Oversupply Leading To Lower Land Values In Some Areas

Tim Hammerich
News Reporter
Farmers across the United States are facing rising financial pressures, and certain oversupplied crops are being hit hardest, says Curt Covington of Ag America Lending. Covington believes one example of this is out west, where specialty crops have experienced declining land values and a flattening growth rate.
Covington… “The next thing that's going to start happening is you're going to have these farmers that get into a position where they have no liquidity and they're not refinanceable. It'll force many of them into either a restructured loan arrangement with their banker or they'll end up in Chapter 12, Chapter 11 bankruptcy, or maybe something worse. Then what happens is the next thing that happens, you start getting tumbling land values. You know, everyone talks about, and I keep hearing this, and maybe it's because I'm not an economist. When everybody says, well, the debt to asset ratio is still good at 13%. If you take a look at the growth in assets on the farm, any farm, any sector, I don't, any part of this country, I don't really care where it is. 80 percent of that growth and net worth has all been unearned. You're starting to see land values starting to peak. They're starting to flatten out in certain areas and you're starting to see not only the growth, the decrease in the growth rate, but you're also seeing some areas where land values are declining.”
Again that’s Curt Covington of Ag America Lending.