

Special Studies Part IV (AC97-SP-4)

Williams, Ann N. 1987. “U.S. Farm Non-Real Estate Debt: A Profile and 

Forecast.” M.S. Thesis, Michigan State University, Department of Agricultural Economics.
41

The Debt Finance Landscape for U.S. Farming and Farm Businesses / AIS-87

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Sectorwide estimates of debt are developed as composite measures that use 

data from multiple sources. Lender types included in the sector-level estimate of debt include commercial banks, life insurance companies, the Farm 

Credit System, the Farm Service Agency, and a group labeled individuals and 

others, such as family members. Data for institutional lenders, such as banks, 

are taken from public sources or are made available by the regulatory agency 

or lender association. Data from the Farm Service Agency are obtained from 

administrative sources. The “individuals and others” component of sector 

level debt estimates is from the Agricultural Resource Management Survey 

(ARMS). Specific sources for agriculture-related debt as reported by lenders 

are provided in appendix table 1. 

Farm-level estimates of debt are derived directly from farmers’ responses to 

questions included in the annual ARMS survey. At both the farm and sector 

level, debt represents claims that creditors have on a farm’s assets. For farms, 

as a group, estimates of debt represent the weighted sum of business-level 

debt as reported by respondents who were interviewed about their farm operation as a part of annual farm business surveys.

ERS publishes a sectorwide balance sheet that pertains only to farm businesses, leaving aside any debt or assets that may used for personal or household circumstances. Historically, ERS also published a balance sheet that 

included operator households. Both balance sheets, including and excluding 

operator households, listed similar components. The main difference was 

that the farm business balance sheet was derived by subtracting the sum of 

operator dwellings, household equipment, the portion of automobiles and 

trucks allocated for family use, time deposits and savings bonds, debt on 

operator dwellings, and the household share of non-real estate debt from 

the “including” households balance sheet to arrive at an estimate for farm 

businesses.

Due to data and other limitations, ERS has not developed a sectorwide 

balance sheet of agriculture that includes household assets and debts since 

Appendix: Farm Business Debt 

 Measurement and Data Sources

Appendix table 1

Sources of farm sector financial data

Lender Source

Commercial banks Federal Reserve System Statistical Release, 

Agricultural Finance Databook

Farm Credit System Federal Farm Credit Banks Funding Corporation 

quarterly Iinformation statement

Farm Service Agency FSA Farm Loan Program Funding web page

Life insurance companies ACLI Life Insurers Fact Book—annual update

Individuals and others Agricultural Resource Management Survey

Commodity Credit Corporation U.S. Census Bureau Consolidated Federal Funds 

Report 10.058—Farm Storage Facility Loans
42

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1Field work to enumerate ARMS 

questionnaires is conducted during 

February-April. Content of the ARMS 

is developed to inquire about the prior 

calendar year, with asset and debt outstanding questions having a reference 

date of December 31.

2Respondents would choose any of 

four reasons, including more than one 

reason if applicable: having sufficient 

funds without loans, could not obtain 

new or additional credit, high transaction costs, or risk associated with debt

1992. At the time that ERS discontinued development of a balance sheet that 

included farm operators’ household assets and debt, the complexity of trying 

to allocate farm household financial accounts between farm and nonfarm 

activities was a key reason. Moreover, the decision to produce only a farm 

business-oriented balance sheet recognized that taking into account only the 

households of primary operators excluded many households, particularly for 

the largest, most complex farms. Over the last two decades, the financial and 

organizational structure of farms has become even more complex, with the 

presence of multiple operators and household participants in farm ownership 

and governance well documented (Johnson et al., 2009).

 Two adjustments are made to sector-level debt estimates reported by lenders 

to more accurately reflect debt owed for farm business purposes. The first 

adjustment reduces the estimate of real estate debt by the share of mortgage 

debt attributed to operator dwellings. The second adjustment reduces lenderreported debt by the share of farm loans that is used for purposes unrelated to 

farm business activities (fig. A-1). To ensure balance between asset and debt 

values, just as debt for dwellings and other nonfarm uses is excluded from the 

sectorwide estimate of farm business debt, the value of dwellings or the value 

of any farmer or farm household asset for which debt is secured using farm 

assets is excluded from the measure of sectorwide assets.

At the farm level, debt represents the claim that creditors have on an individual farm’s assets. A key difference between a farm-level and sectorwide 

balance sheet measurement is that ownership and business boundaries are 

taken into account at the farm level. This occurs because debt is reported only 

for the farm as an individual business unit. No estimate of debt owed by landowners or other such persons or entities with which farmers conduct business 

is included in either the estimate of farm debt or assets. Instead, care is taken 

to ensure that debt aligns with a farm’s reported asset base and with income 

generated by the farm. The alignment of debt, assets, and income enables 

current measures of financial performance—e.g., returns and servicing repayment obligations—to be compared among farms and over time.

Where sector-level estimates of debt begin with institutional reports for 

major lenders such as banks, farm-level estimates are derived from farmers’ 

responses to questions that are included in USDA’s Agricultural Resource 

Management Survey about their farm-based debt use, including questions 

about debt structure and loan characteristics.

ARMS farm debt questions are developed to first ask respondents whether 

debt was used in funding the operation of their farms during the previous 

calendar year, including any seasonal production and other loans taken and 

repaid during the year.

1 Debt reports include any loans obtained in earlier 

years, including, for example, loans to buy farmland, to construct buildings 

or service structures, or to buy equipment. If farmers respond that debt was 

not used in their businesses in 2007, they were asked why debt, including 

a line of credit, was not used.

2 If debt use is reported, respondents are then 

asked if they have an established line of credit and how it was accessed 

during the calendar year. Again, respondents are provided options: borrowed 

the full amount of their line of credit, borrowed more by extending the limit, 

borrowed less, or did not borrow against their line. This line of questioning is 

followed by questions centered on the use of seasonal production loans that 
43

The Debt Finance Landscape for U.S. Farming and Farm Businesses / AIS-87

Economic Research Service/USDA

were taken and repaid during the calendar year, and by a series of questions 

to obtain information about the characteristics of the largest four or five loans 

outstanding on December 31 of the calendar year. To round out a complete 

accounting for debt owed, respondents are asked about any other debt in 

excess of that accounted for by the largest loan sources.

