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An Analysis of Lenders' Influence on Agricultural Producers' Risk Management Decisions

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  • Knight, Thomas O.
  • Lovell, Ashley C.
  • Rister, M. Edward
  • Coble, Keith H.

Abstract

Agricultural lenders have a stake in and are in a position to influence their borrowers' management decisions. Risk management practice adoption is an area in which lenders might want to exercise this influence. This study employs logistic statistical models to estimate lenders' influence on crop producers' decisions regarding use of three alternative risk management practices: federal multiple-peril crop insurance, crop hail and fire insurance, and forward contracting. Results suggest lenders can exert significant influence on these decisions but that poor communication between lenders and borrowers likely reduces this influence.

Suggested Citation

  • Knight, Thomas O. & Lovell, Ashley C. & Rister, M. Edward & Coble, Keith H., 1989. "An Analysis of Lenders' Influence on Agricultural Producers' Risk Management Decisions," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 21(2), pages 21-33, December.
    • Handle: RePEc:cup:jagaec:v:21:y:1989:i:02:p:21-33_00
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    References listed on IDEAS

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    1. Boggess, William G. & Anaman, Kwabena A. & Hanson, Gregory D., 1985. "Importance, Causes, and Management Responses to Farm Risks: Evidence From Florida and Alabama," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 17(2), pages 105-116, December.
    2. Peter J. Barry & David R. Willmann, 1976. "A Risk-Programming Analysis of Forward Contracting with Credit Constraints," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 58(1), pages 62-70.
    3. Boggess, William G. & Anaman, Kwabena A. & Hanson, Gregory D., 1985. "Importance, Causes, And Management Responses To Farm Risks: Evidence From Florida And Alabama," Southern Journal of Agricultural Economics, Southern Agricultural Economics Association, vol. 17(2), pages 1-12, December.
    4. Oral Capps & Randall A. Kramer, 1985. "Analysis of Food Stamp Participation Using Qualitative Choice Models," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 67(1), pages 49-59.
    5. Patrick, George F., 1984. "Producer's Attitudes, Perceptions and Management Responses to Variability," Regional Research Projects >1984: S-180 Annual Meeting, March 25-28, 1984, New Orleans, Louisiana 307239, Regional Research Projects > S-180: An Economic Analysis of Risk Management Strategies for Agricultural Production Firms.
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    Cited by:

    1. Andrea E. Woolverton & Michael E. Sykuta, 2009. "Do Income Support Programs Impact Producer Hedging Decisions? Evidence from a Cross-Country Comparative," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 31(4), pages 834-852, December.
    2. Steven C. Blank & Jeffrey McDonald, 1996. "Preferences for crop insurance when farmers are diversified," Agribusiness, John Wiley & Sons, Ltd., vol. 12(6), pages 583-592.
    3. Todd H. Kuethe & Mitch Morehart, 2012. "The profit impacts of risk management tool adoption," Agricultural Finance Review, Emerald Group Publishing Limited, vol. 72(1), pages 104-116, May.
    4. Hudson, Darren, 2000. "Contracting In Agriculture: A Primer For Farm Lenders," Research Reports 15789, Mississippi State University, Department of Agricultural Economics.
    5. Bullock, W. I. & Ortmann, G. F. & Levin, J. B., 1994. "Farmer Characteristics, Risk Sources And Managerial Responses To Risk In Vegetable Farming: Evidence From Large- And Small-Scale Commercial Vegetable Farmers In Kwazulu-Natal," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 33(3), September.
    6. Aymeric Ricome & Arnaud Reynaud, 2022. "Marketing contract choices in agriculture: The role of price expectation and price risk management," Agricultural Economics, International Association of Agricultural Economists, vol. 53(1), pages 170-186, January.
    7. Perry, Janet E. & Mishra, Ashok K., 1999. "Forward Contracting Of Inputs: A Farm-Level Analysis," Journal of Agribusiness, Agricultural Economics Association of Georgia, vol. 17(2), pages 1-15.

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