Farm survival and performance under alternative financial conditions and credit policies

David Leatham (), Gregory Perry, M. Edward Rister and James Richardson ()
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M. Edward Rister: Assistant Professor in the Department of Agricultural Economics, Texas A&M University, Postal: Assistant Professor in the Department of Agricultural Economics, Texas A&M University

Agribusiness, 1986, vol. 2, issue 3, 321-337

Abstract: The impact of beginning equity, credit limits imposed by lenders, and changes in land values on farm survival, changes in equity position and farm success (measured by the probability of a positive net present value of returns) are evaluated. Whole-farm, Monte Carlo simulations for Texas part-owner and tenant rice-soybean operations were completed over the period 1984 through 1988. Results indicate that extending additional credit to part-owner and tenant operators in a high debt position (over 50%) will allow continued operation, but continued operation significantly increases the likelihood of a loss of farm equity and loan losses to agricultural lenders. Deterioration in land values increases the need for a higher equity base.

Date: 1986
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Persistent link: https://EconPapers.repec.org/RePEc:wly:agribz:v:2:y:1986:i:3:p:321-337

DOI: 10.1002/1520-6297(198623)2:3<321::AID-AGR2720020305>3.0.CO;2-9

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