Owning a business can be a major financial challenge, depending on the industry you are in and the health of the markets, the fluctuating costs of operating the business, and various other factors. This is particularly the case for farmers, who are particularly vulnerable to the vagaries of a supply and demand system.
According to the U.S. Department of Agriculture, farm income is in the third year of a significant decrease. The stretch of hard times has led to many farmers borrowing additional money, selling unnecessary equipment and giving up leases. The situation is largely due to a decrease in the prices for corn and soybeans, as well as an oversupply of grain and difficult markets overseas.
Experts say farm debt is expected to exceed $372 billion this year, which is worse than the situation in the 1970’s when accounting for inflation. Signs of hope remain, though, in low interest rates and relatively steady land prices. Here in Wisconsin, as elsewhere, many farmers were able to make good progress with debts when commodity prices were higher, which will give them a better shot at weather the current crisis.
Still, some farmers–particularly smaller producers–are failing and more will continue to struggle through the crisis, taking on additional debt and perhaps closing down operations altogether. For farmers, knowing what options are available to address burdensome debt is important to ensure they have the opportunity to make the best possible choice for their business.
In our next post, we’ll continue looking at this topic as it relates to the issue of bankruptcy.
Sources:
NPR, “With Economy Stuck In The Mud, Farmers Sink Deeper Into Debt,” Grant Gerlock, March 3, 2016.
Wisconsin Public Radio, “Wisconsin Farm Debt Grows Rapidly As Commodity Prices Stay Low,” Hope Kirwan, June 20, 2016.
