compared to 21 percent of non-Hispanic white households. And, among high-income households, 25%of those who had lost income reported they were struggling to pay their bills (Carman & Nataraj, 2020).
Farm Debt as a Stressor. Research has demonstrated a relationship between debt and mental health disorders (Meltzer et al., 2013). Farm debt indicators suggest that the ability for farms to pay debt is weakening. Figure 2 shows that farm real estate debt is expected to reach $287.4 billion in 2021, a 3.1% annual increase in nominal terms and a 1.2% rise in inflation-adjusted dollars. Farm real estate debt as a share of total debt has risen each year since 2014 and is expected to account for 65.1% of total farm debt in 2021. Farm non-real estate debt is expected to decline slightly by 0.6 % in nominal terms to $154.3 billion in 2021. Since its peak in 2014, non-real estate inflation-adjusted debt has decreased 6.8%. This data comes from February 2021, USDA, Economic Research Service Assets, debt and wealth: Farm sector equity (wealth) forecast to remain flat in 2021 information that can be found at https://www.ers.usda.gov/topics/farm-economy/farm-sector-income-finances/assets-debt-and-wealth/. Solvency is a measure of the ability of a farm or ranch operation to satisfy debt obligations when due. The trend for typical debt-to-equity ratios shows a continued increase from 2012 to the forecasted 2021 ratio of 16.13%. Additionally, the debt service ratio measures the share of the sector's value of production required to service farm debt payments. The debt service ratio is forecast to be 0.25 in 2021, slightly higher than the 2020 forecast of 0.24. This information is also from the February 2021 USDA, Economic Research Service Assets, debt and wealth: Farm sector equity (wealth) forecast to remain flat in 2021 found at https://www.ers.usda.gov/topics/farm-economy/farm-sector-income-finances/assets-debt-and-wealth/. Farm bankruptcy is increasing. Recently released caseload statistics from the U.S. Courts indicate that Chapter 12 family farm and family fishery bankruptcies totaled 552 filings during 2020, down 43 filings, or 7%, from 2019, but also the third highest over the last decade (Newton & Battram, 2021). These data support the conclusion that solvency and the ability to service debt are becoming more difficult for some farm operators. Other Financial Stressors. In addition to income and debt, other financial stressors impact multiple generations of farmers and farm families. Included here are stressors of farm transfer, access to land, costs of health insurance and student loans, and relationships. While most of these are introduced in pervious sections of this guide, below are some additional finance-related stressors.
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