Hostname: page-component-cd9895bd7-fscjk Total loading time: 0 Render date: 2024-12-26T05:16:37.318Z Has data issue: false hasContentIssue false
  • English
  • Français

An Analysis of Optimal Farm Capital Structure

Published online by Cambridge University Press:  28 April 2015

Wesley N. Musser ,
Fred C. White  and
John C. McKissick
Wesley N. Musser
Affiliation:
Department of Agricultural Economics, University of Georgia, Athens, Georgia
Fred C. White
Affiliation:
Department of Agricultural Economics, University of Georgia, Athens, Georgia
John C. McKissick
Affiliation:
Marketing Extension Department, University of Georgia
Get access Rights & Permissions [Opens in a new window]

Extract

Use of debt in financing agricultural firms is an issue of perennial interest. Much of this interest reflects farmers’ disastrous experience with debt during the Great Depression. The foreclosed mortgages and bankruptcies of that era reaffirmed an historical feeling that achieving a level of zero debt or financial leverage was a high priority goal. E. G. Johnson, who was Chief of the Economic and Credit Research Division of the Farm Credit Administration, articulated the position in the 1940 Yearbook of Agriculture that this goal is even more important than increasing profits: “It may be well to emphasize again that while credit properly used may help farmers to increase their income and raise their standard of living, the fact must not be overlooked that more credit will not cure all the ills of agriculture. The greatest need is to assist the farmers in getting out of debt, not deeper into it,” [6, p. 754]. As memories of the Great Depression faded, agricultural economists tended to emphasize the effect of debt on farm size and therefore net income.

Type
Research Article
Information
Journal of Agricultural and Applied Economics , Volume 9 , Issue 1 , July 1977 , pp. 163 - 168
Copyright
Copyright © Southern Agricultural Economics Association 1977

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

[1]Boehlje, Michael. “The Entry-Growth-Exit Processes in Agriculture,” Southern Journal of Agricultural Economics, Volume 5, No. 1, July 1973, pp. 23–26.Google Scholar
[2]Brigham, Eugene F. and Smith, Keith V.. “The Cost of Capital to the Small Firm,” The Engineering Economist, XIII, Fall 1967, pp. 1–26.CrossRefGoogle Scholar
[3]Heady, Earl O.Economics of Agricultural Production and Resource Use, Prentice-Hall Inc., Englewood Cliffs, New Jersey, 1952.Google Scholar
[4]Herr, William. “Understanding Changes in Non-real Estate Farm Debt,” Agricultural Finance Reuiew, Volume 23, November 1967, pp. 23–32.Google Scholar
[5]Hopkin, John A., Barry, Peter J. and Baker, C. B.. Financial Management in Agriculture, Danville, Illinois: The Interstate Printers & Publishers, Inc., 1973.Google Scholar
[6]Johnson, E. C. “Agricultural Credit,” Farmers in a Changing World, U.S. Department of Agriculture, Washington, D.C.: U.S. Government Printing Office, 1940, pp. 740–754.Google Scholar
[7]Lins, David. “Determinants of Net Changes in Farm Real Estate Debt,” Agricultural Economics Research, U.S. Department of Agriculture, Economic Research Service, Volume 24, January 1972.Google Scholar
[8]Lins, David and Donaldson, Timothy R.. “Explaining Farm Operators Debt: An Application of the Automatic Interaction Detector Technique,” Contributed Paper, American Agricultural Economics Association Annual Meeting, Pennsylvania State University, University Park, Pennsylvania, August 15-18, 1976.Google Scholar
[9]Penson, John B Jr. “Demand for Financial Assets in the Farm Sector: A Portfolio Balance Approach,” American Journal of Agricultural Economics, Volume 54, No. 2, May 1972, pp. 163–174.CrossRefGoogle Scholar
[10]Solomon, Ezra.The Theory of Financial Management, New York: Columbia University Press, 1963.Google Scholar
[11]Weston, J. Fred and Brigham, Eugene F.. Managerial Finance, Fifth Edition, Hinsdale, Illinois: Dryden Press, 1975.Google Scholar