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Agricultural and Rural Finance Markets in Transition (NC1014, NC221, NCT-194)
Department of Agricultural Economics
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.
2011 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.
Several studies were conducted to understand and evaluate the recent changes in agricultural and rural finance markets. In a series of related studies, the loan portfolio performance of a lender is evaluated and the credit worthiness, repayment capacity, and farm income variability for farmers are examined. The results help lenders to better understand the credit risks they are facing when making loans.
Ahrendsen, B.L., and A.L. Katchova. Financial Ratio Analysis using ARMS Data. Agricultural Finance Review, (2011) in press.
Kropp, J., and A.L. Katchova. The Effect of Direct Payments on Liquidity and Repayment Capacity for Beginning Farmers. Agricultural Finance Review 71(2011):347-365.
Jette-Nantel, S., D. Freshwater, A.L. Katchova, and M. Beaulieu. Farm Income Variability and Off-Farm Diversification in Canadian Agriculture. Agricultural Finance Review 71(2011):329-346.
Collier, B., A.L. Katchova, and J. Skees. Loan Portfolio Performance and El Nino, an Intervention Analysis. Agricultural Finance Review 71(2011):98-119.
Durguner, S., and A.L. Katchova. Repayment Capacity of Farmers: A Balanced Panel Data Approach. Journal of Applied Economics and Policy 30(2011):14-30.
Durguner, S., and A.L. Katchova. Credit Risk Models by Type of Business. The Business Review 17(2011), in press.
Meyer, L., J. Hunter, A.L. Katchova, S. Lovett, D. Thilmany, M. Sullins, and A. Card. Approaching Beginning Farmers as a New Stakeholder for Extension. Choices 26(2011), 5: 1-7.