Liquidity remains reasonable in poor US crop year

In 2022, the operating income of primarily grain-producing arable farms in Illinois was $339.000. This dropped to a loss of $15.000 in 2024. This made 2022 a record positive year for American arable farmers, partly due to record-high grain prices. In terms of financial results, 2024 was the worst year since 1990. Only 2015 recorded a loss, but that year's loss was limited to $500.

Low corn and soybean prices are the main reason behind the losses many Illinois arable farmers experienced last year. The University of Illinois doesn't expect this to change in the foreseeable future. Government support is therefore becoming increasingly important for American farmers. Without Economic Assistance Payments, the loss would reach $45.000 per farm in 2024. In other words, the average income from government subsidies was $30.000.

The University of Illinois defines operating income as revenue from crop sales, government subsidies/support, crop insurance payments, minus operating expenses, depreciation, and interest expenses. For this study, the university used the financial statements of farms affiliated with Illinois Farm Business Farm Management (FBFM). Grain farms are defined as those that derive at least 50% of their income from grain. Only data from sole proprietorships were used in this study. The financial statements of partnerships and corporations were not included.  

Liquidity
Although Illinois arable farmers, on average, needed additional funds, they aren't immediately facing financial difficulties when looking at their liquidity ratios. The current ratio (current assets/current liabilities) is 2,47 points. This is considerably lower than the 3,59 in 2022, but anything above 2 is considered adequate. Working capital for American arable farmers decreased by 38% compared to 2022, to $236.000 per farm. The solvency ratio increased by 0,013 points to 0,187 points. This means that for every $1 in assets on the balance sheet, there are 18,7 cents in liabilities. A solvency ratio below 0,2 is considered financially strong, but the 0,013 point increase is the largest increase since 1990, according to the University of Illinois.