Over past two decades, farmers have had to borrow more and stretch some loans over longer amounts of time

Average repayment term on all non-real-estate farm loans at
commercial banks (Agricultural Economic Insights chart)

Though farm income has increased a bit since 2018, farmers are still struggling with ever higher levels of debt, and they're having to stretch payments over a longer amount of time to manage monthly payments, David Widmar reports for Agricultural Economic Insights.

Farm debt has risen steadily since 2015 and is approaching levels last seen in the '80s, Widmar reports. Repayment terms on all non-real-estate farm loans have increased from around 11 months in 2000 to almost 16 months in 2018, with a big dip in the middle during the recession, according to the Federal Reserve Bank of Kansas City.

Terms for equipment and livestock averaged about a year to a year and a half longer in 2018 than in 2000-10, Widmer reports. Equipment loans in the early 2000s averaged about 25 months; in 2018 they were nearly 35 months, about 45% longer. Loans for non-feeder livestock averaged around 11 months in 2000; in 2018 the average was almost 19 months, a 60% increase, Widmer reports.

"On the one hand, longer repayment terms – coupled with historically low interest rates – make it easier for producers to meet the annual debt service obligations of historically high debt levels. Longer terms and low rates are certainly preferred to a scenario of short repayment terms and high-interest rates," Widmer writes. "On the other hand, the extended debt terms leave producers “on the hook” for a longer period of time.