Farm Sector Solvency Ratios

The farm sector's debt-to-asset ratio is expected to decline from a projected 10.6 percent at the end of 2012 to 10.2 percent by the end of 2013. The debt-to-equity ratio is expected to decline from 11.9 percent in 2012 to 11.3 percent in 2013. If realized, these changes would result in new historic lows for both measures, confirming the strength of the farm sector's solvency. With such historically low levels of debt relative to assets and equity, the sector is better insulated from the risks associated with commodity production (such as adverse weather), changing macroeconomic conditions in the U.S and world economies, and any fluctuations in farm asset values that may occur due to changing demand for agricultural assets.