Farm Finance:

Financial Condition of American Agriculture as of December 31, 1985

RCED-86-191BR: Published: Sep 3, 1986. Publicly Released: Sep 3, 1986.

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GAO presented information on the financial condition of American agriculture as of December 31, 1985.

After analyzing the economic environment, farmers' financial positions, and the performance of the financial institutions serving agriculture in 1985, GAO concluded that adverse economic and financial conditions facing agriculture continued in 1985. GAO found that: (1) the rate of production increased faster than the rate of U.S. consumption; (2) U.S. agricultural exports declined in both volume and value as a result of strong foreign competition, large production gains in previous importing countries, a weak world economy, and high real interest rates; (3) the value of farm assets declined by 9.9 percent; (4) although farmland values declined nationally by more than 12 percent, farmland values in 18 states declined from 13 percent to more than 20 percent; (5) the rates of return on farmers' assets and equity remained negative; (6) farmers' farm incomes declined by 6.7 percent, while their nonfarm incomes increased; (7) five major lenders held $167.6 billion of the $210 billion in outstanding farm debt; (8) there was a declining share of the total debt for major lenders and an increase in the debt owed to the Farmers Home Administration and the Commodity Credit Corporation; (9) agricultural bank failures increased; (10) four of the major lending institutions had nonperforming or delinquent loans totalling $33.7 billion, an increase of $4.3 billion from 1984; and (11) commercial banks involved in agriculture experienced financial stress.

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