THE COST OF BORROWED OPERATING CAPITAL: A COMPARISON OF PCA AND FmHA

Robert Jones

No 279432, 1981 Annual Meeting, July 26-29, Clemson, South Carolina from American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association)

Abstract: The interest rates farmers now face are significantly higher than in the years past (Schneeberger and Osborn; U.S. Dept. of Agriculture; Sonka, Dixon, and Jones-Melicher; Brake and Melicher) and interest on borrowed operating capital is becoming a larger proportion of production costs. As a result farmers have more incentive to minimize the cost of operating funds used in the farming operation. This involves not only selecting the lowest rate of interest, but also selecting the optimum type of loan proceeds disbursement policy, or the manner in which the operating funds are disbursed. It may also involve factors such as the time in which it takes to get money after the loan is approved, the amount of paperwork involved in processing and maintaining the loan, and the length of time borrowed capital is used compared to the time borrowed capital is paid for.

Keywords: Agricultural; Finance (search for similar items in EconPapers)
Pages: 16
Date: 1981-07
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Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea81:279432

DOI: 10.22004/ag.econ.279432

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