New Approaches to Financing Long-Term Farm Debt

摘要

Reduced expectations of growth in agricultural earnings triggered a downward adjustment in farmland values which, in conjunction with cash flow difficulties of many farmers, threatens the solvency of both farmers and lenders. While evidence exists that farm lenders and borrowers may have made excessive use of credit in the previous decade, there is concern over maintaining an adequate supply of long-term credit. Since the U.S. farm sector relies heavily on borrowed capital, needs of lenders as well as borrowers must be considered in proposals to bolster farm finances. Four farmland financing mechanisms new to agriculture are discussed as a means to supplement existing financial arrangements.