Source: FARM DOC DAILY, UNIV. OF ILLINOIS, 5/9/18


Farmers rely on external debt capital to finance their capital base, to conduct marketing and production activities, and to provide a valuable source of liquidity in responding to risk. Farmers obtain debt capital from a variety of lenders, including commercial banks, the Farm Credit System, other cooperative lenders, and a variety of public programs, such as Farm Service Agency (FSA) direct loans. With the recent declines in farm profitability and reductions in working capital reserves, farmers' demand for external debt capital has increased, yet the same forces also signal increases in repayment risk. As a result, farmers may seek debt capital from additional sources, such as individual investors, input suppliers, or implement dealers. There is currently very limited information on the volume and type of debt held by these lenders. 

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