By RACHEL LANE

D.C. Correspondent

WASHINGTON, D.C. — According to the numbers, farms across America are in a decent financial situation now – but that may change. Debt is rising but land values are currently holding steady.

During the USDA Ag Forum last month, the USDA released forecasting figures for commodities across the country and invited speakers to discuss the economic outlook of farms. While no one seemed to be unconcerned about the economic future of farming, many of the speakers said the situation was not as dire as it might seem.

USDA Secretary Sonny Perdue has often said the farm economy is not as bad as it was in the 1980s, a period of time generally considered the worst economic period in the recent history of farming.

Nathan Kauffman, vice president and Omaha Branch executive of the Federal Reserve Bank of Kansas City, said current numbers indicate the agricultural economy is not as stressed as it was in 2009, and the years immediately following the recent recession. Unemployment is at the lowest it's been since the 1960s and the economy is expanding. If it continues until the summer, it will be the longest expansion in the history of the United States.

Ten years ago, delinquency rates for farms was 4 percent nationally. It is closer to 2 percent right now, Kauffman said. In 2010, 700 farms filed for bankruptcy, while it is about 500 today.

He said there has been an uptick in bankruptcies in the last few years, but it is still lower than 10 years ago. He explained there are a few things he is watching, including the delinquency rates on farms, in addition to the S&P 500 and the International Monetary Fund (IMF).

The IMF reduced the global economic forecast from 2018 to 2019 from 2.9 percent growth to 3.5 percent, Kauffman reported. "I think farmland is one of the most important areas we ought to be monitoring," he said.

Right now, land value is holding, but if interest rates increase, that may not stay true.

Christopher Burns, economist at the USDA’s Economic Research Service, said total farm debt rose to $422 billion in 2018. The total debt-to-asset ratio is 13.5 percent. "Adjusted for inflation, total farm debt is nearing the record peak from the 1980s," he said.

On its own, this is not a bad thing. Larger farms tend to borrow more to expand production. They are also more likely to repay loans on time and have a higher rate of return on new technology used on the farms. Over the last 20 years, U.S. farm production has shifted to larger farms, which are responsible for about 50 percent of farm production and have a debt-to-asset ratio closer to 20 percent.

Sam Funk, CEO and managing member and executive economist for AgServe.com, said the balance sheet might be strong, but farmers need money as well to care for their families. And while national data might be strong now, it does not mean certain regions of the country aren't more negatively impacted by the current economy.

Greg Ibach, USDA under secretary of marketing and regulatory programs, said trade has impacted different regions of the country differently, even as it affects the entire country. Apples from Washington are more likely to go to China than apples from Michigan, he said, but the increased availability of Washington apples in the U.S. means the Michigan farmers are selling fewer.

The government has been purchasing from U.S. farmers and supplying food banks across the country. To date, more than 10,000 loads of food have been delivered to food banks.

While government programs have helped ease current trade tensions momentarily, it is not a long-term solution. Funk said trade with China is a long-term risk. The longer that risk remains in place, the worse the farm economy will grow.

Perdue said in a U.S. House of Representatives hearing earlier this month the farm economy is down about 50 percent in the last five years. "There are very few businesses that can survive that kind of revenue decrease," he noted.

Farm income peaked in 2013/14, he said, and commodity prices have fallen globally since then, while production has increased. "The farm economy, we know it's tough out there," he added. The dairy industry specifically has been hit hard, but he thinks the 2018 farm bill will help.

Stable land values have allowed farmers to get the funding needed to operate their land, which has allowed the debt-asset ratio to remain low by historic standards, Perdue said.

This year, net farm income is expected to increase to $77 billion, but he knows the projections aren't always accurate and farmers won't be able to relax until the crops are in the bins and the checks are in the bank.