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Measuring the Financial Health of U.S. Production Agriculture

Author

Listed:
  • Brewer, Brady
  • Wilson, Christine
  • Featherstone, Allen
  • Harris, J.
  • Erickson, Ken
  • Hallahan, Charles

Abstract

With farm income at record, or near record levels, the overall agricultural production sector has fared well. However, in the current economic climate, instability and volatility in certain agricultural input markets caused by the U.S. macro-economy has put increased pressure on some sub-sectors of the agricultural economy. This paper analyzes the probability of default for USDA Agriculture Resource Management Survey (ARMS) farm operator households over time using a synthetic credit rating model. The probability of default was estimated for each ARMS farm sampled. The farms are classified according to farm type, gross sales class and by region to assess the financial health of each sector, Results indicate that the financial sector at the end of 2010 was exceptionally strong, although there are still certain farms that are vulnerable.

Suggested Citation

  • Brewer, Brady & Wilson, Christine & Featherstone, Allen & Harris, J. & Erickson, Ken & Hallahan, Charles, 2012. "Measuring the Financial Health of U.S. Production Agriculture," Journal of the ASFMRA, American Society of Farm Managers and Rural Appraisers, vol. 2012, pages 1-16.
    • Handle: RePEc:ags:jasfmr:190761
    DOI: 10.22004/ag.econ.190761
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    References listed on IDEAS

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    1. Allen M. Featherstone & Laura M. Roessler & Peter J. Barry, 2006. "Determining the Probability of Default and Risk-Rating Class for Loans in the Seventh Farm Credit District Portfolio," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 28(1), pages 4-23.
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    Cited by:

    1. Kavčáková, Michaela & Kočišová, Kristína, 2020. "Using Data Envelopment Analysis in Credit Risk Evaluation of ICT Companies," AGRIS on-line Papers in Economics and Informatics, Czech University of Life Sciences Prague, Faculty of Economics and Management, vol. 10(3), December.
    2. Yifei Wu & Jeffrey H. Dorfman & Brady E. Brewer, 2021. "The susceptibility of farmland loans to default under falling farmland and commodity prices," Agricultural Economics, International Association of Agricultural Economists, vol. 52(4), pages 561-574, July.
    3. Burns, Christopher & Tulman, Sarah & Harris, J. Michael, 2015. "Farm Financial Stress in a Changing Economic Environment: Simulating Credit Risk with New Imputed ARMS Data on Farm Debt," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 205295, Agricultural and Applied Economics Association.

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