"Rising farm debt in developed economies shows that agrarian distress is not only a developing-country problem." Discuss, with reference to the U.S. and India.

In 2026, U.S. farm debt reached a record of more than $605 bn after adjusting for inflation. That is roughly double its level in 2000 [1]. Farm distress is therefore not limited to poor countries. Its form and how severe it is, however, differ sharply between rich and poor economies.

Distress in a developed economy: the U.S.

• Margin squeeze: crop prices have fallen while fertiliser and fuel costs have stayed high. The 2026 Middle East conflict pushed input costs up further [1].
• Trade wars: in March 2025, China imposed retaliatory tariffs on U.S. soybeans, maize, wheat and other farm goods, so U.S. farmers lost a key export market [2].
• Hidden credit stress: as bankruptcies rose, banks tightened lending and farmers turned to vendor credit. One study found that non-bank equipment debt was up to four times the official estimates [1].

Distress in India

• Widespread debt: 50.2% of agricultural households were in debt, with an average outstanding loan of ₹74,121 (SAS 2019) [3].
• Dependence on moneylenders: NSS data show that moneylenders supplied ₹257 of every ₹1,000 owed by farmer households [4].
• Uneven formal credit: the RBI Internal Working Group (2019) found very low farm credit in central, eastern and north-eastern states. Some other states received more farm credit than the size of their farm economy, which suggests the loans were used for non-farm purposes [5].

Limits of the comparison

• Nature of distress: U.S. distress mainly hits commercial farms exposed to market and geopolitical shocks. In India it hits smallholders who have little to fall back on, so debt threatens their basic livelihood.
• Policy response: India provides crop loans through KCC at an effective 4% for farmers who repay on time [6]. Even so, 10 states announced loan waivers worth ₹2.4 lakh crore after 2014-15, which the RBI group said damage repayment discipline [5].
• Shared blind spot: neither country fully counts informal or vendor debt [1][4].

Farm distress is universal. Price volatility, input shocks and credit that official data misses drive it in both countries, but it runs deeper in India. The way forward is to measure all farm debt, with more frequent debt surveys in India and household-level borrowing surveys in the U.S. India should also route crop loans only through KCC, as the RBI group recommended [5], and move from waivers to stable farm incomes, in line with SDG 2.