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Evaluating financial stress and performance of beginning farmers during the agricultural downturn

Author

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  • Ani L. Katchova
  • Robert Dinterman

Abstract

Purpose - The purpose of this paper is to examine the financial performance and stress of beginning farmers in the USA with emphasis on the agricultural downturn experienced since 2013. Design/methodology/approach - Using the US Department of Agriculture’s Agricultural Resource Management Survey (ARMS) data, probit models are estimated to study the personal and farm characteristics that affect whether or not the financial ratios fall into critical zones as defined by the Farm Financial Standards Council. The financial ratios involve liquidity, solvency, profitability, efficiency, and repayment capacity. Findings - Beginning farmers are at a greater risk of financial stress on average, with higher likelihood of financial stress in liquidity and efficiency. Further, the recent agricultural downturn has negatively affected liquidity, solvency, and profitability for farmers while repayment capacity does not appear to be affected. During the downturn, beginning farmers are better positioned than the general farming population with respect to liquidity and repayment capacity. Originality/value - This paper applies current lending practices to a nationally representative sample of farms over a time of changing economic conditions for the agricultural sector.

Suggested Citation

  • Ani L. Katchova & Robert Dinterman, 2018. "Evaluating financial stress and performance of beginning farmers during the agricultural downturn," Agricultural Finance Review, Emerald Group Publishing Limited, vol. 78(4), pages 457-469, January.
    • Handle: RePEc:eme:afrpps:afr-08-2017-0074
    DOI: 10.1108/AFR-08-2017-0074
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    Citations

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    Cited by:

    1. Chen, Jian & Katchova, Ani L. & Zhou, Chenxi, 2021. "Agricultural loan delinquency prediction using machine learning methods," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 24(5), May.
    2. Bauman, Allison & Jablonski, Becca B. R. & Key, Nigel D. & Hadrich, Joleen C., 2022. "Land tenure and profitability outcomes for U.S. beginning farmers and ranchers," 2022 Annual Meeting, July 31-August 2, Anaheim, California 322233, Agricultural and Applied Economics Association.
    3. Florence Becot & Casper Bendixsen & Kathrine Barnes & Josie Rudolphi, 2021. "Broadening Our Understanding of Farm Children’s Risk Exposure by Considering Their Parents’ Farming Background," IJERPH, MDPI, vol. 18(10), pages 1-18, May.
    4. Denis Nadolnyak & Valentina Hartarska & Bretford Griffin, 2019. "The Impacts of Economic, Demographic, and Weather Factors on the Exit of Beginning Farmers in the United States," Sustainability, MDPI, vol. 11(16), pages 1-17, August.
    5. Bretford Griffin & Valentina Hartarska & Denis Nadolnyak, 2020. "Credit Constraints and Beginning Farmers’ Production in the U.S.: Evidence from Propensity Score Matching with Principal Component Clustering," Sustainability, MDPI, vol. 12(14), pages 1-12, July.
    6. Florence A. Becot & Shoshanah M. Inwood, 2022. "Medical economic vulnerability: a next step in expanding the farm resilience scholarship," Agriculture and Human Values, Springer;The Agriculture, Food, & Human Values Society (AFHVS), vol. 39(3), pages 1097-1116, September.

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