Farm interest expense is expected to jump 34% in 2023, reaching $33.3 billion. This is the highest level of farm interest expense since 1991 and represents a significant increase from the 1991-2022 average of $22.1 billion.
The increase in farm interest expense is due to a combination of factors, including rising interest rates and increasing farm debt levels. Interest rates have been rising steadily since early 2022, and are expected to continue to rise in 2023. Farm debt levels have also been increasing in recent years, reaching a record high of $450 billion in 2022.
The increase in farm interest expense is a concern for farmers, as it will reduce their net farm income. Net farm income is the amount of money that farmers have left over after paying all of their expenses, including interest expense. A decrease in net farm income could make it more difficult for farmers to service their debt and cover their living expenses.
The increase in farm interest expense is also a concern for the agricultural economy as a whole. A decrease in farm income could lead to a decrease in spending by farmers, which could have a ripple effect throughout the economy.
Farmers should carefully review their financial situation and budget for 2024 to account for the increase in interest expense. They may need to make adjustments to their crop budgets and debt usage to navigate a world with higher borrowing costs.
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Categories: Michigan, General