INCOME AND DEBT COMPONENTS OF FARM FINANCIAL STRESS: A NATAL EXAMPLE

J. R. Leslie and M. A. G. Darroch

Agrekon, 1992, vol. 31, issue 4

Abstract: This study allocates farm financial stress into an income problem and a debt problem (leverage and interest rate) for a selected sample of Natal farms. This is done by comparing leverage and interest rates for farms experiencing financial stress (negative rate of return to equity) with a target leverage ratio and interest rate for those farms which are financially successful (positive rate of return to equity). The results show that some 65.4% of financial stress, for sample farms, is due to an income problem, 25.6% to leverage and 9.0% to an interest rate problem. Policies which alleviate the income problem will therefore be the most effective for these farms.

Keywords: Agricultural Finance; Financial Economics (search for similar items in EconPapers)
Date: 1992
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Persistent link: https://EconPapers.repec.org/RePEc:ags:agreko:267549

DOI: 10.22004/ag.econ.267549

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