Amid declining interest rates, Canadian farmers piled on debt at the fastest rate in more than four decades in 2024.
Statistics Canada on Wednesday reported total national farm debt at the end of last year at a whopping $166.71 billion, up 14.1% from a year earlier and the largest annual increase since 1981, when double-digit inflation and unprecedented high interest rates made it difficult for farmers to service debts accumulated during a period of expansion in the 1970s.
In 2023, Canada farm debt increased by a much more modest 4.8% from a year earlier.
After more than two years of hikes, the Bank of Canada began cutting its key overnight lending rate in mid-2024, lowering it by 2.75% to its current level of 2.25%. Producers took on more debt as rates declined, StatsCan said, which in turn pushed farm interest costs higher.
In fact, interest expenses led the gain in total farm operating costs for the second straight year in 2024, rising 28.6% to $9.1 billion. That is roughly the same amount as farmers paid last year for fertilizer and lime, another major farm operating expense.
Total farm operating expenses in 2024 (after rebates) rose 2.7% to $78.5 billion.
Farm debt in Alberta jumped about $5.5 billion or 17.2% to $37.4 billion in 2024, while Saskatchewan debt increased around $2.8 billion or 13.2% to $24.4 billion. Manitoba debt was up around $1.6 billion or 13.7% to $13.8 billion. In Ontario, farm debt climbed roughly $5.1 billion or 13.5% to $42.8 billion.
The bulk of 2024 Canadian farm debt was held by chartered banks ($64.6 billion), followed by federal government agencies ($45.8 billion), and credit unions ($24.3 billion).
