By Gerald Mashange and Bradley Zwilling
In our previous article (see farmdoc daily, October 1, 2025), we found that most farms maintained healthy solvency ratios, with debt-to-asset levels remaining relatively stable or improving over the past 6 years. However, in recent years, farms carrying the highest debt loads have seen their debt servicing costs accelerate at a faster clip relative to grain farms with lower debt burdens.
Having examined debt servicing costs and solvency trends in earlier articles, we now turn to how grain farms’ economic costs vary by debt burden using recent Illinois Farm Business Farm Management Association (FBFM) data. Economic costs represent the total cost of all resources used in farming, including both out-of-pocket expenses and opportunity costs. Unlike financial costs—which only include cash outlays—economic costs also capture what farmers forgo by using their own resources in the farm business (e.g., owned land, equity capital, and unpaid labor). As a result, economic costs are typically higher than what you would see on an income statement.
Classification of Grain Farms and Economic Cost Categories