Enhancing debt payment capacity under greater production and income risk

Cesar L Escalante

American Bankers Association, 2001, vol. 15, issue 01

Abstract: Consistent with the steady plunge of agricultural commodity prices in recent years, the latest USDA national estimates suggest deterioration in the profitability and viability of most small farms. However, with the exception of limited resource and retirement farms, the erosion of debt repayment capacity for small farms was less severe than expected. This article recommends that risk rating models used by lenders should capture the farm borrowers' flexibility to adopt ad hoc or alternative repayment strategies when the viability of farm businesses is threatened by external shocks much beyond the farmers' control.

Keywords: Agricultural; Finance (search for similar items in EconPapers)
Date: 2001
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