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Component Causes Of Farm Financial Stress

Author

Listed:
  • Featherstone, Allen M.
  • Schroeder, Ted C.
  • Burton, Robert O., Jr.

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.

Suggested Citation

  • Featherstone, Allen M. & Schroeder, Ted C. & Burton, Robert O., Jr., 1987. "Component Causes Of Farm Financial Stress," Staff Papers 133706, Kansas State University, Department of Agricultural Economics.
    • Handle: RePEc:ags:ksaesp:133706
    DOI: 10.22004/ag.econ.133706
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    References listed on IDEAS

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    Cited by:

    1. Pederson, Glenn D. & Brooks, Karen M. & Lekhtman, Oleg P., 1998. "Russian Farm Enterprise Performance And Restructuring: A Debt Problem Or A Profitability Problem?," Working Papers 14416, University of Minnesota, Center for International Food and Agricultural Policy.

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    Farm Management;

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