IDEAS home Printed from https://ideas.repec.org/a/cup/jagaec/v20y1988i02p15-24_01.html
   My bibliography  Save this article

Allocation of Farm Financial Stress Among Income, Leverage, and Interest Rate Components: A Kansas Example

Author

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

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 Kansas Farm Management Association farms with a financial problem, 30 percent of the total financial problem is caused by an interest rate problem, 28 percent by a leverage problem, and 42 percent by an income problem. A reduction of leverage or interest rate to the level attained by the average nonstressed farms would make 31 percent and 32 percent of the stressed farms profitable, respectively. Therefore, in the short run, an interest rate buy-down or a debt reduction would be equally effective.

Suggested Citation

  • Featherstone, Allen M. & Schroeder, Ted C. & Burton, Robert O., 1988. "Allocation of Farm Financial Stress Among Income, Leverage, and Interest Rate Components: A Kansas Example," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 20(2), pages 15-24, December.
    • Handle: RePEc:cup:jagaec:v:20:y:1988:i:02:p:15-24_01
    as

    Download full text from publisher

    File URL: https://www.cambridge.org/core/product/identifier/S0081305200017556/type/journal_article
    File Function: link to article abstract page
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Robert W. Jolly & Arnold Paulsen & James D. Johnson & Kenneth H. Baum & Richard Prescott, 1985. "Incidence, Intensity, and Duration of Financial Stress among Farm Firms," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 67(5), pages 1108-1115.
    2. Lovell, C A Knox & Sickles, Robin C, 1983. "Testing Efficiency Hypotheses in Joint Production: A Parametric Approach," The Review of Economics and Statistics, MIT Press, vol. 65(1), pages 51-58, February.
    3. John R. Brake & Michael D. Boehlje, 1985. "Solutions (or Resolutions) of Financial Stress Problems from the Private and Public Sectors," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 67(5), pages 1123-1128.
    4. Emanuel Melichar, 1984. "A financial perspective on agriculture," Federal Reserve Bulletin, Board of Governors of the Federal Reserve System (U.S.), issue Jan, pages 1-13.
    5. Jolly, Robert W. & Paulsen, Arnold & Johnson, James D. & Baum, Kenneth H. & Prescott, Richard, 1985. "Incidence, Intensity, And Duration Of Financial Stress Among Farm Firms," 1985 Annual Meeting, August 4-7, Ames, Iowa 278535, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    6. Jolly, Robert W. & Paulsen, Arnold & Johnson, James D. & Baum, Kenneth H. & Prescott, Richard, 1985. "Incidence, Intensity, and Duration of Financial Stress Among Farm Firms," Staff General Research Papers Archive 11380, Iowa State University, Department of Economics.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. 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.
    2. Leslie, J. R. & Darroch, M. A. G., 1992. "Income And Debt Components Of Farm Financial Stress: A Natal Example," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 31(4), December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. 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.
    2. Innes, Robert, 1987. "Agency Costs, Farm Debt And Foreclosure: Positive And Policy Issues," Working Papers 225811, University of California, Davis, Department of Agricultural and Resource Economics.
    3. Leslie, J. R. & Darroch, M. A. G., 1992. "Income And Debt Components Of Farm Financial Stress: A Natal Example," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 31(4), December.
    4. Olson, Kent D. & Mikesell, Chris L., 1990. "Impacts Of The Farm Financial Crisis: Results Of The 1989 Regional Farm Survey For Minnesota," Staff Papers 14280, University of Minnesota, Department of Applied Economics.
    5. Innes, Robert, 1986. "Moral Hazard and the Genesis of Farm Debt," CUDARE Working Papers 198349, University of California, Berkeley, Department of Agricultural and Resource Economics.
    6. Olsen, Douglas Ray, 1990. "An analysis of the use of farm marketing and crop insurance risk transfer tools by Iowa farm characteristics," ISU General Staff Papers 1990010108000018157, Iowa State University, Department of Economics.
    7. Mortensen, Timothy L. & Leistritz, F. Larry & Ekstrom, Brenda L. & Wanzek, Janet K., 1989. "Facing Economic Adversity: Experiences of Displaced Farm Families in North Dakota," Agricultural Economics Reports 23319, North Dakota State University, Department of Agribusiness and Applied Economics.
    8. Schnitkey, Gary D. & Barry, Peter J. & Ellinger, Paul N., 1987. "A Microcomputer Analysis of Farm Financial Performance," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 19(2), pages 203-209, December.
    9. Patrick, George F., 1986. "Variability Of Farm Incomes: Some Preliminary Cross-Sectional And Longitudinal Analyses," Regional Research Projects > 1986: S-180 Annual Meeting, March 23-26, 1986, Tampa, Florida 272005, Regional Research Projects > S-180: An Economic Analysis of Risk Management Strategies for Agricultural Production Firms.
    10. Eric C. Davis & Ani L. Katchova, 2020. "The Impact of Bank Deregulations on Farm Financial Stress and Stability," Sustainability, MDPI, vol. 12(4), pages 1-14, February.
    11. Stefenoni, Joseph & Jones, Rodney D. & Doye, Damona & Riley, John Michael, 2018. "Farm Financial Stress in Oklahoma: The Effects of Price Change and Debt," 2018 Annual Meeting, February 2-6, 2018, Jacksonville, Florida 266721, Southern Agricultural Economics Association.
    12. J. Shonkwiler & C. Moss, 1993. "A multidimensional index of financial stress in the farm sector," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 29(3), pages 307-316, July.
    13. Pederson, Glenn & Duffy, Michael, 1987. "Debt Resolution Through Mediation: Extension and Research Linkages," 1987 Annual Meeting, August 2-5, East Lansing, Michigan 337252, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    14. Wilson, Paul N. & Gundersen, Carl E., 1985. "Financial Risk In Cotton Production," Southern Journal of Agricultural Economics, Southern Agricultural Economics Association, vol. 17(2), pages 1-8, December.
    15. Bertrand Koebel, 1998. "Tests of Representative Firm Models: Results for German Manufacturing Industries," Journal of Productivity Analysis, Springer, vol. 10(3), pages 251-270, November.
    16. Burki, Abid A. & Khan, Mahmood-ul-Hasan, 2004. "Effects of allocative inefficiency on resource allocation and energy substitution in Pakistan's manufacturing," Energy Economics, Elsevier, vol. 26(3), pages 371-388, May.
    17. Gow, Jeff & Stayner, Richard, 1995. "The Process of Farm Adjustment: A Critical Review," Review of Marketing and Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 63(02), pages 1-12, August.
    18. Ouyang, Xiaoling & Sun, Chuanwang, 2015. "Energy savings potential in China's industrial sector: From the perspectives of factor price distortion and allocative inefficiency," Energy Economics, Elsevier, vol. 48(C), pages 117-126.
    19. Sauer, Johannes, 2008. "Quota Deregulation and Organic versus Conventional Milk – A Bayesian Distance Function Approach," 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida 6425, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    20. Johannes Sauer, 2010. "Deregulation and dairy production systems: a Bayesian distance function approach," Journal of Productivity Analysis, Springer, vol. 34(3), pages 213-237, December.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cup:jagaec:v:20:y:1988:i:02:p:15-24_01. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Kirk Stebbing (email available below). General contact details of provider: https://www.cambridge.org/aae .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.