Respondents are not only asked about the amount owed and lenders from 

whom a loan was obtained, but also about the terms of each of their largest 

loans. For example, questions are asked about date of origin, and the term and 

interest rate associated with loans, along with questions about loan purpose 

and type, and whether rates are fixed or adjustable. If respondents indicate 

that they have loans with an adjustable rate, they are also asked how often the 

Raw farm sector data

Derived from farm lender reports

Published farm sector data

Farm business debt

Derived from ARMS

Difference 

between sector 

and farm 

business data

Reduced by

Operator

dwelling

Nonfarm use

Operator 

dwelling owned 

by farm business

Operator dwelling 

owned by farm 

household

Dwellings located on or adjacent to farm business

Non-farm debt secured by farm assets

-$14.6 billion

-$9.4 billion

-$18.2 billion

$214.2 billion

$256.2 billion

$42.2 billion

Figure A-1

Relationship between estimates of debt reported by level of aggregation, 2007

Debt

1

ARMS estimates that 6.42% of U.S. farm sector debt is used by households for nonfarm purposes but is secured by farm 

business assets.

2

Estimated using average amount of household debt secured by farm assets.

3

1999 USDA Agricultural Economics and Land Ownership (AELOS) survey estimates that 17.2% of real estate debt is held 

by non-operator landlords.

Non-farm debt held by principal operator 

household but secured by farm assets1

Non-farm debt held by other operator 

household but secured by farm assets2

Debt held by non-operator landlords3

Unknown holders of debt

Unknown nonfarm 

uses of sector debt 

total $14.8 billion

-$15.2 billion

?

-$44.1 billion

$140.0 billion

?
44

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3AELOS is a special survey conducted by USDA’s NASS that interviews owners of farmland, and includes 

both owner-operators and nonoperator 

landlords.

loan is repriced. Responses to the loan volume, structure, and pricing questions are used in conjunction with estimates of income to develop an indication of debt service capability and to assess how use of debt service capacity 

varies among farms and over time.

Sector-level debt, as developed from lender reports, includes all debt secured 

by farm real estate or other assets. This is why an estimate of debt used 

either for nonfarm purposes or associated with operator dwellings has to be 

subtracted to arrive at an estimate of farm business debt for the sector. At the 

farm level, respondents are asked directly to exclude debt used for nonfarm 

purposes even if the loan is secured by a farm operation’s assets. Instead, 

“off-farm” debt secured by farm assets is recorded along with debt obtained 

using any other source of collateral to construct a balance sheet for the households of farm operators. Following these procedures enables ERS estimates 

of household-based assets and debts to be assessed apart from assets and debt 

of farms as business operations. Repayment capabilities of farm households 

may then be measured based on both farm and nonfarm sources of debt and 

income. Meanwhile, farm business estimates draw only on farm-based debt 

and income.

Sectorwide and farm-level estimates of debt do not show the same magnitude 

of debt use within the farm sector (fig. A1). This is expected since farmlevel debt reported for farms as individual businesses is a subset of total 

sector-level debt. This occurs for two reasons. First, farmers report use of 

farm-based debt for non-business purposes and for the purchase of dwellings. Second, owners and operators of farm businesses are only a subset of all 

borrowers of loan funds that are either secured by farm assets or are associated with an agricultural activity (Irwin, 1968). For example, the most recent 

Agricultural Economics and Land Ownership Survey (AELOS), conducted 

in 1999, showed that landlords held 17.2 percent of the total amount of 

debt reported by operators and landlords together.

3 The AELOS revealed 

nonoperator owners to be active participants in farm real estate markets, with 

non-operators accounting for nearly 30 percent of the number of individuals 

acquiring land in 1999 and 19 percent of the purchasers who acquired owner 

financing. AELOS tracked time periods, by 10-year increments, when owners 

reported acquiring land. Based on responses to these questions, nonoperator 

owners have remained an integral part of farmland markets over time, ranging 

from 32 to 35 percent of purchasers during the 1973-98 timeframe. Recent 

data from Iowa show that nonoperator landlords continued to be active 

participants in farmland markets. In 2007, 49 percent of farmland owners did 

not live on owned farmland, with 40 percent of farmland owned by persons 

who did not farm. Of Iowa farmland owned by nonoperators, 13 percent was 

financed by mortgage and 1 percent was under contract (Duffy and Smith, 

2008).

Farm-level estimates derived from the annual ARMS survey provide the only 

measure of farm debt that is detailed enough to examine the distribution of 

debt among farms in conjunction with income earned by farms that hold debt 

financing. Moreover, ARMS is the only national-level farm source of farm 

debt, conducted on an ongoing basis, sufficient to provide a foundation from 

which to examine changes in debt use and concentration among farms and 

over time.
45

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The only other data source able to provide any perspective about the distribution of debt among farms is the Census of Agriculture, and even this meager 

glimpse of debt use is indirect. Census does not ask farmers directly about 

use of debt in their businesses. Comparing the share of farms with interest 

expenses from the Census of Agriculture with the share of farms that report 

debt in ARMS reveals a similar trend. Both data sources show share of farms 

reporting debt declining dramatically from the mid-1980s.through 2007 (fig.

A-2). Census data on interest expenses may imply the level of debt owed by 

0

70

60

50

40

30

20

10

1986 88 90 92 94 96 98 2000 02 04 06

Percent

ARMS

Census of 

Agriculture

Note: Farms were determined to be debt holders in the Census of Agriculture if they reported 

interest expenses.

Source: Agricultural Resource Management Survey and Farm Costs and Returns Survey, 

USDA, National Agricultural Statistics Service and Economic Research Service; and the 

Census of Agriculture, USDA, National Agricultural Statistics Service.

Figure A-2

Share of farms reporting debt from the Census of Agriculture and 

ARMS, 1986-2007

0

20

40

60

80

100

120

140

160

180

200

1987 89 91 93 95 97 99 2001 03 05 07

Percent

Figure A-3

Comparing Census of Agriculture implied debt to farm business debt, 

1987-2007

Note: Prior to 1996, farm-level surveys were labeled as Farm Costs and Return Surveys. 

Census instructs respondents to include interest on such items as feed, seed, fertilizer, so it is

not clear whether this would include accounts payable. ARMS loans outstanding and 

estimates of accounts payable and accrued interest are included to enable comparison. 

Source: Agricultural Resource Management Survey and Farm Costs and Returns Survey, 

USDA, National Agricultural Statistics Service and Economic Research Service; and the 

Census of Agriculture, USDA, National Agricultural Statistics Service.

ARMS

Census New Census ARMS
46

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farmers. We used interest rates derived from the ARMS for both real estate 

and non-real estate debt to impute debt. This was done by assuming that 

real estate was in year two of a 7-year loan. Since the census is reported in 

thousands of dollars, the debt service for repaying $1,000 was determined.

