COMPONENT CAUSES OF FARM FINANCIAL STRESS

Allen Featherstone, Ted Schroeder and Burton, Robert O.,

No 133706, Staff Papers from Kansas State University, Department of Agricultural Economics

Abstract: Suggested methods to reduce farm financial stress have included interest rate buy-downs and debt forgiveness. This study develops a method to estimate the proportion of individual farm financial stress attributable to an income problem, a leverage problem, and an interest rate problem. Of the financially stressed farms, 33.5% suffered most from an interest rate problem, and 23.4% suffered most from a leverage problem. A reduction of leverage or interest rate to the level attained by the average nonstressed farms would make 31% and 32% of the stressed farms profitable, respectively. Therefore, in the shortrun, an interest rate buy-down or a debt reduction would be equally effective.

Keywords: Farm; Management (search for similar items in EconPapers)
Pages: 33
Date: 1987-12-14
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:ags:ksaesp:133706

DOI: 10.22004/ag.econ.133706

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