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Looking Beyond the Statistics in Ag
You are here:   Blog  »  Agricultural Real Estate  »  Looking Beyond the Statistics in Ag

February 19, 2019 

It is important to examine the overall ag sector using statistics, charts, and analysis. The trends and changes indicated for various data sets and sectors is valuable for many reasons, not the least is to determine the health of the ag economy. But for all the ag statistics that we look at, and I personally enjoy the statistics and numbers, there is a story, a business, and a person behind the trends and charts. This is especially so during tough economic times in agriculture like we are experiencing today. One has to dig deeper into the statistics to really fathom the effect on the individual producer or landowner. Even though data is collected and reported in the aggregate for agriculture, the effects of events and trends potentially have differing impacts on landowners and farmers. 


One example of needing to dig deeper into what the statistics really mean is the recent Wall Street Journal article "Wave of Bankruptcies Hits Farm Country". The Journal reports that Chapter 12 bankruptcies in the three Circuit Court Districts encompassing much of the grainbelt are up 50% to 96% from 2008. While this is true, the total number of Chapter 12 bankruptcy filings in the 16 states during 2018 was a bit over 200. If you take into account the total number of farmers and ranchers in these states, the overall percentage of bankruptcy filings is very low. This does not negate the financial and emotional burden for the people involved, but it does put the statistic of rising bankruptcies in perspective.
 


There are other statistics that support the overall financial strength of agriculture. These include a low debt-to-asset ratio, loan delinquency rates that are just now getting back up to longer term averages, and the fact that the majority of farmland has no debt. These positive statistics mask what is happening to individual producers, who for various reasons, are having financial troubles. These are the producers who may end up selling a farm or other asset to shore up their balance sheet or cash flow. This is the small group that everyone in ag has been expecting to bring more land on the market for sale, but the sales have not materialized to any large extent to date.
 


As we move into the sixth year of lower farm commodity prices and farm incomes, statistics are very important to watch and analyze. But it also takes a deeper dive into those statistics to really determine what is going on in the aggregate, how these affect individual producers, and what impact if any will the trends and actions have on the land market. Stay tuned for another year of careful watching!
  

   

Randy Dickhut 

Senior Vice President - Real Estate Operations 

 

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