Interest charges were summed for the year and used to impute an implied 

debt estimate from census interest expense. Once again, trends are similar, 

showing a growing amount of debt reported by farms. Obviously, changing 

the assumption embedded in figure A-3 would alter the amount of debt 

implied by the census. Still, the main idea drawn from figure A-1—that farm 

business debt does not account for all debt labeled as farm debt—would 

remain largely intact.
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Appendix table 2

Farm sector financial statistics, 1984-2009f

Real Nonreal Total Net cash

estate estate debt Equity Assets income DRCU

$ billion

1984 101.4 87.4 188.8 709.0 897.8 36.0 93%

1985 94.1 78.1 172.1 603.8 775.9 45.6 72%

1986 84.1 67.2 151.3 570.7 722.0 46.5 62%

1987 75.8 62.7 138.5 618.0 756.5 52.6 51%

1988 70.8 62.3 133.1 655.4 788.5 53.7 49%

1989 68.8 62.3 131.0 682.7 813.7 53.5 51%

1990 67.6 63.5 131.1 709.5 840.6 53.8 49%

1991 67.5 64.4 131.9 712.3 844.2 51.4 50%

1992 67.9 63.7 131.6 736.2 867.8 56.9 43%

1993 68.4 65.9 134.3 774.9 909.2 60.8 41%

1994 69.9 69.0 138.9 795.8 934.8 53.7 47%

1995 71.7 71.3 143.0 822.8 965.8 54.5 51%

1996 74.4 74.2 148.6 854.3 1002.9 60.9 46%

1997 78.5 78.4 156.9 894.4 1051.3 60.9 50%

1998 83.1 81.5 164.6 918.8 1083.4 57.7 54%

1999 87.2 80.5 167.7 971.1 1138.8 57.9 54%

2000 84.7 79.2 163.9 1039.3 1203.2 57.3 55%

2001 88.5 82.1 170.7 1085.3 1255.9 62.1 51%

2002 95.4 81.8 177.2 1126.8 1304.0 51.3 58%

2003 94.1 81.0 175.1 1203.6 1378.8 71.5 44%

2004 96.9 86.1 183.0 1434.6 1617.6 82.3 40%

2005 104.8 91.6 196.4 1583.0 1779.4 86.8 47%

2006 108.1 94.9 196.4 1851.0 2047.4 68.8 60%

2007 112.7 101.4 214.1 1841.2 2055.5 78.2 57%

2008 130.7 109.4 240.1 1765.5 2005.5 97.5 48%

2009 130.7 103.4 234.1 1701.5 1935.6 68.2 63%

Source: USDA, Economic Research Service.
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Appendix table 3

USDA Agricultural Resource Management Survey estimates, by debt classification, 2007 

Debt classification

Item No lender debt payable Debt payable to lender(s) 48-State total

Number of farms 1,510,418 686,348 2,196,766

 Percent of farms 68.8 31.2 100.0

Value of production ($1,000) 96,068,345 194,145,460 290,213,805

Percent of value of production 33.1 66.9 100.0

Acres per farm

Land operated per farm 290 684 413

Total farm loan debt 0 138,574,596 138,574,596 

Percent of debt held 0.0 100.0 100.0 

Farm operation income statement: Dollars per farm

Gross cash income 64,262 242,839 120,056

 Less: Cash expenses 48,639 192,295 93,522

 Variable 40,685 151,309 75,248

 Fixed 7,954 40,985 18,274

Equals: Net cash farm income 15,623 50,544 26,533

Balance sheet characteristics: $1,000

 Value of total farm financial assets 1,066,076,481 813,836,838 1,879,913,319 

 Total farm financial debt* 2,049,521 146,145,643 148,195,164 

 Accounts payable 2,049,521 3,413,749 5,463,270 

 Seasonal loans taken and repaid during year 9,656,030 32,054,512 41,710,543

Percent

 Seasonal loans taken and repaid during year 23.2 76.8 100.0

Profitability: Percent

 Return on assets 0.27 3.49 1.67

 Operating profit margin 2.56 15.05 10.41

Debt distributions:

 Sales classes:

 $9,999 or less 68.1 36.7 58.3

 $10,000-$99,999 23.5 28.8 25.1

 $100,000-$499,999 6.4 21.7 11.2

 $500,000-$999,999 1.2 7.8 3.3

 $1,000,000-$4,999,999 0.7 4.6 1.9

 $5,000,000 or more 0.1 0.5 0.2

Farm types

 Cash grain and soybean 10.7 21.9 14.2

 Other field crops 24.6 14.5 21.5

 High-value crops 6.4 6.3 6.3

 Beef cattle 31.0 28.5 30.2

 Hogs 0.9 2.6 1.5

 Poultry 0.8 3.9 1.8

 Dairy 1.4 6.3 2.9

 General livestock 24.2 16.0 21.6

---continued
49

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Appendix table 3

USDA Agricultural Resource Management Survey estimates, by debt classification, 2007, continued 

Debt classification

Item No lender debt payable Debt payable to lender(s) 48-State total

Percent

Tenure:

 Full owner 72.9 47.5 64.9

 Part owner 21.2 44.7 28.6

 Tenant 5.9 7.8 6.5

Operator age:

 Less than 35 years 3.9 8.1 5.2

 35 to 44 9.7 18.3 12.4

 45 to 54 21.0 30.2 23.9

 55 to 64 years 31.3 29.4 30.7

 65 years or older 34.1 13.9 27.8

Mileage to obtain inputs: Miles

 Miles to buy machinery 22.3 26.5 23.7 

 Miles to obtain credit 14.2 18.1 16.0 

 Miles to do farm related 

 business/purchasing 16.2 18.1 16.8 

* Total farm financial debt = total farm loan debt + total accounts payable + total accrued interest.

Based on 6,614 observations (6,179 households, 435 non-households). Version=1 only.

