According to Wells Fargo Agricultural Economist Michael Swanson, the farm balance sheet looks strong on paper, but there is a disconnect between the USDA’s definition of a strong balance sheet and farmer sentiment. “When you look at the levels of debt to equity, they’re very low in interpretation, but that comes with a huge caveat: land values,” says Swanson. “We’ve seen land values go from $1.6 trillion in 2010 to $2.6 trillion in 2020. Farm families have more net wealth, because of that, but is it really useable? It’s not the same as cash income.” If farmers are cash renting ground, Swanson says re-evaluate the productivity. If it’s causing you to lose money, Swanson says find a way to better negotiate rent or let it go. “The tough cash rent decisions will make an impact on farmers for 2021. That’s the one thing sticking out like a sore thumb in the farm economy.”
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