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Credit Constraints and Beginning Farmers’ Production in the U.S.: Evidence from Propensity Score Matching with Principal Component Clustering

Author

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  • Bretford Griffin

    (Consumer Product Safety Commission, Bethesda, MD 20814, USA)

  • Valentina Hartarska

    (Department of Agricultural Economics and Rural Sociology, Auburn University, Auburn, AL 36849, USA)

  • Denis Nadolnyak

    (Department of Agricultural Economics and Rural Sociology, Auburn University, Auburn, AL 36849, USA)

Abstract

Beginning Farmers and Ranchers (BFRs) in the U.S. represent a diverse and important subset of family farms. Understanding their financial needs is of paramount importance for supporting the future of American farmers. The focus of this work is on evaluating to what extent credit constraints affect the BFRs’ production. We use propensity score matching to show that credit constraints are associated with significantly lower production levels. To address the highly heterogeneous nature of BFRs, we complement the matching procedure with Principal Components Analysis and clustering to extract more information from the available Agricultural Resource Management Survey data. The results show losses in the total and per acre production values attributed to being credit-constrained, ranging between 14–77% and 24–72%, depending on the matching method, which has important policy implications.

Suggested Citation

  • 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.
    • Handle: RePEc:gam:jsusta:v:12:y:2020:i:14:p:5537-:d:382249
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