Exclusive-US farm debt is at a record. Official data might be undercounting it

American farmers are borrowing more money than ever before, with non-traditional and vendor credit contributing to the rise, according to a report by Reuters. The USDA estimates that inflation-adjusted US farm debt has more than doubled since 2000, reaching more than $605 billion this year, a record. However, this figure may understate the true extent of farm debt, as farmers are increasingly turning to alternative lenders such as suppliers, cooperatives, equipment manufacturers, and financial technology firms.

The USDA is launching research projects to better track non-traditional farm lenders and understand the potential impact on the broader economy. Jenny Ifft, an agricultural finance professor at Kansas State University, estimates that there could be two to three times as much debt as what USDA currently reports. Vendor credit has grown significantly, with about half of all US commercial farms relying on these lenders to cover operational expenses.

This trend has raised concerns about potential spillover effects to the overall economy, similar to the subprime mortgage crisis of 2007-2010. The USDA is working to improve its data collection methods for non-traditional lenders and assess the financial stress of the farming community.