Farm doom on the near horizon.

Farms are on the brink of another catastrophic financial collapse not seen sense the 80’s as cost such as equipment, seed &fuel rise and land value drop and crop values stagnate. We’re looking at farms going upside-down on their loans meaning they can no longer take a loan to plant a field.

Snip; The value of farmland is a vital economic linchpin for farmers. Farmland accounts for 85 percent of the typical farmer's assets and serves as collateral for many loans. If land prices fall, so too could the farms themselves. Investments in farmland have had three years of double-digit growth, according to the Federal Reserve study, as farmers keep throwing money into land instead of other investments like stocks.

"Land values can't stay as high as they are now," said Hurst, who's written on the subject. "They've increased at a double-digit rate for the last seven years in the corn belt area. But those values can crash in a hurry, increasing debt levels. Just look at former home owners in Las Vegas and Southern California."

"We can see debt already increasing," Hurst went on to say. "A Kansas Farm Management Association report says that the number of farmers with a 40 percent debt ratio is higher now than it was in 1979 and that farms with a debt ratio of more than 70 percent are three times as many today."

What could make a farm debt worse besides imploding land value is a rise in interest rates, said Roger Hadley, a 60-year-old farmer with 700 acres near Fort Wayne, Indiana.

"I think there's a false sense of normalcy with farmers about this right now," said Hadley, who grows soybeans and corn.



"Rates have been low for a while, but if they do go up, that's only going to increase the debt burden on farmers," Hadley said. "Loans would get more expensive."

What happens to interest rates and land values may be somewhat of a guessing game at this point. But it does seem fairly certain that farm incomes in the U.S. are headed down. The USDA predicts a 25 percent decline in farm profits for 2014, as commodity prices level off and exports are reduced.

This comes after incomes reached $98.1 billion last year—topping an overall increase of 147 percent since 1988, according to the USDA.

"We're having a lot of commodity surplus here in the U.S because the world is growing its own food," said Schriver. "And prices are going to go down as a result."

If farm income is lower, it only adds to the pain of increasing costs.

"Not too long ago it took $400 to grow an acre of corn," Schriver said. "Now its $1,000 an acre of corn. A bag of seed was around $35-40 an acre. Now it's $245 or more. It's getting very expensive to farm."


[link to www.nbcnews.com]