Source: 2007 USDA Agricultural Resource Management Survey. 
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Appendix table 4

USDA Agricultural Resource Management Survey estimates, by number of lenders and loans, 2007 

Debt classification

Item One lender One lender with Multiple lenders

 No loans One loan multiple loans and loans 48-State tota

Number of farms 1,548,993 399,198 120,148 128,427 2,196,766 

 Percent of farms 70.5 18.2 5.5 5.8 100.0 

 Value of production ($1,000) 114,312,095 76,912,750 44,791,775 54,197,185 290,213,805 

Percent of value of production 39.4 26.5 15.4 18.7 100.0 

 Acres per farm 

Land operated per farm 317 500 695 1,035 413 

$1,000

 Total farm loan debt 15,370,791 46,986,186 33,680,175 42,537,444 138,574,596 

 Percent of debt held 11.1 33.9 24.3 30.7 100.0 

Farm operation income statement: Dollars per farm

Gross cash income 72,479 154,750 325,290 394,049 120,056 

Less: Cash expenses 55,102 128,165 250,187 302,676 93,522 

 Variable 45,680 102,327 196,703 234,084 75,248 

 Fixed 9,422 25,838 53,484 68,592 18,274 

Equals: Net cash farm income 17,377 26,585 75,103 91,373 26,533 

Balance sheet characteristics: $1,000

 Value of total farm financial assets 1,134,208,467 371,974,302 164,491,753 209,238,797 1,879,913,319 

 Total farm financial debt 18,203,612 49,576,858 35,469,958 44,944,736 148,195,164 

 Accounts payable 2,371,704 1,181,059 779,365 1,131,142 5,463,270 

 Seasonal loans taken & repaid 

 during year 10,085,145 11,410,366 8,175,196 12,039,836 41,710,543 

Percent

 Seasonal loans taken & repaid during year 24.2 27.4 19.6 28.9 100.0 

Profitability:

 Return on assets (percent) 0.53 1.80 4.50 5.37 1.67 

 Operating profit margin (percent) 4.65 9.49 17.18 19.15 10.41 

Debt distributions:

 Sales class:

 $9,999 or less 67.1 45.8 29.2 17.7 58.3 

 $10,000-$99,999 23.5 30.9 26.9 24.4 25.1 

 $100,000-$499,999 6.8 15.9 27.2 34.1 11.2 

 $500,000-$999,999 1.6 4.5 9.3 14.8 3.3 

 $1,000,000-$4,999,999 0.9 2.5 6.7 8.4 1.9 

 $5,000,000 or more 0.1 0.3 0.7 0.6 0.2 

 Farm type:

 Cash grain and soybean 11.0 17.2 27.1 31.0 14.2 

 Other field crops 24.4 14.8 15.7 11.5 21.5 

 High-value crops 6.5 6.3 6.3 4.9 6.3 

 Beef cattle 30.7 31.1 28.8 23.0 30.2 

 Hogs 0.9 2.9 1.3 3.4 1.5 

 Poultry 0.9 3.8 4.3 3.6 1.8 

 Dairy 1.5 4.6 7.4 11.2 2.9 

 General livestock 24.1 19.2 9.0 11.3 21.6 

---continued
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Appendix table 4

USDA Agricultural Resource Management Survey estimates, by number of lenders and loans, 2007, continued

Debt classification

Item One lender One lender with Multiple lenders

 No loans One loan multiple loans and loans 48-State tota

Percent

Tenure:

 Full owner 72.4 54.7 38.4 31.4 64.9 

 Part owner 21.7 36.9 52.9 62.2 28.6 

 Tenant 5.9 8.4 8.7 6.5 6.5 

Operator age:

 Less than 35 years 3.9 8.2 8.3 8.9 5.2 

 35 to 44 9.7 17.3 23.6 18.8 12.4 

 45 to 54 21.3 30.6 25.9 32.4 23.9 

 55 to 64 years 31.6 27.0 32.5 29.9 30.7 

 65 years or older 33.5 16.9 9.7 10.1 27.8 

Mileage to obtain inputs: Miles

 Miles to buy machinery 22.4 25.5 25.8 29.7 23.7 

 Miles to obtain credit 14.3 18.4 17.1 19.0 16.0 

 Miles to do farm related 

 business/purchasing 16.4 17.5 18.0 18.4 16.8 

** Total farm financial debt = total farm loan debt + total accounts payable + total accrued interest.

Based on 6,614 observations (6,179 households, 435 non-households). Expansion factor was VER1WT0. Version=1 only.

Source: 2007 USDA Agricultural Resource Management Survey. 
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Appendix table 5

Farm financial, operator, and structural characteristics for farm operations with debt grouped by sales class, 2007

Debt classification 

Item Operation has Operation has Operation has Operation has Operation has 

debt payable and debt payable and debt payable and debt payable and debt payable and 

gross sales of gross sales of gross sales of gross sales of gross sales of 

$9,999 or less $10,000-$99,999 $100,000-$499,999 $500,000-$999,999 $1,000,000-$4,999,999 $

Number of farms 251,800 197,330 148,955 53,548 31,231 

 Percent of farms 36.7 28.8 21.7 7.8 4.6 

Value of production ($1,000) 1,041,360 8,707,882 41,449,251 38,459,682 61,165,207 

Percent of value of production 0.5 4.5 21.3 19.8 31.5 

Acres per farm 

Land operated per farm 87 436 1,238 1,601 2,607 

 Total farm loan debt 23,973,914 19,891,992 31,233,366 23,028,490 25,790,824 

 Share of debt held 17.3 14.4 22.5 16.6 18.6 

Farm operation income statement; Dollars per farm Gross cash income 6,178 47,556 244,283 618,268 1,652,012 

Less: Cash expenses 19,771 52,969 193,668 452,077 1,220,483 

 Variable 10,080 37,291 145,789 344,321 995,248 

 Fixed 9,690 15,678 47,880 107,756 225,235 

Equals: Net cash farm income -13,592 -5,412 50,614 166,191 431,529 

 Balance sheet characteristics; $ 1,000  Value of total farm  financial assets 125,684,885 160,792,622 222,914,359 129,397,490 130,995,674 

 Total farm financial debt* 24,840,908 20,771,069 33,063,271 24,517,850 27,502,022 

 Accounts payable 147,756 282,298 892,890 798,501 937,471 

 Seasonal loans taken and  repaid during year 305,264 1,814,195 8,684,523 8,399,013 9,690,139 

Percent

Seasonal loans taken and 

 repaid during year 1.0 5.7 27.1 26.2 30.2 

 Profitability;  Return on assets (percent) -2.50 -2.88 2.06 7.13 10.25 

 Operating profit margin (percent) -66.01 -38.68 10.76 24.11 24.03 
53

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Appendix table 5

Farm financial, operator, and structural characteristics for farm operations with debt grouped by sales class, 2007, co

Debt classification 

Item Operation has Operation has Operation has Operation has Operation has 

debt payable and debt payable and debt payable and debt payable and debt payable and 

gross sales of gross sales of gross sales of gross sales of gross sales of 

$9,999 or less $10,000-$99,999 $100,000-$499,999 $500,000-$999,999 $1,000,000-$4,999,999 $

