Debt repayment capacity utilization (DRCU) is the percentage of actual farm debt outstanding relative to the maximum feasible farm debt supportable out of farm income in any given year. A value exceeding 100 percent indicates that debt payments must be made by drawing on additional cash sources, such as taking on additional debt, relying on off-farm income, drawing down household assets, or selling farm business assets.
DRCU is expected to increase to 41 percent in 2013. Two factors are contributing to this rise: farm sector debt is forecast to increase by $8.5 billion in 2013 and net cash income is expected to decrease by $12 billion. Even with interest rates expected to remain low, these two factors are expected to decrease the sector's maximum feasible farm debt and unused debt repayment capacity in 2013, which can signal loan repayment problems. Nonetheless, 2013’s DRCU is expected to remain well below levels experienced in the mid-1980s.