IDEAS home Printed from https://ideas.repec.org/p/ags/usdami/338717.html
   My bibliography  Save this paper

Evaluating the Relative Cost Effectiveness of the Farm Service Agency’s Farm Loan Programs – Report to Congress

Author

Listed:
  • Dodson, Charles
  • Koenig, Steven

Abstract

Excerpts from the Executive Summary: The federal government’s credit programs specifically designed to serve agriculture are those administered by the U.S. Department of Agriculture’s Farm Service Agency (FSA). Through the FSA and predecessor agencies, USDA has been involved in farm credit markets since the Great Depression. While the reach and breadth of federal farm credit programs have fluctuated, they have been an important source of credit to family farmers through economic impoverishment, prosperity, and political change. FSA delivers credit assistance to family farmers through direct lending programs, where loans are made and serviced by FSA staff, and through loan guarantee programs, where loans are made and serviced by commercial lenders but guaranteed against loss by FSA. Direct farm loans have historically been more costly and their loan repayment performance has generally been weaker than have guaranteed loans for similar purposes and terms. The higher delivery cost and weaker loan repayment performance of direct loans has raised Congressional concerns over the need for continuation of this delivery system when alternative guaranteed delivery mechanisms are available. It is in this context that Section 5301 of the Farm Security and Investment Act of 2002 (P.L. 107-171) required the Secretary of Agriculture to undertake an evaluation of the direct and guaranteed loan programs administered by FSA. Congress directed that the study should examine the effectiveness of direct and guaranteed loans programs in meeting the credit needs of agricultural producers in an efficient and fiscally responsible manner. Congress directed the study to assess differences in the characteristics of direct and guaranteed loans, specifically mentioning the number and size of loans, as well as delinquency and default rates. This report addresses the provisions of the Act by: (1) documenting FSA’s direct and guaranteed farm loan program missions, objectives, loan activity, and performance over historical periods of time; (2) examining and comparing the characteristics and the loan performance of different loan cohort groups during recent time periods; and (3) comparing the costs of the direct and guaranteed loan delivery systems in reaching their mandated objectives. Guidelines for administering federal credit programs as outlined by the Office of Management and Budget are considered in addressing the issues and concerns expressed by Congress.

