US Farm Liquid Assets, Self-Insurance, and Financial Resiliency

Carl Zulauf and Gary Schnitkey

farmdoc daily, 2024, vol. 14, issue 21

Abstract: This article examines liquid assets on US farms since 1960. Liquid assets serve multiple purposes. They include self-insurance to meet unexpected farm and farm household expenses and to cushion fiscal impacts of poor farm production, as well as to provide flexibility to take advantage of business and other opportunities. Liquid assets held by US farms have increased over time and now exceeds $300 billion. However, they have not increased as much as cash production expenses, implying that their self-insurance role in providing financial resiliency to produce next year has declined. Some of the decline overlaps with publically-subsidized US farm commodity insurance, prompting a policy question of whether public subsidies have replaced private self-insurance. Concurrent data trends suggest the research hypotheses that the US farm commodity insurance program has allowed farmers to reduce liquid assets that provide self-insurance but increased financial resiliency (insured liability plus self-insurance) and provided farmers collectively an additional source of income.

Keywords: Agribusiness; Agricultural Finance; Farm Management (search for similar items in EconPapers)
Date: 2024
References: Add references at CitEc
Citations:

Downloads: (external link)
https://ageconsearch.umn.edu/record/358281/files/fdd013124.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ags:illufd:358281

DOI: 10.22004/ag.econ.358281

Access Statistics for this article

More articles in farmdoc daily from University of Illinois at Urbana-Champaign, Department of Agricultural and Consumer Economics Contact information at EDIRC.
Bibliographic data for series maintained by AgEcon Search ().