Next-generation production loans

Jeff Seeley and Mark Tracy

American Bankers Association, 2003, vol. 16, issue 2

Abstract: Traditionally price risk either goes unmanaged or is partially managed via futures accounts set up for the purpose of hedging. However, while clearly an appropriate and ably managed alternative for some producers, exchange listed futures and options can present burdensome issues for the producer and, consequently, for the lender. These issues include cash flow burdens and the time required to manage the account. The Next Generation Production Loan will overcome these hedging-related burdens while simultaneously lowering the producer's interest rate and reducing the lender's portfolio risk.

Keywords: Agricultural; Finance (search for similar items in EconPapers)
Date: 2003
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