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| I'd also be very interested if someone had historical "EBITDA" equivalent to farm operations. There is no question that the most vulnerable operations have high debt levels, so high "I" and probably "D". Those that owe "T" are at least making profit.
The spikes on this charted ratio are caused more by a hit to income than they are a surge in debt. As others have mentioned, more land today is rented than farmer owned. So zooming out and looking very macro, the business cycle self corrects - if margins decrease enough, rents (eventually) will decrease until there is positive income for most. (And land values would follow). The painful part of the business cycle is that some operations fail.
The shock to income in the 1980s is very clear on your chart and aligns with how severe things were. | |
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Farm level Debt / EBITDA
