U.S. farm equity is forecast to rise by 2.3 percent this year as the sector continues to generate wealth despite lower farm income, a cooling off of land prices and higher borrowing costs, said the Agriculture Department. The rise in farm sector assets would result primarily from a 2.9 percent rise in the value of farm land and buildings. USDA said the “continued growth in the value of farm real estate reflects expectations of favorable net returns from both the market and government programs, including crop insurance, in 2014 and the future.”
Two widely watched gauges of farm solvency, the debt-to-asset and debt-to-equity ratios, “remain near their post-1970 historical lows,” said USDA, showing the sector’s strong financial position.
“As such, the sector remains well insulated from the risks associated with commodity production (such as adverse weather), changing macroeconomic conditions in the United States and abroad, as well as any fluctuations in farm asset values that may occur due to changing demand for agricultural assets.”