Debt distributions:Sales class: Percent

 $9,999 or less 100.0 0.0 0.0 0.0 0.0 

 $10,000-$99,999 0.0 100.0 0.0 0.0 0.0 

 $100,000-$499,999 0.0 0.0 100.0 0.0 0.0 

 $500,000-$999,999 0.0 0.0 0.0 100.0 0.0 

 $1,000,000-$4,999,999 0.0 0.0 0.0 0.0 100.0 

 $5,000,000 or more 0.0 0.0 0.0 0.0 0.0 

Farm type: Cash grain and soybean 2.9 20.9 46.6 45.5 24.3 

 Other field crops 23.5 13.6 4.8 7.7 8.1 

 High value crops 2.9 9.1 6.5 7.8 10.5 

 Beef cattle 29.5 45.1 15.5 10.4 8.5 

 Hogs 2.5 1.1 1.8 4.6 12.2 

 Poultry 1.8 0.3 5.2 14.5 18.3 

 Dairy 0.0 4.3 16.8 8.5 14.4 

 General livestock 36.9 5.6 2.7 1.0 3.7 

Tenure: Full owner 75.2 43.9 20.4 20.0 24.6 

 Part owner 21.7 48.9 65.7 71.4 59.4 

 Tenant 3.1 7.2 13.9 8.6 16.1 

Operator age: Less than 35 years 7.2 8.2 9.7 8.3 7.5 

 35 to 44 19.8 16.9 17.9 16.6 20.7 

 45 to 54 31.7 24.8 31.5 34.9 36.3 

 55 to 64 years 28.5 31.3 29.0 30.3 26.2 

 65 years or older 12.9 18.7 11.9 9.9 9.2 

Mileage to obtain inputs: Miles Miles to buy machinery 23.5 26.5 31.7 24.7 27.0 

 Miles to obtain credit 16.8 17.1 19.5 18.3 23.6 

 Miles to do farm-related  business/purchasing 16.7 16.8 22.1 17.0 20.3 

* Total farm financial debt = total farm loan debt + total accounts payable + total accrued interest.Based on 6,614 observations (6,179 households, 435 non-households). Expansion factor was VER1WT0. Version=1 only.Source: 2007 USDA Agricultural Resource Management Survey. 
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Appendix table 6

Farm financial, operator, and structural characteristics for farm operations by debt classification and 

line of credit, 2007 

Debt Classification

 No debt but had Operation had Operation had

 No debt and no an established debt in 2006 but debt in 2006 plus

 line of credit line of credit in no established an established

Item established 2006 line of credit line of credit 48-State total

Number of farms 1,428,027 82,391 312,415 373,933 2,196,766

 Percent of farms 65.0 3.8 14.2 17.0 100.0

 Value of production ($1,000) 66,341,733 29,726,612 38,462,516 155,682,944 290,213,805

Percent of value of production 22.9 10.2 13.3 53.6 100.0

Acres per farm 

Land operated per farm 258 846 345 968 413

Total farm loan debt 0 0 41,067,448 97,507,148 138,574,596

Percent of debt held 0.0 0.0 29.6 70.4 100.0

Farm operation income statement: Dollars per farm

Gross cash income 46,243 376,564 87,601 372,538 120,056

Less: Cash expenses 35,995 267,797 76,323 289,187 93,522

 Variable 30,299 220,701 57,821 229,417 75,248

 Fixed 5,696 47,096 18,502 59,770 18,274

Equals: Net cash farm income 10,249 108,767 11,278 83,351 26,533

Balance sheet characteristics: $1,000 

Value of total farm financial assets 951,274,058 114,802,423 247,722,543 566,114,295 1,879,913,319

Total farm financial debt* 1,447,436 602,085 42,874,041 103,271,602 148,195,164

Accounts payable 1,447,436 602,085 574,543 2,839,206 5,463,270

Seasonal loans taken and repaid 

 during year 449,322 9,206,709 1,031,434 31,023,078 41,710,543

 Percent 

Seasonal loans taken and repaid 

 during year 1.1 22.1 2.5 74.4 100.0

Profitability: 

Return on assets (percent) -0.41 5.85 0.18 4.95 1.67

Operating profit margin (percent) -4.92 20.21 1.36 17.89 10.41

---continued
55

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Appendix table 6

Farm financial, operator, and structural characteristics for farm operations by debt classification and 

line of credit, 2007, continued 

Debt Classification

 No debt but had Operation had Operation had

 No debt and no an established debt in 2006 but debt in 2006 plus

 line of credit line of credit in no established an established

Item established 2006 line of credit line of credit 48-State total

Percent 

Debt distributions:

Sales class:

 $9,999 or less 71.2 13.9 54.9 21.5 58.3

 $10,000-$99,999 22.7 36.6 27.8 29.5 25.1

 $100,000-$499,999 4.9 31.7 12.6 29.3 11.2

 $500,000-$999,999 0.7 10.9 2.7 12.1 3.3

 $1,000,000-$4,999,999 0.4 6.2 1.9 6.8 1.9

 $5,000,000 or more 0.1 0.6 0.1 0.8 0.2

Farm type:

 Cash grain and soybean 8.3 52.1 10.1 31.7 14.2

 Other field crops 25.3 12.8 19.9 10.0 21.5

 High-value crops 6.2 8.8 7.3 5.4 6.3

 Beef cattle 31.8 18.0 28.3 28.7 30.2

 Hogs 0.9 0.8 2.6 2.7 1.5

 Poultry 0.8 0.7 4.9 3.1 1.8

 Dairy 1.4 2.1 4.7 7.7 2.9

 General livestock 25.3 4.7 22.2 10.8 21.6

Tenure:

 Full owner 74.8 38.6 63.9 33.8 64.9

 Part owner 20.1 40.3 31.1 56.2 28.6

 Tenant 5.1 21.0 5.0 10.1 6.5

Operator age:

 Less than 35 years 3.7 6.9 6.7 9.4 5.2

 35 to 44 9.5 13.5 19.9 17.0 12.4

 45 to 54 20.9 23.3 30.6 29.8 23.9

 55 to 64 years 31.2 33.5 28.9 29.9 30.7

 65 years or older 34.7 22.9 14.0 13.9 27.8

Mileage to obtain inputs: Miles

 Miles to buy machinery 21.8 29.4 25.7 27.1 23.7 

 Miles to obtain credit 13.7 18.7 16.8 19.2 16.0 

 Miles to do farm-related purchasing 16.2 15.9 17.5 18.7 16.8 

* Total farm financial debt = total farm loan debt + total accounts payable + total accrued interest.

Based on 6,614 observations (6,179 households, 435 non-households). Expansion factor was VER1WT0. Version=1 only.

