The farm debt ratio increased slightly over the previous year
When debt rises in line with rising asset values this shows banks are willing to invest in the sector as they have confidence that farmers can repay their loans.
By looking at the farms assets and the debt each business holds we can calculate the overall value of the business which is called net worth.
13% - Average debt ratio for Scottish farms
The average farm net worth has decreased from around £1.5 million in 2014-15 to £1.3 million in 2019-20 in real terms.
The amount of assets held by farms has decreased slightly, while the amount of debt has also risen slightly. Neither shift has greatly changed the average debt ratio, which increased one percentage point compared to the previous year.
As the farm debt ratio has only increased slightly, the statistics do not indicate immediate concerns with rising levels of debt.
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