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g„lco, r n ultural etter o Federal Reserve Bank of Chicago - - • September 7, 1962 The financial position of agriculture showed'improvement during 1961. The Balance Sheet of Agricul- Ug. Drpr. Ars,i ture prepared by the U. S. Department of Agriculturg valued farmers' assets at a record $207.3 billion oHATIONAL AMCULT" January 1, 1962 compared with $200 billion a year earNumber 669 lier. While this was the first substantial rise in three SEP 2 4 1962 years, it renews the upward trend prevalent since the The $800 million rise in value of livestock invenbeginning of World War II. CURREGAgAieEfearM both an increase in numbers and highe prices for cattle and hogs from year earlier. Record soyWith an increase in liabilities of $2.2 billion,only partially offsetting the higher value of assets, the owner bean -holdings, along with larger amounts of cotton in equity in the industry rose $5.1 billion-in 1961 to $179.6 farmers' hands boosted the crop -inventory $700 million. billion. This is more than six times as great as the total liabilities in agriculture. Financial assets showed little change during the year. The value of household furnishings and equipment Comparative Balance Sheet of Agriculture declined reflecting the rapid decrease in the number of for the United States, January 1 farm households which more than offset increased value per household. Change during 1961 1961 1962 billion dollars Assets Physical Real estate • • • • • • • • *sees Non-real estate Livestock••••••••••••• Machinery and motor vehicles Cropsstored••••••••••• Household furnishings •.••• Financial •.• • • • • • •••••• Total...•••••••••••••••• Claims Liabilities .••••••••••••• Real estate debt...••••••• Non-real estate debt CCC •••••••••••••••• Other • ••• •.• • • a_• • • • • • • Proprietors' equities •..•.••• Total•••••••••••••••• •.• 131.8 138.0 +6.2 15.5 18.2 8.0 8.9 17.6 200.0 16.3 18.2 8.7 8.3 17.8 207.3 +.8 +.7 -.6 +.2 +7.3 25.5 13.1 27.7 14.2 +2.2 +1.1 1.4 _11.0 174.5 200.0 1.9 11.6 179.6 207.3 +.5 +.6 +5.1 +7.3 Almost all of the increase in assets and net worth was due to higher real estate values (the principal farm asset) which rose $6.2 billion during 1961 to a new record of $138.0 billion. This reflects a 5 per cent increase in the average value per acre and was one of the largest annual increases in recent years. Most of the higher value, of course, represents inflation in land values rather than increases in physical assets. Improved farm incomes and continued demand for land to enlarge existing farms were largely responsible for the rise in land values. Market prices of grazing land showed a 5 per cent increase from year earlier on top of an 11 per cent gain in the previous 12 months, reflecting the influence of continued high beef cattle prices. However, the upturn in the Corn Belt was relatively small following a decline the previous year. • Total farm debt(excluding CCC loans)reached $25.8 billion, a new high, up $1.8 billion from year earlier. As farmers continue enlarging the size of farms and purchasing more machinery and other capital production items, they apparently use larger amounts of credit to finance their expansion. Non-real estate farm loans increased $700 million during 1961 to $11.4 billion. The gain was slightly larger than during the previous year but only about half as large as the rapid expansion in 1958 and 1959. One notable feature of the expansion in loans at Production Credit Associations in recent years, however, is the relatively faster growth in the dollar volume of loans renewed than in the new cash advanced. According to the USDA, this trend likely indicates two causal. factors. First, it appears that farmers are increasing their use of long-term credit faster than their use of short-term credit with part of the gain being supplied by a rise in renewals. Secondly, some farm borrowers are probably finding it more difficult to meet their debt obligations. Farm mortgage debt outstanding totaled $14.2 billion-up 8.5 per cent from year earlier. About half of the total amount of farm mortgages made during 1961 was for refinancing mortgages or other indebtedness. Only about a third of the real estate credit extended was used to purchase farm real estate which again indicates the unwillingness or inability of farmers to discharge their debt obligations. The Corn Belt showed a relatively slower rate of increase in farm debt in 1961 than in any other region, possibly reflecting the reduced activity in the Corn Belt's farm land market. Research Department
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