Source: 2007 USDA Agricultural Resource Management Survey. 
56

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Appendix table 7

Farm financial, operator, and structural characteristics for farm operations by debt classification, 2007

Debt classification

Item No lender debt payable Debt payable to lender(s) 48-State total

Number of farms 1,510,418 686,348 2,196,766

 Percent of farms 68.8 31.2 100.0

 Value of production ($1,000) 96,068,345 194,145,460 290,213,805

Percent of value of production 33.1 66.9 100.0

Acres per farm 

Land operated per farm 290 684 413

 Total farm loan debt 0 138,574,596 138,574,596

 Percent of debt held 0.0 100.0 100.0

Farm operation income statement: Dollars per farm 

Gross cash income 64,262 242,839 120,056

 Less: Cash expenses 48,639 192,295 93,522

 Variable 40,685 151,309 75,248

 Fixed 7,954 40,985 18,274

 Equals: Net cash farm income 15,623 50,544 26,533

Balance sheet characteristics: $1,000

 Value of total farm financial assets 1,066,076,481 813,836,838 1,879,913,319

 Total farm financial debt* 2,049,521 146,145,643 148,195,164

 Accounts payable 2,049,521 3,413,749 5,463,270

 Seasonal loans taken and repaid 

 during year 9,656,030 32,054,512 41,710,543

Percent

 Seasonal loans taken and repaid 

 during year 23.2 76.8 100.0

Profitability: 

 Return on assets (percent) 0.27 3.49 1.67

 Operating profit margin (percent) 2.56 15.05 10.41

Debt distributions:

Sales class

 $9,999 or less 68.1 36.7 58.3

 $10,000-$99,999 23.5 28.8 25.1

 $100,000-$499,999 6.4 21.7 11.2

 $500,000-$999,999 1.2 7.8 3.3

 $1,000,000-$4,999,999 0.7 4.6 1.9

 $5,000,000 or more 0.1 0.5 0.2

---continued
57

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Appendix table 7

Farm financial, operator, and structural characteristics for farm operations by 

debt classification, 2007, continued 

Debt classification

Item No lender debt payable Debt payable to lender(s) 48-State total

Farm type: Percent

 Cash grain and soybean 10.7 21.9 14.2

 Other field crops 24.6 14.5 21.5

 High-value crops 6.4 6.3 6.3

 Beef cattle 31.0 28.5 30.2

 Hogs 0.9 2.6 1.5

 Poultry 0.8 3.9 1.8

 Dairy 1.4 6.3 2.9

 General livestock 24.2 16.0 21.6

Tenure:

 Full owner 72.9 47.5 64.9

 Part owner 21.2 44.7 28.6

 Tenant 5.9 7.8 6.5

Operator age:

 Less than 35 years 3.9 8.1 5.2

 35 to 44 9.7 18.3 12.4

 45 to 54 21.0 30.2 23.9

 55 to 64 years 31.3 29.4 30.7

 65 years or older 34.1 13.9 27.8

Mileage to obtain inputs: Miles

 Miles to buy machinery 22.3 26.5 23.7 

 Miles to obtain credit 14.2 18.1 16.0 

 Miles to do farm-related 

 business/purchasing 16.2 18.1 16.8

* Total farm financial debt = total farm loan debt + total accounts payable + total accrued interest.

Based on 6,614 observations (6,179 households, 435 non-households). Expansion factor was VER1WT0. Version=1 only.

Source: 2007 USDA Agricultural Resource Management Survey. 
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Appendix table 8

Farm financial, operator, and structural characteristics for farm operations by debt-to-asset-ratio groupings, 2007

Debt-to-asset ratio 

Item No debt .01 - .10 .11 - .40 .41 - .70 .71 - 1.0 Number of farms 1,510,418 262,079 299,274 93,653 20,993 

 Percent of farms 68.8 11.9 13.6 4.3 1.0 

 Value of production ($1,000) 96,068,345 54,708,183 94,924,662 30,145,921 8,657,475 

Percent of value of production 33.1 18.9 32.7 10.4 3.0 

Acres per farm 

Land operated per farm 290 764 724 383 512 

 Total farm loan debt 0 15,029,493 72,947,350 33,314,305 9,707,735 

 Percent of debt held 0.0 10.8 52.6 24.0 7.0 

Farm operation income statement: Dollars per farmGross cash income 64,262 184,626 281,895 252,293 328,058 

Less: Cash expenses 48,639 146,749 218,849 206,358 271,385 

 Variable 40,685 118,573 170,990 161,478 208,826 

 Fixed 7,954 28,176 47,858 44,880 62,559 

Equals: Net cash farm income 15,623 37,877 63,046 45,935 a56,673 

Balance sheet characteristics: $ 1,000  Value of total farm  financial assets 1,066,076,481 376,301,883 354,416,446 65,848,767 12,358,386 

 Total farm financial debt* 2,049,521 16,537,265 76,849,574 34,705,558 10,153,447 

 Accounts payable 2,049,521 1,056,858 1,713,781 391,814 154,481 

 Seasonal loans taken and  repaid during year 9,656,030 7,617,572 18,613,340 4,414,537 872,203 

Percent 

 Seasonal loans taken and  repaid during year 23.2 18.3 44.6 10.6 2.1 

Profitability: Percent Return on assets 0.27 1.66 4.83 5.46 7.26 

 Operating profit margin 2.56 11.09 17.81 13.93 12.53 

Debt distributions:Sales class: $9,999 or less 68.1 32.7 34.0 50.2 48.2 

 $10,000-$99,999 23.5 37.1 25.3 21.2 19.6 

 $100,000-$499,999 6.4 20.0 25.9 15.1 20.3 

 $500,000-$999,999 1.2 6.8 8.9 7.2 6.3 

 $1,000,000-$4,999,999 0.7 3.2 5.4 5.5 4.3 

 $5,000,000 or more 0.1 0.2 0.6 0.8 1.3 
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Appendix table 8

Farm financial, operator, and structural characteristics for farm operations by debt-to-asset-ratio-groupings, 2007, cont

Debt-to-asset ratio 

Item No debt .01 - .10 .11 - .40 .41 - .70 .71 - 1.0 Farm type: Percent Cash grain and soybean 10.7 22.7 24.1 15.6 14.0 

