Farm liquidity is the top concern for lenders according to the 2024 joint survey conducted by the American Bankers Association (ABA) and Farmer Mac (see ABA-Farmer Mac Agricultural Lender Survey, August 2024). In our previous farmdoc article, we discussed the median reported working capital to operating expense ratio based on data from all grain farms in Illinois (see farmdoc daily, December 16, 2024). Our analysis indicated that this ratio has been steadily declining since 2021. In this article, we further examine this liquidity measure by comparing trends across the three regions of Illinois, using data obtained from the Illinois Farm Business Farm Management (FBFM). Recall that liquidity refers to a farm business’s ability to generate sufficient cash or quickly convert assets into cash to meet its financial obligations as they come due. These obligations include operational expenses, debt payments, family living expenses, and taxes. Our primary focus here is to relate working capital to accrual operating expenses for grain farms and illustrate the quality and trends of this ratio in each of the state's three regions.
