Farm asset values—which reflect farm investors’ and lenders’ expectations about
long-term profitability of farm sector investments—are projected down (2.2%) in
2016 to $2,846 billion, reflecting a second consecutive year of decline and some
erosion of the outlook for the general farm economy (Table 3).
Weaker farm asset values are expected due to weakness in both real estate (-
1.5%) and non-real estate (-5.2%) values (Figure 21 and Figure 22). Real estate
traditionally accounts for the bulk of total value of farm sector assets—nearly an
81% share.
Land values are closely linked to commodity prices and are expected to continue
to recede if the forecasts for lower commodity prices and the prospect for
continued global stock recovery for grains and oilseeds are realized in 2016 and
beyond (Figure 21).
Meanwhile, total farm debt is forecast down slightly to $354 billion in 2016 (-
0.8%).
Farm equity (or net worth, defined as asset value minus debt) is projected to be
down a second consecutive year (-2.4%) at $2,492 billion in 2016.
The farm debt-to-asset ratio is forecast slightly higher at 12.4% in 2016 (Figure
23).