Suggested Citation

  • Dodson, Charles & Koenig, Steven, 2006. "Evaluating the Relative Cost Effectiveness of the Farm Service Agency’s Farm Loan Programs – Report to Congress," USDA Miscellaneous 338717, United States Department of Agriculture.
    • Handle: RePEc:ags:usdami:338717
    DOI: 10.22004/ag.econ.338717
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/338717/files/LoanProgramsEvaluationFSA.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.338717?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Koenig, Steven R. & Dodson, Charles B., 1998. "When Are Farm Interest Rate Subsidy Programs Most Effective?," Agricultural Information Bulletins 33693, United States Department of Agriculture, Economic Research Service.
    2. Stam, Jerome M. & Dixon, Bruce L., 2004. "Farmer Bankruptcies And Farm Exits In The United States, 1899-2002," Agricultural Information Bulletins 33689, United States Department of Agriculture, Economic Research Service.
    3. Charles B. Dodson & Steven R. Koenig, 2003. "Explaining county‐level variability in farm service agency farm loan programs," Agricultural Finance Review, Emerald Group Publishing Limited, vol. 63(2), pages 193-212, November.
    4. Robert B. Avery & Raphael W. Bostic & Paul S. Calem & Glenn B. Canner, 1997. "Changes in the distribution of banking offices," Federal Reserve Bulletin, Board of Governors of the Federal Reserve System (U.S.), vol. 83(Sep), pages 707-725, September.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Dubman, Robert & Key, Nigel & Law, Jonathan & Litkowski, Carrie & Mandalay, Okkar & Subedi, Dipak & Todd, Jessica E & Whitt, Christine, 2021. "Agricultural Income and Finance Situation and Outlook: 2021 Edition," Economic Information Bulletin 327362, United States Department of Agriculture, Economic Research Service.
    2. Gangopadhyay, Partha & Nilakantan, Rahul, 2021. "Peer effects and social learning in banks’ investments in information technology," International Review of Economics & Finance, Elsevier, vol. 75(C), pages 456-463.
    3. John Bailey Jones & Sangeeta Pratap, 2020. "An Estimated Structural Model of Entrepreneurial Behavior," American Economic Review, American Economic Association, vol. 110(9), pages 2859-2898, September.
    4. Enjolras, Geoffroy & Madiès, Philippe, 2017. "The determinants of financial distress in French farms: Analysts versus Algorithms," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 259168, Agricultural and Applied Economics Association.
    5. Timothy H. Hannan & Elizabeth K. Kiser & Robin A. Prager & James J. McAndrews, 2003. "To Surcharge or Not to Surcharge: An Empirical Investigation of ATM Pricing," The Review of Economics and Statistics, MIT Press, vol. 85(4), pages 990-1002, November.
    6. Ian Dunham & Alec Foster, 2023. "FRINGE FINANCIAL ECOLOGIES AND PLACE‐BASED EXCLUSION: A Tale of Two Cities," International Journal of Urban and Regional Research, Wiley Blackwell, vol. 47(6), pages 881-898, November.
    7. Gardó, Sándor & Klaus, Benjamin, 2020. "Overcapacities in banking: Measurement, trends and determinants," Economic Modelling, Elsevier, vol. 91(C), pages 819-834.
    8. Lukasz SATOLA & Tomasz WOJEWODZIC & Wojciech SROKA, 2018. "Barriers to exit encountered by small farms in light of the theory of new institutional economics," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 64(6), pages 277-290.
    9. Ani L. Katchova & Mary Clare Ahearn, 2017. "Farm entry and exit from US agriculture," Agricultural Finance Review, Emerald Group Publishing Limited, vol. 77(1), pages 50-63, May.
    10. Daniel Immergluck, 2001. "The Financial Services Sector and Cities: Restructuring, Decentralization, and Declining Urban Employment," Economic Development Quarterly, , vol. 15(3), pages 274-288, August.
    11. Jeremy G. Weber & Nigel Key, 2015. "Leveraging Wealth from Farmland Appreciation: Borrowing, Land Ownership, and Farm Expansion," Land Economics, University of Wisconsin Press, vol. 91(2), pages 344-361.
    12. Jason Henderson, 2008. "Will farmland values keep booming?," Economic Review, Federal Reserve Bank of Kansas City, vol. 93(Q II), pages 81-104.
    13. Ahrendsen, Bruce L. & Dixon, Bruce L. & Bacchus, Chris & Settlage, Latisha A., 2006. "Commercial Bank Usage of the Farm Service Agency Interest Assistance Program," 2006 Agricultural and Rural Finance Markets in Transition, October 2-3, 2006, Washington, DC 132773, Regional Research Committee NC-1014: Agricultural and Rural Finance Markets in Transition.
    14. Glenn D. Pederson & Lyubov Zech, 2009. "Assessing Credit Risk in an Agricultural Loan Portfolio," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 57(2), pages 169-185, June.
    15. Marcello Pagnini & Paola Rossi & Valerio Vacca & Johann Burgstaller, 2017. "Dynamics of Retail-Bank Branching in Austria," Economic Notes, Banca Monte dei Paschi di Siena SpA, vol. 46(3), pages 527-554, November.
    16. Dinterman, Robert & Katchova, Ani, 2018. "Survival Analysis of Farm Bankruptcy Filings," 2018 Annual Meeting, August 5-7, Washington, D.C. 274117, Agricultural and Applied Economics Association.
    17. William C. Apgar & Mark Duda, 2003. "The twenty-fifth anniversary of the Community Reinvestment Act: past accomplishments and future regulatory challenges," Economic Policy Review, Federal Reserve Bank of New York, issue Jun, pages 169-191.
    18. Avery, Robert B. & Bostic, Raphael W. & Calem, Paul S. & Canner, Glenn B., 1999. "Consolidation and bank branching patterns," Journal of Banking & Finance, Elsevier, vol. 23(2-4), pages 497-532, February.
    19. Robert Dinterman & Ani L. Katchova, 2021. "Survival analysis of farm bankruptcy filings: Evaluating the time to completion of chapter 12 bankruptcy cases," Agribusiness, John Wiley & Sons, Ltd., vol. 37(2), pages 324-347, April.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:usdami:338717. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: http://www.usda.gov .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.