Canadian farmers are extremely vulnerable to rising interest rates. Aggregate debt has more than
tripled in the last three decades, whereas in the U.S. it's
only gone up 33 per cent.
"We've been paying a lot more for our assets, we've been increasing our debt substancially, but our incomes - with the exception of 2008 - have been going down," said Dr. George Brinkman, Professor Emeritus at the University of Guelph.
Meantime, Canadian farm incomes have been decreasing. Brinkman said it means we've had less capacity to pay off our debt while it's been increasing, compared to the United States.
"So I think that rising interest rates could be the most important factor that could create agriculture problems in the future."
The debt to income ratio in the 1980's was a third of what it is now, so Brinkman says a much smaller interest rate hike could have the same effect as the double-digit rates in the 80's.
"We've been paying a lot more for our assets, we've been increasing our debt substancially, but our incomes - with the exception of 2008 - have been going down," said Dr. George Brinkman, Professor Emeritus at the University of Guelph.
Meantime, Canadian farm incomes have been decreasing. Brinkman said it means we've had less capacity to pay off our debt while it's been increasing, compared to the United States.
"So I think that rising interest rates could be the most important factor that could create agriculture problems in the future."
The debt to income ratio in the 1980's was a third of what it is now, so Brinkman says a much smaller interest rate hike could have the same effect as the double-digit rates in the 80's.
Tue, Apr 23, 1:00 PM
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