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Solvency Series: Debt Related Characteristics of Grain Farms by Debt Service Costs in 2024

  • Gerald Mashange
  • Department of Agricultural and Consumer Economics
  • University of Illinois
  • Bradley Zwilling
  • Illinois FBFM Association and Department of Agricultural and Consumer Economics
  • University of Illinois
October 1, 2025
farmdoc daily (15):180
Recommended citation format: Mashange, G. and B. Zwilling. "Solvency Series: Debt Related Characteristics of Grain Farms by Debt Service Costs in 2024." farmdoc daily (15):180, Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, October 1, 2025. Permalink

In our previous article (see farmdoc daily, September 26, 2025), we examined the debt-to-asset ratio and interest expense per tillable acre of Illinois grain farms across the lower quartile, median, and upper quartile from 2003 to 2024. We found that debt-to-asset ratios declined from 2003 to 2012, then stabilized, with modest increases for highly leveraged farms, between 2012 and 2019, and fell again from 2019 to 2022, before ticking upward in 2022–2024. In contrast, interest per tillable acre fluctuated with interest rate cycles, rising steadily after 2013, easing during the pandemic, and then rising sharply from 2022 to 2024—especially for the 25% of grain farms carrying the heaviest debt loads.

In today’s article, we examine the debt-related financial characteristics of Illinois grain farms enrolled in Illinois Farm Business Farm Management (FBFM) based on their position in the distribution of interest per tillable acre in 2024. On a per-acre basis, we follow four cohorts over time: farms with interest expenses (1) above the upper quartile, (2) between the median and upper quartile, (3) between the lower quartile and median, and (4) below the lower quartile. For each cohort, we track changes from 2019 to 2024 in average debt-to-asset ratios, debt per tillable acre, assets per tillable acre, and interest per tillable acre. This approach allows us to follow the same set of farms across time and see how their financial characteristics evolved.

Figure 1 shows the quartile levels of interest expense per tillable acre from 2003 to 2024. The lower quartile (25th percentile) marks the cutoff below which 25% of farms with the lowest interest costs fall, the median (50th percentile) marks the midpoint of the distribution (with half paying more and half less in interest expense per tillable acre), and the upper quartile (75th percentile) marks the cutoff above which 25% of farms with the highest interest costs fall. In 2024, interest expenses reached $59.86 per tillable acre at the upper quartile, $29.34 at the median, and $8.33 at the lower quartile.

This line graph illustrates the interest expense per tillable acre for Illinois grain farms from 2003 to 2024, sourced from the Illinois Farm Business Farm Management (FBFM) Association, showing the annual cost of servicing debt per acre of farmland. The x-axis displays years from 2003 to 2024, labeled every two years, with a slight extension to 2025.5 for label visibility. The y-axis shows interest costs in dollars per acre, ranging from $0 to $75, with dollar signs on labels. Three solid lines represent the quartiles: the lower quartile (teal, 25% of farms with the lowest interest costs), median (blue, typical farm with half paying more and half less), and upper quartile (orange, 25% with the highest interest costs). From 2003 to 2012, the lines show volatility, peaking in 2007; the upper quartile rises from $24.55 to $34.23, then falls to $29.15 by 2012; the median increases from $13.79 to $19.68, then drops to $14.39; and the lower quartile climbs from $6.38 to $8.74, then declines to $4.29. From 2012 to 2019, all quartiles rise steadily, with the upper quartile reaching $43.31, the median $20.72, and the lower quartile $6.54. From 2019 to 2022, costs decrease, with the upper quartile falling to $37.08, the median to $17.42, and the lower quartile to $4.78. From 2022 to 2024, costs surge, with the upper quartile reaching $59.86, the median $29.34, and the lower quartile $8.33. Data labels in 2024, positioned above each line in bold, show values: $8.33 (teal, lower quartile), $29.34 (blue, median), and $59.86 (orange, upper quartile). The graph is titled “Interest per Tillable Acre Quartiles, Illinois Grain Farms (2003–2024)” with a subtitle and a caption noting the FBFM source. A legend at the bottom identifies the lines by color and quartile. The graph highlights escalating financial pressure, particularly for the most indebted farms, with 2024 costs nearing mid-2000s peaks.

