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Trade credit and agricultural commodity prices: evidence from the us dairy industry

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Listed:
  • Chad Fiechter
  • Jennifer Ifft

Abstract

Financing provided by suppliers or trade credit is a major source of short-term finance. Using a long-term panel data set of Northeast US dairy producers, we find a negative relationship between trade credit use and milk price. Additionally, regional dairy feed manufacturers reported that, in a period of low milk prices, past due trade credit accumulated to 10 per cent of industry sales or approximately 100 million dollars. Both estimates suggest the possibility of producer default risk spreading through the dairy industry. Trade credit is often not publicly reported, hence financial regulators and policymakers may have difficulty observing this default risk.

Suggested Citation

  • Chad Fiechter & Jennifer Ifft, 2023. "Trade credit and agricultural commodity prices: evidence from the us dairy industry," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 50(2), pages 529-562.
    • Handle: RePEc:oup:erevae:v:50:y:2023:i:2:p:529-562.
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    File URL: http://hdl.handle.net/10.1093/erae/jbac010
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    Keywords

    trade credit; bank credit; dairy;
    All these keywords.

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