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Best of NAMA 2022


By Michael Langemeier, Center for Commercial Agriculture, Purdue University

U.S. farm equity in 2022 is 27.7% higher than it was in 2017 and 42.7% higher than it was in 2012. During the last 10 years, net farm income was above the long-run average (i.e., average from 2007 to 2022) from 2012 to 2014, and in 2021 and 2022, but below the long-run average from 2013 to 2020. Thus, the increase in farm equity is due to more than relatively high net farm income. This article discusses changes in in the U.S. farm sector balance sheet as well as liquidity and solvency ratios.

Trends in Real Assets and Debt

Before analyzing the farm sector's current balance sheet, we will review trends in real assets and real debt. Figure 1 presents real U.S. farm sector assets and debt values using 2021 as the base year. With the exception of 2022, the values for each year represent end of year values. Prior to 2012, the peak in real assets occurred in 1979 at a value of $2.837 trillion. In 2012, real assets for the farm sector totaled $3.048 trillion. Since 2012, real assets have exceeded $3 trillion. Real assets are projected to reach a new peak at $3.618 trillion in 2022. This represents a 3.4% increase from the previous peak in 2021.

Real farm sector debt in 2022 is projected to be $467.9 billion, a decrease of 1.3% from the year before. If realized, the decline in real farm debt in 2022 would represent the first decline in total debt since 2012. Current farm sector debt is 36.1% higher than the value in 2012 and 10.0% higher than the value in 2017.

Projected farm sector equity in 2022 is $3.150 trillion, which represents a 4.2% increase from the year before. Real farm sector equity in 2022 is 16.5% higher than the value in 2012 and 10.6% higher than the value in 2017.

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