Financing Agriculture in a Turbulent World Economy: Perspectives from the U.S.A.
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Publisher:Ohio State University. Department of Agricultural, Environmental, and Development Economics
Series/Report no.:Ohio State University. Department of Agricultural Economics and Rural Sociology. ESO (Economics and Sociology Occasional Paper). No. 1201
About one-fifth of U.S. farmers are experiencing moderate to severe financial problems due to low income, declining land values and high interest rates. These problems are largely attributable to the world-wide economic recession of the early 1980s. U.S. agricultural lenders are struggling with record amounts of loan losses and loan servicing costs. Government policy responses have included higher price supports, farm debt restructuring and improvements in government crop insurance. Financial market innovations that would respond to income and interest rate variability include modifications to traditional farm debt instruments and improved equity capital markets for farm investments. The U.S. experience offers insights for countries that have not yet experienced the full weight of such difficulties and the solutions attempted may also be applicable elsewhere.