Farmers Face Tough Times: How to Check Your Money Health

Farmers in the Midwest are having a rough time. Money is tight, and profits are low. To help, the University of Illinois Extension is teaching farmers how to check their financial health. They use something called a balance sheet. This sheet shows what the farm owns and what it owes. Lenders look at this sheet to see if a farm is doing well. They use a traffic light system. Green means the farm is strong. Yellow means be careful. Red means trouble. If a farm has a debt-to-asset ratio over 60%, it's hard to get a loan. They might need to go to the Farm Service Agency for help.Lenders also look at the current ratio. This is the farm's current assets divided by current liabilities. A ratio of 2. 0 or more is good. It means the farm has enough money to pay its debts. Working capital is another important thing. It's the extra money a farm has after paying expenses. Lenders want to see a cushion of 30% to 40%. This helps cover unexpected problems. It's important to be honest when reporting finances. Lying on a balance sheet is a crime. Farmers have been to jail for this. Experts advise farmers to keep lenders informed. Use real numbers and keep balance sheets consistent. For more help, farmers can reach out to Kevin Brooks. He works with the University of Illinois Extension. They also have a blog called Extension Farm Coach.