Financial Control and Variable Amortization Under Uncertainty: An Application To Texas Rice Farms

Md. Lutfor Rahman and Peter J. Barry

Journal of Agricultural and Applied Economics, 1981, vol. 13, issue 1, 99-103

Abstract: Variability in commodity prices and yields, together with greater financial obligations for highly leveraged farms, have added much uncertainty about farmers' debt servicing capacity (Barry and Fraser; Hanson and Thompson). As a result, financial responses must come more to the forefront in farmers' risk management, through emphasis on fuller development and application of the financial control process; and development of specific financial programs and instruments for dealing with random variations in debt servicing capacity (Baker; Lee). An example of the second response is the variable amortization payment plan VAPP suggested by Baker and tested empirically by Stone for use in farm mortgage lending.

Date: 1981
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