The Financial Situation of U.S. Farms by Class and Type

Abstract

This is a study of the financial profile and situation of U.S. farm operators in 1986. Difficult conditons in the farm sector have placed a number of farmers under financial stress. While some farms of all sizes have been experiencing financial stress, these problems have been most pronounced for small family-sized commercial farms. The degree of financial stress is based on the farm's debt/asset ratio and its cash flow. Analysis of the accounting statements of the farming sector for 1986 shows that assets and debts were lower causing a reduction in owner equity. This drop in equity indicates a decline in the wealth position of farmers. For analytical purposes, family-size commercial farms were those that sell between $40,000 and $500,000 of farm products per year. Such farms account for nearly a third of all farms and half of all sales of farms products.