Outlook for Farm Assets and Debt 2017-18
Farms in good position to handle economic shifts
A stronger Canadian dollar and higher interest rates may make the business of agriculture more challenging, but not necessarily put producers in a weaker financial position.
Our latest report, Outlook for Farm Assets and Debt 2017-18, gives you the inside scoop on the financial health of the Canadian agriculture industry.
Canadian farm debt is on the rise - is that cause for worry?
Canadian producers have recently taken on more debt. Farmland values are increasing, ag remains capital intensive and interest rates are at a historic low. That may sound worrying, but for the moment, there’s no cause for alarm.
How to determine your farm's financial fitness
Liquidity and solvency are two important measures to determine the health of the agriculture industry. They can also help you determine your farm's financial health. Watch these short videos to learn more about these ratios and then plug your own numbers into our calculators below.
Liquidity = Current ratio
Solvency = Debt-to-asset ratio
A current ratio above 1.5 is ideal because it shows current assets are greater than current liabilities. But be mindful that a ratio which is too high can also suggest you aren't putting your money to work.
A lower debt-to-asset ratio brings flexibility to an operation if it has to withstand unexpected challenges, or to seize opportunities that arise in the marketplace (such as expansion, diversification, etc.).