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Analysis of Farm Service Agency Direct Loan Loss Likelihoods and Loss Rates

Author

Listed:
  • Ahrendsen, Bruce L.
  • Dixon, Bruce L.
  • Nwoha, Ogbonnaya John
  • Hamm, Sandra J.
  • Danforth, Diana M.

Abstract

The USDA's Farm Service Agency (FSA) serves as the nation's lender of last resort by providing direct loans to farmers unable to obtain credit at reasonable rates and terms. Annual loan losses have been substantial, averaging $576 million for fiscal 1994-2004. An econometric model using survey data from a sample of FSA loans originated in fiscal 1994-1996 is estimated to identify factors associated with loan losses. The results indicate previous debt settlement experience, loan type, farm type, farm size, and farm financial characteristics are important factors. This information may be used by FSA to adjust its underwriting standards in an effort to reduce loan losses and provide additional loans to farmers given its current funding.

Suggested Citation

  • Ahrendsen, Bruce L. & Dixon, Bruce L. & Nwoha, Ogbonnaya John & Hamm, Sandra J. & Danforth, Diana M., 2006. "Analysis of Farm Service Agency Direct Loan Loss Likelihoods and Loss Rates," 2006 Annual meeting, July 23-26, Long Beach, CA 21454, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    • Handle: RePEc:ags:aaea06:21454
    DOI: 10.22004/ag.econ.21454
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    References listed on IDEAS

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    1. Nwoha, Ogbonnaya John & Ahrendsen, Bruce L. & Dixon, Bruce L. & Chavez, Eddie C. & Hamm, Sandra J. & Settlage, Daniel M. & Danforth, Diana M., 2005. "Farm Service Agency Direct Farm Loan Program Effectiveness Study," Research Reports 15772, University of Arkansas, Arkansas Agricultural Experiment Station.
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    Keywords

    Agricultural Finance;

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