Farmers need more time to pay off non-real estate loans, according to recent data.
An analysis published last week by Agricultural Economics Insights, an agriculture economic analysis firm, shows repayment term length on farm loans recently reached levels not seen in decades.
In 2018, the average repayment term on all non-real estate loans was 15.4 months. The report says that’s the highest annual observation noted since 1977.
In recent years, even as farm income has turned higher, producers are still relying on higher levels of debt for farm machinery, livestock and all non-real estate loans.
However, the analysis says longer repayment terms, coupled with historically low-interest rates, make it easier for producers to meet the annual debt service obligations of high debt levels.
Terms over the last 20 years generally stayed between 12 and 14 months, with a decline in 2008 and 2009 due to the Great Recession, when the average non-real estate farm loan term dipped to 11 months.