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When Are Farm Interest Rate Subsidy Programs Most Effective?

Author

Listed:
  • Koenig, Steven R.
  • Dodson, Charles B.

Abstract

The U.S. Department of Agriculture provides subsidized credit to high-risk farm borrowers unable to obtain credit from commercial sources. To boost incomes and to relieve financial stress, Farm Service Agency programs can provide additional interest rate subsidies to borrowers. However, when market interest rates are low as in recent years, these additional subsidies are less effective in improving borrower income and financial performance. Directing these additional subsidies to beginning farmers and socially disadvantaged borrowers or reserving their use for more stressful economic periods may help control program costs while increasing benefits to borrowers and the public.

Suggested Citation

  • Koenig, Steven R. & Dodson, Charles B., 1998. "When Are Farm Interest Rate Subsidy Programs Most Effective?," Agricultural Information Bulletins 33693, United States Department of Agriculture, Economic Research Service.
    • Handle: RePEc:ags:uersab:33693
    DOI: 10.22004/ag.econ.33693
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    Cited by:

    1. Ahrendsen, Bruce L. & Dixon, Bruce L. & Bacchus, Chris & Settlage, Latisha A., 2006. "Commercial Bank Usage of the Farm Service Agency Interest Assistance Program," 2006 Agricultural and Rural Finance Markets in Transition, October 2-3, 2006, Washington, DC 132773, Regional Research Committee NC-1014: Agricultural and Rural Finance Markets in Transition.
    2. Dodson, Charles & Koenig, Steven, 2006. "Evaluating the Relative Cost Effectiveness of the Farm Service Agency’s Farm Loan Programs – Report to Congress," USDA Miscellaneous 338717, United States Department of Agriculture.

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    Keywords

    Agricultural Finance;

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