Using these 2024 quartile levels of interest per tillable acre, we classify farms into four cohorts as shown in Figure 2. Farms with interest expenses (1) above the upper quartile form the high interest expense cohort, (2) those between the median and upper quartile make up the moderate-high interest expense cohort, (3) those between the lower quartile and median fall into the moderate-low interest expense cohort, and (4) those below the lower quartile form the low interest expense cohort. Therefore, the average debt-to-asset ratios, debt per tillable acre, assets per tillable acre, and interest per tillable acre reported in Figure 2 represent the same sets of farms tracked over time. However, in years prior to 2024, there may be instances where a farm isn’t reported in its cohort because it either wasn’t enrolled in the FBFM program or did not have a certified usable balance sheet.  Given the numerous inquiries we have received from stakeholders regarding recent debt dynamics, our analysis will primarily focus on the high interest expense and moderate-high interest expense cohorts, addressing key concerns about leverage and interest cost pressures amid a high interest rate environment. However, we will briefly describe the characteristics of the remaining two cohorts for context.

This figure displays four vertically stacked line charts showing debt-related financial characteristics of Illinois grain farms from 2019 to 2024. Farms are grouped into four cohorts based on their 2024 interest expense per tillable acre quartiles. Structure: Four separate panels arranged vertically, each showing trends for a different metric over six years (2019-2024). Each panel contains four colored lines representing different interest expense cohorts, with data points marked at each year. Cohorts (i.e., the same group of farms are in each cohort across all years in the figure, and their cohort categorization is based on their 2024 Interest expense per tillable acre quartile position): • Red line: High Interest Expense Cohort (above upper quartile) • Yellow line: Moderate-High Interest Expense Cohort (median to upper quartile) • Green line: Moderate-Low Interest Expense Cohort (lower quartile to median) • Blue line: Low Interest Expense Cohort (below lower quartile) Panel 1 - Debt to Asset Ratio (%): This panel shows the percentage of farm assets financed by debt. • High Interest Expense (red): Ranges from 38.7% (2019) to 38.3% (2024), with a slight dip to 35.1% in 2022. This cohort consistently maintains the highest debt-to-asset ratios. • Moderate-High Interest Expense (yellow): Ranges from 30.9% (2019) to 26.9% (2024), showing a general declining trend. • Moderate-Low Interest Expense (green): Ranges from 23.5% (2019) to 18.0% (2024), consistently declining over the period. • Low Interest Expense (blue): Ranges from 9.5% (2019) to 6.2% (2024), maintaining the lowest ratios and showing a declining trend. Panel 2 - Debt per Tillable Acre ($/Acre): This panel displays the total amount of debt normalized per tillable acre. • High Interest Expense (red): Increases from $1,585 (2019) to $2,364 (2024), showing steady growth. • Moderate-High Interest Expense (yellow): Increases from $988 (2019) to $1,096 (2024), with relatively modest growth. • Moderate-Low Interest Expense (green): Remains relatively stable, ranging from $687 (2019) to $635 (2024). • Low Interest Expense (blue): Decreases from $332 (2019) to $257 (2024), showing a declining trend. Panel 3 - Assets per Tillable Acre ($/Acre): This panel shows the value of total assets per tillable acre, providing context for the debt levels. • Low Interest Expense (blue): Highest asset values, increasing from $5,779 (2019) to $9,553 (2024). • Moderate-Low Interest Expense (green): Increases from $3,713 (2019) to $5,754 (2024). • Moderate-High Interest Expense (yellow): Increases from $3,935 (2019) to $5,712 (2024). • High Interest Expense (red): Lowest asset values, increasing from $4,731 (2019) to $7,599 (2024). Panel 4 - Interest per Tillable Acre ($/Acre): This panel displays the actual interest costs per acre, which was used to classify farms into cohorts based on their 2024 values. • High Interest Expense (red): Increases from $62.10 (2019) to $108.65 (2024), with a notable spike between 2023 and 2024. • Moderate-High Interest Expense (yellow): Ranges from $34.09 (2019) to $42.97 (2024), showing more moderate increases. • Moderate-Low Interest Expense (green): Ranges from $22.59 (2019) to $18.47 (2024), declining after 2019. • Low Interest Expense (blue): Decreases from $9.11 (2019) to $1.93 (2024), showing the most dramatic decline.

