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The wealth effect in U.S. agriculture

Author

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  • Jason Henderson
  • Nathan Kauffman

Abstract

Since 2009, wealth in the U.S. farm sector has surged along with booming farmland values. Similar to nonfarm households, farm enterprises historically have used wealth to support consumption and investments when income fades. During years of low income, farmers tap their existing wealth to finance spending on capital investments such as buildings, vehicles, machinery and other equipment. Thus, similar to nonfarm households, the wealth effect often leads to sharp increases in debt and leverage in farm enterprises.

Suggested Citation

  • Jason Henderson & Nathan Kauffman, 2013. "The wealth effect in U.S. agriculture," Main Street Economist, Federal Reserve Bank of Kansas City, issue 1.
    • Handle: RePEc:fip:fedkms:y:2013:n:1
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    File URL: http://www.kansascityfed.org/publicat/mse/MSE_0113.pdf
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    Cited by:

    1. Banard, Freddie L. & Yeager, Elizabeth A., 2014. "Impact of Lower, More Volatile Net Farm Incomes, and Higher Interest Rates on Repayment Risk," Journal of the ASFMRA, American Society of Farm Managers and Rural Appraisers, vol. 2014, pages 1-20.
    2. Yeager, Elizabeth A. & Banard, Freddie L., 2014. "Effectiveness of Increasing Liquidity as a Response to Increased Repayment Risk: A Case Study," Journal of the ASFMRA, American Society of Farm Managers and Rural Appraisers, vol. 2014, pages 1-19.

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