 Other field crops 24.6 16.1 12.4 16.3 20.8 

 High-value crops 6.4 6.0 6.3 5.9 2.8 

 Beef cattle 31.0 32.7 28.9 21.0 8.8 

 Hogs 0.9 1.7 2.5 4.4 9.1 

 Poultry 0.8 1.7 3.3 10.2 6.9 

 Dairy 1.4 7.7 6.0 3.4 9.3 

 General livestock 24.2 11.5 16.4 23.1 28.2 

Tenure: Full owner 72.9 44.8 45.1 57.0 57.4 

 Part owner 21.2 49.8 47.8 28.9 26.0 

 Tenant 5.9 5.5 7.0 14.1 16.5 

Operator age: Less than 35 years 3.9 6.3 6.9 14.1 16.6 

 35 to 44 9.7 12.7 17.7 33.7 29.3 

 45 to 54 21.0 26.2 35.0 26.1 24.7 

 55 to 64 years 31.3 32.2 30.4 21.1 24.3 

 65 years or older 34.1 22.6 10.0 5.0 5.2 

Mileage to obtain inputs: Miles Miles to buy machinery 22.3 26.1 28.0 22.4 35.2 

 Miles to obtain credit 14.2 17.9 17.4 19.8 25.9 

 Miles to farm-related purchasing 16.2 19.4 17.5 16.5 21.0 

* Total farm financial debt = total farm loan debt + total accounts payable + total accrued interest.Based on 6,614 observations (6,179 households, 435 non-households). Expansion factor was VER1WT0. Version=1 only. All 48 contiguous States were included in the sample. Rounded percents may not add precisely to 100. Source: 2007 USDA Agricultural Resource Management Survey. 
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Appendix table 9

Farm financial, operator, and structural characteristics for farm operations by number of lenders and loans, 2007

Debt Classification

Item No loans One lender, One lender with Multiple lenders 48-State total

 one loan multiple loans and loans

 Percent 

Number of farms 1,548,993 399,198 120,148 128,427 2,196,766

 Percent of farms 70.5 18.2 5.5 5.8 100.0

 Value of production ($ 1,000) 114,312,095 76,912,750 44,791,775 54,197,185 290,213,805

Percent of value of production 39.4 26.5 15.4 18.7 100.0

Acres per farm 

Land operated per farm 317 500 695 1,035 413

 Total farm loan debt 15,370,791 46,986,186 33,680,175 42,537,444 138,574,596

 Percent of debt held 11.1 33.9 24.3 30.7 100.0

Farm operation income statement: Dollars per farm 

Gross cash income 72,479 154,750 325,290 394,049 120,056

Less: Cash expenses 55,102 128,165 250,187 302,676 93,522

 Variable 45,680 102,327 196,703 234,084 75,248

 Fixed 9,422 25,838 53,484 68,592 18,274

Equals: Net cash farm income 17,377 26,585 75,103 91,373 26,533

Balance sheet characteristics $1,000

 Value of total farm financial assets 1,134,208,467 371,974,302 164,491,753 209,238,797 1,879,913,319

 Total farm financial debt* 18,203,612 49,576,858 35,469,958 44,944,736 148,195,164

 Accounts payable 2,371,704 1,181,059 779,365 1,131,142 5,463,270

 Seasonal loans taken and repaid 

 during year 10,085,145 11,410,366 8,175,196 12,039,836 41,710,543

Percent 

 Seasonal loans taken and repaid 

 during year 24.2 27.4 19.6 28.9 100.0

Profitability: 

 Return on assets (percent) 0.53 1.80 4.50 5.37 1.67

 Operating profit margin (percent) 4.65 9.49 17.18 19.15 10.41

Debt distributions:

Sales class:

 $9,999 or less 67.1 45.8 29.2 17.7 58.3

 $10,000-$99,999 23.5 30.9 26.9 24.4 25.1

 $100,000-$499,999 6.8 15.9 27.2 34.1 11.2

 $500,000-$999,999 1.6 4.5 9.3 14.8 3.3

 $1,000,000-$4,999,999 0.9 2.5 6.7 8.4 1.9

 $5,000,000 or more 0.1 0.3 0.7 0.6 0.2

Farm type:

 Cash grain and soybean 11.0 17.2 27.1 31.0 14.2

 Other field crops 24.4 14.8 15.7 11.5 21.5

 High-value crops 6.5 6.3 6.3 4.9 6.3

 Beef cattle 30.7 31.1 28.8 23.0 30.2

 Hogs 0.9 2.9 1.3 3.4 1.5

 Poultry 0.9 3.8 4.3 3.6 1.8

 Dairy 1.5 4.6 7.4 11.2 2.9

 General livestock 24.1 19.2 9.0 11.3 21.6

Tenure:

 Full owner 72.4 54.7 38.4 31.4 64.9

 Part owner 21.7 36.9 52.9 62.2 28.6

 Tenant 5.9 8.4 8.7 6.5 6.5

---continued
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Appendix table 9

Farm financial, operator, and structural characteristics for farm operations by number of 

lenders and loans, 2007, continued

Debt Classification

Item No loans One lender One lender with Multiple lenders 48-State total

 One loan multiple loans and loans

 Percent 

Operator age:

 Less than 35 years 3.9 8.2 8.3 8.9 5.2

 35 to 44 9.7 17.3 23.6 18.8 12.4

 45 to 54 21.3 30.6 25.9 32.4 23.9

 55 to 64 years 31.6 27.0 32.5 29.9 30.7

 65 years or older 33.5 16.9 9.7 10.1 27.8

Mileage to obtain inputs: Miles

 Miles to buy machinery 22.4 25.5 25.8 29.7 23.7 

 Miles to obtain credit 14.3 18.4 17.1 19.0 16.0 

 Miles to do farm-related business/purchasing 16.4 17.5 18.0 18.4 16.8 

* Total farm financial debt = total farm loan debt + total accounts payable + total accrued interest.

Based on 6,614 observations (6,179 households, 435 non-households). Expansion factor was VER1WT0. Version=1 only.

All 48 contiguous States were included in the sample.

