ERS Report Shows‘Bs
WASHINGTON - Farmers’
cash flow positions improved
during 1985 largely because of
continued high direct Government
payments and greatly increased
Commodity Credit Corporation
loans, according to a report to be
issued August 15 by the U.S.
Department of Agriculture’s
Economic Research Service.
Farmers’ equity declined and
their debt-to-asset ratios increased
due to declining land values, ac
cording to the ERS analysis of data
gathered in early 1986. Also,
private farm lenders have con
siderable risk exposure in their
farm loan portfolios.
Developments during the first
six months of 1986 and forecasts for
the year suggest a little change in
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• Powershift Transmission - Full 12 Speed Forward;
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• Wet Hydraulic Master Clutch
• Hydraulic Disc Brakes
• Dual, 27 GPM Remote Hydraulic Valves
• 115 Gallon Fuel Tank
• Super Quiet Cab w/50.75 Sq. Ft. of Tinted Glass
• Deluxe, Adjustable, Air-Ride Seat
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operators’ income and further slow
deterioration in their equity
positions. Larger direct Govern
ment payments and reduced
production expenses will essen
tially offset lower marketing
receipts. But continued declines in
asset values, particularly land
values, will more than offset lower
operator debt.
The ERS report, “Financial
Characteristics of U.S. Farms,
January 1986,” will include data
collected in USDA’s “Farm Costs
and Returns Survey” conducted in
early 1986.
Net farm income in 1985 was in
the $29-32 billion range, slightly
below the 1984 level of $34 billion,
preliminary analysis of the in
formation indicates. Net cash
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Cash Flow Improved, Equity Declined
income last year rose to $43-46
billion from $36-39 billion in recent
years. Off-farm income continued
to grow in 1985, reaching $4042
billion. Many operators have taken
advantage of these relatively
favorable incomes to reduce debts.
Overall, debt owed by operators
for farm purposes declined about
$7 billion, with only the CCC
showing a major increase in
lending in 1985.
Farm cash flow improved
somewhat from 1984 to 1985. Over
55 percent of farms had positive
cash flows after considering all
sources of family income and cash
obligations, including interest,
principal payments, and minimal
family living expenses. This was
up from 49 percent in 1984. Nearly
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50 percent of all debt was owed by
farms with positive cash flows, as
opposed to 36 percent in 1984.
Debt-to-asset ratios, in contrast,
increased slightly. Twenty-one
percent of farms, which owed 66
percent of the debt, had high debt
to-asset ratios (over .4). In 1984,19
percent of farms, owing 62 percent
of the debt, had high debt-to-asset
ratios.
The proportion of farms with the
most serious financial problems
both high debt-to-asset ratios and
negative cash Hows declined
from about 12.5 percent in 1984 to
about 11 percent a year later.
These farms accounted for about
37 percent of operator debt in 1985,
compared with 45 percent in 1984.
The Upper Midwest had the
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MIDDLETOWN, DE
(302) 378-9655
Lancaster Farming, Saturday, July 26,1956-C7
Extension Honors Economist
CREAMERY - Sara
Danehower, Lansdale, was
honored recently by the Penn
sylvania Association of Extension
Home Economist for her out
standing contribution to the
Cooperative Extension Service.
Sara has served as a 4-H
clothing, foods, and organizational
leader for over 35 years. In ad
dition, she worked closely with the
4-H Teen Council and continues to
serve on the Extension Executive
Board and the Farm, Home and 4-
H Foundation board of directors.
She has been instrumental in the
recent establishment and
renovation of the Montgomery
County 4-H Center in Creamery.
Mrs. Danehower is a retired
home economist teacher from the
North Penn School district. She has
also been cited for her work with
handicapped youth in the North
Penn area.
Paying Top Prices For
Good Quality Ear Corn
• Wet or Dry
• No Quantity too large
or too small
Fast Unloading -
Dump on Pile & Go
Easy access - 2.2
miles off 283 bypass-
Manheim, Mt. Joy
exit
Daily Receiving 7:30
A.M. to 5 P.M. - Un
loading evenings &
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Trucks available for
pick up at your farm.
JAMES E. NOLL GRAIN
highest proportion of farms at risk
because of debts. Three regions
the Corn Belt, Northern Plains and
Lake States accounted for over
two-thirds of these farms.
Financial stress also was highly
concentrated among farms with
annual sales of $40,000 and above,
among grain and general livestock
farms, and among younger and
middle-aged farmers.
About 40 percent of all farms in
the nationwide survey owed no
debt on January 1, 1986 and
another 40 percent had debts equal
to less than 40 percent of the value
of their assets. Among farms with
annual sales of $40,000 or more,
about 19 percent were debt-free
and another 48 percent had low
debts relative to assets.
Lenders still face considerable
risk of losses because over two
thirds of operator debt is owed by
highly leveraged farmers, with 37
percent owed by farmers who were
both highly leveraged and had
negative cash flows. As expected,
the Farmers Home Administration
had the highest proportion of
operator loans at risk. Other
lenders typically had 10-15 percent
of their farm loan portfolios owed
by operators whose debts exceeded
their assets, and half or more of
their portfolios owed by operators
with debt-to-asset ratios of .4 to 1.0.
EAR CORN
Call Anytime For Price
717-665-4785