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# Four Years Below Breakeven
- URL: https://the-capital-memo.ghost.io/four-years-below-breakeven/
- Published: 2026-10-14T11:05:00.000Z
- Updated: 2026-10-14T11:05:00.000Z
- Author: James Coleman

American farm debt is forecast at 605.1 billion dollars this year. Adjusted for inflation, that is about six percent above the previous peak, which was 1980\. The year 1980 is not an arbitrary comparison. It is the year immediately before the worst agricultural credit collapse in modern American history.  
  
The cost of growing an acre of corn works out near five dollars a bushel. Corn sells for about four dollars and twenty cents. That gap has now persisted for four consecutive seasons, which means a sector carrying a real debt load heavier than 1980 has gone four years without covering its cost of production on its largest crop.  
  
Net farm income is reported at 158.35 billion dollars, which sounds comfortable until the composition is examined. Government payments account for 47.4 billion of it, about thirty percent. Strip the transfer out and the operating economics of the sector look like the breakeven arithmetic above rather than the headline.

### The Historical Echo

The 1980s farm crisis is the only American asset bust that ran its full course through a leveraged real asset while the rest of the economy recovered around it.  
  
Between 1982 and 1987 American farmland fell 34 percent in nominal terms, to 471 dollars an acre. Iowa, the best ground in the country, fell 62 percent. Sixty two agricultural banks failed in 1985 alone. The mechanism was not a crop failure. It was interest rates meeting leverage: land had been bought on the expectation that inflation would keep lifting its value, the Federal Reserve ended the inflation, and the debt service stayed exactly where it was while the collateral behind it halved.  
  
The single most important difference today is the balance sheet rather than the income statement. Farm debt to asset ratio is 13.54 percent. In 1985 it was 22.19 percent. The sector entered the 1980s with roughly two thirds more leverage against its assets than it carries now. That is a very large buffer, and it is the reason this is a margin problem rather than a solvency problem, at least in aggregate.  
  
Aggregate is doing a lot of work in that sentence. Averages conceal the distribution, and the distribution is where a credit cycle actually happens. Chapter 12 bankruptcy filings, the provision written specifically for family farms after the last crisis, rose from 216 in 2024 to 315 in 2025, with 177 in the first half of this year.

### Where Patient Capital Is Positioning

The land market is where the strain is now showing, and it is showing in real terms first.  
  
Farmland averages 4,500 dollars an acre, up 3.4 percent nominally and 0.4 percent after inflation. In the Chicago Federal Reserve district, which covers the core of the corn belt, values were flat year on year in the second quarter and down 3.7 percent in real terms, the weakest reading since 2016\. The bank credit indicators in the same survey are worse than the price indicators: the loan to deposit ratio at district agricultural banks reached a record 80.7 percent, and 3.7 percent of farm loans were classified as having major or severe repayment problems.  
  
That combination describes a market that is being held up rather than one that is clearing. Nominal land prices barely moving while operating losses run into a fourth year, and the banks funding the gap running out of deposits to do it with. Land does not reprice gradually, because almost none of it trades in any given year and the owners who are under pressure are precisely the ones who cannot afford to establish a lower comparable. It holds and holds and then a forced seller sets a new number.  
  
For capital that thinks across decades the relevant question is not whether farmland is cheap, because by every historical measure of price against the income the land produces it is not. The question is who is obliged to sell and when. In the 1980s the answer was the leveraged operator with a variable rate loan, and the repricing took five years to complete. Today the sector as a whole is far less levered, the transfer payments are substantial, and the pressure is concentrated in the cash grain operator in the upper Midwest who bought ground after 2020\. That is a narrower problem than 1982, and a narrower problem is where the opportunities in real assets usually come from. Watch the credit survey, not the price series. The banks always know first.

![](https://storage.ghost.io/c/44/88/44885750-7681-4d57-825f-5d69f4c60045/content/images/2026/10/four-years-below-breakeven-photorealistic.jpg)

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