Source: 2007 USDA Agricultural Resource Management Survey. 
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Appendix table 10

Farm financial, operator, and structural characteristics for farm operations with debt grouped by farm type, 2007

 Item Cash grain Other field High value 

and soybean crops crops Beef cattle Hogs Poultry Dairy 

Number of farms 149,972 99,700 43,154 195,681 17,941 26,723 43,461 

 Percent of farms 21.9 14.5 6.3 28.5 2.6 3.9 6.3 

 Value of  production ($ 1,000) 52,410,341 10,886,121 24,134,057 33,718,166 14,430,356 23,211,312 30,598,222 

Percent of value of production 27.0 5.6 12.4 17.4 7.4 12.0 15.8 

Acres per farm 

Land operated per farm 1,191 497 236 931 323 170 421 

 Total farm loan debt 36,747,124 14,282,512 12,603,498 27,210,533 5,860,082 8,828,670 18,372,488 

 Percen of debt held 26.5 10.3 9.1 19.6 4.2 6.4 13.3 

Farm operation income statement: Dollars per farmGross cash income 345,114 121,150 566,519 136,582 534,912 220,902 708,787 

Less: Cash expenses 254,889 94,976 451,138 126,252 383,019 152,390 527,070 

 Variable 176,564 70,246 382,612 104,379 320,106 117,662 466,588 

 Fixed 78,325 24,730 68,526 21,874 62,914 34,728 60,482 

Equals: Net cash farm income 90,225 26,174 115,382 10,329 151,893 68,512 181,717 

Balance sheet characteristics: $ 1,000  Value of total farm  financial assets 240,559,594 87,500,633 67,224,950 208,106,350 24,661,425 29,243,169 91,326,208 

 Total farm financial debt* 39,491,434 14,987,652 13,401,214 28,483,770 6,179,437 9,141,804 19,177,235 

 Accounts payable 1,641,884 276,657 419,610 456,901 143,551 48,272 253,567 

 Seasonal loans taken  and repaid during year 13,990,608 3,239,670 3,009,221 6,829,433 1,123,574 498,702 2,436,395 

Percent 

 Seasonal loans taken  and repaid during year 43.6 10.1 9.4 21.3 3.5 1.6 7.6 
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Appendix table 10

Farm financial, operator, and structural characteristics for farm operations with debt grouped by farm type, 2007, con

 Item Cash grain Other field High value 

and soybean crops crops Beef cattle Hogs Poultry Dairy 

 Profitability: Percent Return on assets 6.53 2.15 5.93 0.09 10.46 4.40 4.5

 Operating profit margin 24.95 13.50 15.60 0.63 24.68 19.35 12.9

Debt distributions:Sales class: $9,999 or less 4.8 59.3 17.1 38.0 35.4 17.1 0.

 $10,000-$99,999 27.4 26.9 41.5 45.5 12.6 2.1 19.

 $100,000-$499,999 46.3 7.2 22.3 11.8 15.2 29.2 57.

 $500,000-$999,999 16.2 4.1 9.7 2.8 13.8 29.1 10.

 $1,000,000-$4,999,999 5.1 2.5 7.6 1.4 21.2 21.4 10.

 $5,000,000 or more 0.1 0.0 1.7 0.5 1.8 1.1 2.

Tenure: Full owner 19.2 62.3 63.3 43.9 47.9 76.1 15.

 Part owner 66.5 34.1 27.4 48.0 42.5 23.3 73.

 Tenant 14.3 3.7 9.3 8.0 9.5 0.6 11.

Operator age: Less than 35 years 11.5 6.2 2.1 8.1 2.3 9.6 11.

 35 to 44 17.7 14.8 11.0 14.6 26.7 38.2 18.

 45 to 54 29.2 29.3 36.8 26.9 45.5 24.4 38.

 55 to 64 years 26.6 35.5 33.7 33.2 17.5 21.7 21.

 65 years or older 15.1 14.4 16.4 17.2 8.0 6.0 9.

Mileage to obtain inputs: Miles Miles to buy machinery 27.6 21.5 28.9 28.5 29.6 21.1 27.

 Miles to obtain credit 16.9 14.8 19.7 20.5 14.5 18.8 19.

 Miles to do farm-related  business/purchasing 13.9 15.1 30.8 21.1 15.9 15.6 22.

* Total farm financial debt = total farm loan debt + total accounts payable + total accrued interest.Based on 3,570 observations (3,363 households, 207 non-households). Expansion factor was VER1WT0. Version=1 only. Source: 2007 USDA Agricultural Resource Management Survey.
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Appendix table 11

Increased concentration of U.S. farm debt, by year, 1998–2007 

Item 1998 1999 2000 2001 2002 2003 2004 2005 

Number of farms 2,054,711 2,186,951 2,166,061 2,149,388 2,152,415 2,120,819 2,107,925 2,094,876 

Number of farms with debt 911,291 925,139 919,979 897,250 928,304 871,408 832,095 780,806 Percent of farms with debt 44 42 42 42 43 41 39 37 

Dollars per farm 

Farm financial debt 55,541 51,374 57,031 58,610 65,314 65,091 65,684 64,657 Farm financial assets 520,470 497,330 535,807 559,421 547,726 628,840 708,363 777,669 Net worth (equity) 464,930 445,956 478,776 500,811 482,412 563,749 642,678 713,012 Net cash farm income 16,480 14,193 13,550 16,133 12,086 16,262 24,529 24,439 Value of commodities produced 90,960 80,605 81,847 89,974 84,770 88,006 107,071 102,772 

$ million 

Farm financial debt 114,120 112,352 123,532 125,976 140,583 138,047 138,458 135,448 Farm financial assets 1,069,416 1,087,637 1,160,590 1,202,414 1,178,933 1,333,656 1,493,175 1,629,119 

Net worth (equity) 955,296 975,285 1,037,058 1,076,437 1,038,351 1,195,609 1,354,718 1,493,671 

Net cash farm income 33,861 31,040 29,349 34,676 26,014 34,488 51,706 51,196 Value of commodities produced 186,897 176,280 177,286 193,390 182,461 186,644 225,698 215,295 

Ratio 

Debt/asset ratio 0.107 0.103 0.106 0.105 0.119 0.104 0.093 0.083 Debt/equity ratio 0.119 0.115 0.119 0.117 0.135 0.115 0.102 0.091 Debt/value of commodities ratio 0.611 0.637 0.697 0.651 0.770 0.740 0.613 0.629 All farms Number of farms 2,054,711 2,186,951 2,166,061 2,149,388 2,152,415 2,120,819 2,107,925 2,094,876 

 Gini coefficient 0.848 0.850 0.858 0.853 0.854 0.859 0.865 0.876 Only farms with debt: Number of farms with debt 911,291 925,139 919,979 897,250 928,304 871,408 832,095 780,806  Gini coefficient of farms with debt 0.657 0.646 0.665 0.648 0.661 0.656 0.658 0.668 

Percent

Farms by income solvency class: Favorable 59 62 60 62 59 62 66 65  Marginal income 33 31 32 29 31 29 28 28  Marginal solvency 4 4 3 3 5 4 3 3  Vulnerable 5 4 5 5 5 5 3 4 Sample size 11,812 10,251 10,309 7,699 12,391 18,459 20,579 22,843 

All 48 contiguous States were included in the sample. Alaska, Hawaii, and U.S. territories are excluded from the surveys. Rounded percents may not add precisely to 100. Source: 1998–2007 USDA Farm Costs and Returns Survey/Agricultural Resource Management Survey.