Commercial farms’ share of total farm debt grew 23 percentage points from 1996 to 2023

Commercial farms consistently account for the largest portion of debt held by U.S. farms despite representing the smallest share of farms by number. Commercial farms’ high debt share reflects their reliance on financing for capital-intensive activities, such as investments in equipment, land, and essential technologies. Since 1996, their share of all farm debt has increased from less than half of total sector debt to 69 percent in 2023. Meanwhile, debt shares for intermediate and residential farms have decreased. For residential farms, the share of debt initially rose from 18 percent of total sector debt in 1996 to a peak near 27 percent in 2003 before falling to 13 percent in 2023. Similarly, intermediate farms’ debt shares gradually dropped from 36 percent in 1996 to 18 percent in 2023. Changes in average debt levels per farm reflect the shift in debt shares by farm type. Among commercial farms, average debt levels have nearly doubled since 1996, while average debt levels for intermediate and residential farms have remained relatively flat after adjusting for inflation. These changes clearly show the pivotal role debt plays in the financial stability of farms, including supporting their expansion, covering routine expenses, and providing support during financial downturns. This chart is drawn from data in the USDA, Economic Research Service’s ARMS Farm Financial and Crop Production Practices data product.