Growth in Overall Farm Wealth Expected to Slow in 2014

The latest forecast from the USDA Economic Research Service predicts a slowdown in the growth of overall farm wealth in 2014.  Expectations are that overall farm debt will increase 2.3% while farm assets are expected to rise 2.4% yielding a net increase of 0.1%.  This level of wealth generation in the agricultural sector is much lower than the 1.5% growth that ag. has enjoyed over the last 10 years.  The decline in asset growth stems primarily from a decline in the growth in land values around the country, brought about by a slowdown in accumulation of agricultural land, and an expected decline in commodity prices.

Despite the slowdown in asset value growth, financial solvency is expected to continue its improvement moving to a national average debt-asset ratio of 10.5 in 2014 which is down from a modest spike of 11.8 in 2010, and the lowest it has been in about 60 years.

debttoequity

However, solvency  measured using the debt-to-asset ratio is subject to change  should land price fall.