Farmers are paying off their debts and acquiring fewer short-term debts than in the past, the Agriculture Department said yesterday, indicating that farmers' financial hardships may be moderating.
An updated Agricultural Outlook report from the Economic Research Service said prices farmers received during the second quarter of the year were up slightly, staying ahead of the price increases for the items farmers need to buy. Cash receipts during the quarter totaled $127 billion.
Net farm income this year is estimated at between $41 billion and $45 billion, a notable increase from the preliminary 1986 figure of $37.5 billion.
"The financial stress experienced by the farm sector during the early 1980s is moderating," the report said. "Estimates of lenders' potential losses on farm loans peaked at $8.6 billion in 1985 and are forecast to drop to $4 billion in 1987."
Losses are measured through unpaid interest and through asset losses from forced sales of financially stressed farms.
Lenders have acquired nearly 8 million acres of farmland through foreclosure and bankruptcy. That is less than 1 percent of U.S. farmland but is 24 percent of the usual yearly volume of land sales.
"Lenders are reluctant to sell the holdings rapidly lest prices fall," the report said. "In addition, improving rates of return on land used for farming could boost values.
"The value of the farm sector's real estate assets is stabilizing and equity values may be edging up as farm income is buoyed by increases in federal payments and reductions in cash expenses."
Farmers are paying off debts and acquiring less new short-term debt than in the past, the Economic Research Service said, but "continued foreclosures and debt restructuring indicate that not all farmers are sharing in the recovery."