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Leasing as an Alternative Method of Financing for Agricultural Cooperatives

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  • Pederson, Glenn D.
  • Gill, Eric E.

Abstract

Economic incentives for agricultural cooperatives to lease capital assets such as structures, machinery, equipment, and other depreciable items are explored and illustrated. Selected aspects of lease contracts are reviewed. The lease or purchase problem is analyzed using capital budgeting (discounted cash flow) and wholefirm financial simulation methods. Results for a case farmer cooperative situation are compared under pre- and post-1986 Tax Reform Act rules and various interest rate and lease rate conditions. The analyses suggest that the attractiveness of facility leasing for cooperatives has declined in the post-1986 period. However, leasing will likely continue to be used selectively by farmer cooperatives.

Suggested Citation

  • Pederson, Glenn D. & Gill, Eric E., 1990. "Leasing as an Alternative Method of Financing for Agricultural Cooperatives," Research Reports 279807, United States Department of Agriculture, Rural Development.
    • Handle: RePEc:ags:urdbrr:279807
    DOI: 10.22004/ag.econ.279807
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    References listed on IDEAS

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    1. Boehlje, Michael & Pederson, Glenn D., 1988. "Farm Finance: The New Issues," Choices: The Magazine of Food, Farm, and Resource Issues, Agricultural and Applied Economics Association, vol. 3(3), pages 1-4.
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    Cited by:

    1. Curtiss, Jarmila, 2012. "Determinants of Financial Capital Use: Review of theories and implications for rural businesses," Factor Markets Working Papers 123, Centre for European Policy Studies.

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