The average debt-to-asset ratio for the high interest expense cohort consistently remained above 35% from 2019 to 2024, placing these farms in the cautionary risk category (30%–60%) according to the Center for Farm Financial Management’s Farm Financial Scorecard—though closer to the lower end of that range. [1] The average debt-to-asset ratio fell from 38.65% (cautionary) in 2019 to 35.09% (cautionary) in 2022, before rising again to 38.33% (cautionary) in 2024. This cohort’s average debt per tillable acre consistently rose over the period from $1,585.23 in 2019 to $2,364.24 in 2024. However, their average assets per tillable acre consistently rose too, increasing from $4,731.48 in 2019 to $7,598.75. Lastly, average interest per tillable acre for this cohort remained stable prior to the federal funds rate hikes in 2022, but surged from $59.42 in 2022 to $79.49 in 2023, and further to $108.65 in 2024, highlighting the impact of rising interest rates on this cohort.

The moderate-high interest expense cohort, representing grain farms with mid-to-high interest expense per tillable acre in 2024, displayed a much different dynamic over the period. The average debt-to-asset ratio was 30.89% (cautionary) in 2019, and declined to a low of 25.17% (strong) in 2022 before rising to 26.89% (strong) in 2024. Unlike the high interest expense cohort, average debt per tillable acre for the moderate-high interest expense cohort remained relatively stable over this period, rising from $987.68 in 2019 to $1,096.32 in 2024. Meanwhile, average assets per tillable acre grew substantially, from $3,934.93 in 2019 to $5,712.25 in 2024. Average interest per tillable acre fell from $34.09 in 2019 to $29.83 in 2022, then increased to $35.50 in 2023 and $42.97 in 2024, as interest rates rose.

Lastly, on average, the moderate-low and low interest expense cohorts improved their debt-to-asset ratios over this period and remained within the strong category (<30%). The former maintained a steady average debt per tillable acre value, while the latter decreased it over time. Additionally, the average interest per tillable acre for these two cohorts remained healthy, with the former modestly decreasing its debt servicing cost over time, while the latter achieved a more substantial reduction.

Conclusion

Overall, our findings highlight the uneven financial pressures facing Illinois grain farms in the current high interest rate environment. Farms in the high interest expense cohort remain in a cautionary leverage position (debt-to-asset ratio of 30-60%), with rising debt and surging interest costs posing clear financial stress despite asset growth. By contrast, farms in the moderate-high interest expense cohort have generally strengthened their balance sheets, keeping leverage in the strong  range (debt-to-asset ratio <30%) even as interest costs began to rise after 2022. The moderate-low and low interest expense cohorts show even greater resilience, with healthy leverage levels and manageable interest cost burdens. Taken together, the evidence suggests that while most farms are well-positioned to weather higher borrowing costs, those with the heaviest debt loads face the highest financial strain. As interest rate policy and farm income conditions continue to evolve, close monitoring of these highly leveraged farms will be essential for anticipating potential financial strain in the sector.

Acknowledgment

The authors would like to acknowledge that data used in this study comes from the Illinois Farm Business Farm Management (FBFM) Association. Without Illinois FBFM, information as comprehensive and accurate as this would not be available for educational purposes. FBFM, which consists of 5,000+ farmers and 70 professional field staff, is a not-for-profit organization available to all farm operators in Illinois. FBFM field staff provide on-farm counsel along with recordkeeping, farm financial management, business entity planning and income tax management. For more information, please contact our office located on the campus of the University of Illinois in the Department of Agricultural and Consumer Economics at 217-333-8346 or visit the FBFM website at www.fbfm.org.

Note

[1] The Farm Financial Scorecard adheres to the guidelines set by the Farm Financial Standards Council

References

Mashange, G. and B. Zwilling. "Solvency Series: Healthy Debt-to-Asset Ratios Amid Rising Debt Servicing Costs." farmdoc daily (15):177, Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, September 26, 2025.

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