Lower debt-servicing costs have not led to consolidation, but to higher indebtedness. Farmers are among the most frequent customers for adjustable-rate and deferredamortisation loans. In addition, a large part of the debt is denominated in foreign exchange. For some years, the Swiss franc has been a popular currency for Danish farmers to borrow in (slide 10).
Whereas other sectors often seek to hedge foreign-exchange risks, many farmers take on such risks on a large scale. But this is not the whole issue. In some cases, foreign-exchange loans are not used to finance operations, but are invested in high-yield currencies. This is a purely financial transaction that is unrelated to running a farm.