Source: POLITICO'S MORNING AGRICULTURE, 11/20/19

Farm Credit Administration Chairman Glen Smith told the House Agriculture Committee on Tuesday that the farm lending system is currently "safe and sound" — but officials are "very concerned and closely monitoring some weakening in credit quality." At a subcommittee hearing, Smith also drew parallels between the current downturn and the run-up to the 1980s farm crisis.

"I think we're at a level that's comparable to the early '80s," he said, citing economic trends like falling farm income, rising debt-to-asset ratios and concerns about the value of farmland. "At that time in the Midwest, we'd lost 15-20 percent of our land values. 

Guess what? Today we've lost 15-20 percent of our land values in the Midwest."

Farmland values remain largely stable across the country. But that could change, Smith warned in his written remarks to the committee, if larger amounts of farmland go up for sale — like if farm bankruptcy rates continue ticking upward.

"With declining land prices, farm balance sheets could deteriorate more quickly, and a farm borrower's ability to restructure debt or obtain additional financing could weaken," Smith said. He also said the FCA is monitoring an increase in producers turning to non-traditional lenders for financing, which often carry higher interest rates and can prove treacherous for farmers that fall behind.

Another similarity to the Eighties? "The late '70s and early '80s were typified by trade wars," Smith added, referring to the U.S. grain embargo against the Soviet Union.