Iowa Public Television


Farm Economy Improving

posted on December 27, 2002

Hello, I'm Mark Pearson.

Discount, discount, discount was the mantra of the 2002 holiday retail season. But major retailers are reporting this year's Christmas sales may be the worst in 30 years.

While interest rates at 40 year lows have encouraged consumers to refinance home mortgages, buy new homes, and big ticket items, many shoppers have resisted Yule splurging.

The prospect of War and underlying angst over a flat economy is encouraging consumers and investors alike to sit on the sidelines. No one seems willing to pay full price these days.

The picture in Rural America is a bit different. Land Values this past year have climbed in many parts of the country and the value of many farming operations has improved.


Farm Economy Improving

It may be hard to believe in a climate of fiscal crisis forcing many states to slash budgets and layoff employees … but the farm balance sheets are steadily improving.

The USDA says over the last ten years, the increase in farm debt was more than offset by larger gains in asset values … which cut farmers' debt-to-asset ratios.

In current dollars, sector net worth is estimated to be about $1,063-point eight (B) billion dollars ... up $4.8 (B) billion from 2001. About a third of that – or $1.6 (B) billion dollars, was accrued to non-operator landlords. The other two-thirds – or $3.2 (B) billion dollars—was attributed to farm operators.

Intermediate-size farms – those with sales of less than $250,000 – account for 32% of all family farms. They generate negative returns on farm assets, but have annual off-farm household income of almost $40,000. Despite low returns to farming, they own farm assets valued at about $640,000 and have a net worth of $585,000.

Nonfarm wealth boosted household net worth to almost $675,000 per farm.

Farmland values is also a pretty good indicator of how the agriculture economy is fairing. As Market To Market reported last week, prices for Iowa farmland hit their highest level since 1981. According to a study conducted by Iowa State University the average value of an acre Iowa farmland is 2-thousand 83 dollars, an increase of 8.7 percent from a year ago. The jump is attributable to the prospect of ample government subsidies, low interest rates and investors seeking higher returns than what Wall Street currently offers.


Tags: agriculture markets news