A Financial Profile Of Indebted Farm Operators In Nebraska - 1984

The farming sector continues in an extended period of economic stress. Some have described it as the most serious and prolonged period of financial stress in more than 40 years [2]. Real net farm income of farm families during the current decade has been less than two-thirds the average for the 1970's. Farm cash flows have followed a similar pattern. Present economic stress has been further aggravated by rapid expansion of indebtedness during the last half of the 1970's when total debt of the U.S. farming sector more than doubled [5]. During that time, debt expansion paralleled the rapid appreciation of land and other agricultural assets. When interest rates reached unprecedented levels in the 1980's while assets started declining in value, the stage was set for a financial crunch of crisis proportion. For many farmers, economic survival has become the key issue of today [1]. This paper analyzes in some detail the current financial state of Nebraska's farming sector. It is specifically focussed on indebted farm operators, in examining the financial health and credit worthiness of this particular group. After constructing a financial framework to better understand current conditions, implications are then drawn.