Betting the Farm and Losing: Banks Seek Collateral for Debts
- Demanding more land to secure U.S. loans as slump boosts risks
- Selling more farms amid longest profit drop in three decades
Cows with identification tags attached to their ears feed in a barn at a dairy farm operated by Kalm Kakuyama K.K. in Ebetsu, Hokkaido, Japan, on Tuesday, Sept. 6, 2016. On the northern island of Hokkaido, Japan's top dairy-producing region, Jin Kawaguchiya transformed the 20-cow farm he inherited from his father-in-law 16 years ago into Asia's largest automated milking factory. Robots extract milk from 360 cows three times a day and make sure the animals are fed and healthy.
Photographer: Tomohiro Ohsumi/BloombergBetting the farm on record crop, livestock and dairy prices has turned into a losing investment for an expanding share of America’s agricultural heartland. The level of debt to income is the highest in three decades, and growers are increasingly unable to make loan payments.
Four years after record U.S. crop and farmland values boosted purchases of land and equipment, a global surplus has sent prices tumbling and farm income into the longest slump since 1977. The Federal Reserve says growers are borrowing more to pay bills, repayment rates are plunging, and the number of bankers requesting additional collateral is the highest in 25 years.