The importance of off-farm income to servicing farm debt
U.S. farm income is on the rise. Yet, farm income alone is often insufficient for many farmers to service their debt. In fact, for many farm operations off-farm wages have become their main source of income. In 2008, 90 percent of all income for farm households came from off-farm activities. ; This boost in income has become vital to farm households however, it comes with significant risk. Farm operations are now exposed to economic stresses that arise outside the farm gate. In particular, rising unemployment in the local community can elevate a farmer’s risk to income loss. If farmers lose this income, their financial stress would rise to the point that many would be unable to service their debt. The risk of off-farm income loss can be heightened if the local economy relies on a shrinking industry, such as manufacturing. Moreover, the financial stress associated with exposure to local unemployment levels can be much greater for some farm operations than others, depending on their size, type of enterprise, and age of the operator. ; Briggeman explores the effect of labor market stress on a farmer’s ability to service debt. His analysis finds that financial stress among farmers intensifies as local unemployment rates rise especially among small farmers, livestock producers, and young farmers that operate near manufacturing areas.
Volume (Year): (2011)
Issue (Month): Q I ()
|Contact details of provider:|| Postal: |
Phone: (816) 881-2254
Web page: http://www.kansascityfed.org
More information through EDIRC
|Order Information:|| Email: |
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Ashok K. Mishra & Barry K. Goodwin, 1997. "Farm Income Variability and the Supply of Off-Farm Labor," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(3), pages 880-887.
- Charles A. Towe & Mitchell J. Morehart, 2009. "Credit Constraints: Their Existence, Determinants, and Implications for U.S. Farm and Nonfarm Sole Proprietorships," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 91(1), pages 275-289.
- Parker, Timothy S. & Kusmin, Lorin D. & Marre, Alexander W., 2010. "Economic Recovery: Lessons Learned From Previous Recessions," Amber Waves, United States Department of Agriculture, Economic Research Service, March.
- 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.
- Gibbs, Robert & Kusmin, Lorin D., 2005. "Low Skill Employment and the Changing Economy of Rural America," Economic Research Report 33595, United States Department of Agriculture, Economic Research Service.
When requesting a correction, please mention this item's handle: RePEc:fip:fedker:y:2011:i:qi:n:v.96no.1:x:1. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (LDayrit)
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 references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link 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 profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.