Research Accomplishment Reports 2009

Agricultural and Rural Finance Markets in Transition

A. Katchova
Department of Agricultural Economics

 

Non-Technical Summary

The goal of this project is to understand and evaluate the recent changes in agricultural and rural finance markets and provide recommendations seeking improvements in programs and policies affecting the well-being of farm and rural households. We will conduct a series of studies addressing the changing structure of the agricultural sector. Several research projects will address the credit risks faced by agricultural lenders and measure the impacts of various government and risk management programs. Upon completion of the project, insights will be gained to ultimately improve the functioning of agricultural and rural financial markets. Producers, rural residents, and businesses should benefit through increased performance and reduced business risk. The lending sector will become more stable and better prepared to face future policy, portfolio and structure-related challenges.

2009 Project Description

The outputs for this project relate to the following goals and objectives:

1) to determine the effects of changes in federal and state policies affecting agriculture on the financial and economic performance of farms, agribusinesses and rural financial markets,

2) to determine the effects of market, policy, and structural change in the agricultural and financial market sectors on the financial soundness, safety, and management of financial institutions that supply capital to agriculture, and

3) to evaluate the management strategies, capital needs, and financial performance required for the long-term sustainability of firms in the food and agribusiness sector.

The research was disseminated through publications in refereed journals and professional conferences.

2009 Impact

Several studies were conducted to understand and evaluate the recent changes in agricultural and rural finance markets. In one study, we found that the measure of small business financial performance is different from a lender and a borrower perspective. In another study, we also found that the measure of creditworthiness is different for crop and livestock farms. These results help lenders to better understand the credit risks they are facing when making loans. In another study, we find that agricultural processors do not exercise market power when alternative marketing options are not available to farmers, which has important implications for the competitiveness of the agricultural sector.

2009 Publications

Bayar, E., Saghaian, S., Hu, W., and Katchova, A.L. (2009). "Importance of Nutrition Labels and Serving Size Information in the Context of Overweight and Obesity." Journal of Food Distribution Research 40: 15-21.

Durguner, S., and Katchova, A.L. (2009) "Measure of Small Business Financial Performance From a Lender and a Borrower Perspective." The Business Review 13, in press.

Durguner, S. and Katchova, A.L. (2009) "How the Measure of Creditworthiness Differ Among Livestock and Crop Farm Businesses" The Journal of American Academy of Business 15, in press.

Katchova, A.L. (2009) "Agricultural Contracts and Alternative Marketing Options: A Matching Analysis." Journal of Agricultural and Applied Economics 42, in press.