Hostname: page-component-cd9895bd7-hc48f Total loading time: 0 Render date: 2024-12-25T16:47:12.726Z Has data issue: false hasContentIssue false
  • English
  • Français

External Finance: A Necessary Component in Growth Projections for Southern Agriculture*

Published online by Cambridge University Press:  28 April 2015

John B. Penson Jr
John B. Penson Jr*
Affiliation:
Department of Agricultural Economics, Texas A & M University
Get access Rights & Permissions [Opens in a new window]

Extract

Literature is replete with studies projecting the performance of agriculture to 1980, 1985 and the year 2000. These studies are usually based upon a dynamic certainty econometric model which, in turn, either assumes or projects annual rates of growth in the stock of producer capital over the time period covered by the study. In two recent assessments of the state of the art King [12] and Tweeten [27] cited several needed changes in our approach to sector econometric projections models, which should lead to increases in accuracy and consistency of future projections. Among those listed were incorporation of risk and uncertainty associated with expected outcomes and integration of disparate models into an aggregate sector projections system. Both of these authors failed, however, to identify the lack of financing considerations in present sector projections models. For example, those studies that sought to explain aggregate demand for farm producer capital when projecting the capital stocks associated with future output levels ignored the implicit rental price of capital and other variables suggested by finance and risk theory.

Type
Research Article
Information
Journal of Agricultural and Applied Economics , Volume 9 , Issue 1 , July 1977 , pp. 25 - 33
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.)

Footnotes

*

Invited paper presented at the SAEA meetings held in Atlanta, Georgia, February 8, 1977. The author wishes to acknowledge the helpful suggestions received from Peter J. Barry, John A. Hopkin and Rod J. Martin

References

[1]Aines, Ronald O. “Linkages in Control and Management with Agribusiness,” Size, Structure and Future of Farms, Ball, A. Gordon and Heady, Earl O., Eds., Iowa State University Press, 1972.Google Scholar
[2]Agri-Banking. “Iowa Bank Increases Income and Farmer Contact Through Leasing,” November-December 1974.Google Scholar
[3]Baker, C. B. “A Variable Amortization Plan to Manage Farm Mortgage Risks,” Agriculture Finance Review, 36(1976):l-6.Google Scholar
[4]Barry, Peter J. and Fraser, Donald R.. “Risk Management in Primary Agricultural Production: Methods, Distribution, Rewards and Structural Implications,” American Journal of Agricultural Economics, 58(1976):286–295.CrossRefGoogle Scholar
[5]Birch, Eleanor M. and Siebert, Calvin D.. “Uncertainty, Permanent Demand, and Investor Behavior,” American Economic Review, 66(1976):15–27.Google Scholar
[6]Brake, John R. “Capital and Credit,” Size, Structure and Future of Farms, Ball, A. Gordon and Heady, Earl O., Eds., Iowa State University Press, 1972.Google Scholar
[7]Hammer, Frederick S.The Demand for Physical Capital: Application of a Wealth Model, Prentice-Hall, Inc., 1964.Google Scholar
[8]Harding, W. M. “Agricultural Credit in the Next Decade,” Speech presented at the Agricultural Credit Seminar, Columbus, Ohio, May 13, 1976.Google Scholar
[9]Hopkin, John A., Barry, Peter J. and Baker, C. B.. Financial Management in Agriculture, Interstate Printers and Publishers, Inc., 1973.Google Scholar
[10]Hottel, J. Bruce, and Reinsel, Robert D.. Returns to Equity Capital by Economic Class of Farm, AER No. 347, ERS, USDA, 1976.Google Scholar
[11]Hickman, Bert G. “On a New Method of Capacity Estimation,” American Statistical Association Journal, June 1964, pp. 529–549.Google Scholar
[12]King, Gordon A. “Econometric Models of the Agricultural Sector,” American Journal of Agricultural Economics, 57(1975):164–171.CrossRefGoogle Scholar
[13]Melichar, Emanuel. “Aggregate Farm Capital and Credit Flows Since 1950 and Projections to 1980” Agriculture Financial Review, 33(1972):1–7.Google Scholar
[14]Melichar, Emanuel. “Impact of Banking Structure on Farm Lending: An Examination of Aggregate Data for States,” Improved Fund Availability at Rural Banks, Board of Governors of the Federal Reserve System, 1975.Google Scholar
[15]Melichar, Emanuel. “Financial Markets for Rural Bank Paper: Report on Research for a System Committee,” Improved Fund Availability at Rural Banks, Board of Governors to the Federal Reserve System, 1975.Google Scholar
[16]Muth, J. F. “Rational Expectations and the Theory of Price Movements,” Econometrica, 29(1961):315–335.CrossRefGoogle Scholar
[17]Ott, David J., Ott, Attiat F. and Yoo, Jang H.. Macroeconomic Theory, New York: McGraw-Hill, 1975.Google Scholar
[18]Penson, John B. Jr. “An Aggregative Income and Wealth Simulator for the U.S. Farm Sector: Its Description and Application to Policy Analysis,” Unpublished Ph.D. thesis, Urbana: University of Illinois, 1973.Google Scholar
[19]Penson, John B. Jr. “Towards An Aggregative Measure of Saving and Capital Finance for U.S. Farm Operator Families,” American Journal of Agricultural Economics, 59(1977):49–60.CrossRefGoogle Scholar
[20]Penson, John B. Jr., Hughes, Dean W. and Nelson, Glenn L.. “Measurement of Capacity Depreciation Based on Engineering Data,” American Journal of Agricultural Economics, 59(1977):321–329.CrossRefGoogle Scholar
[21]Penson, John B. Jr. “Demand for Financial Assets in the Farm Sector: A Portfolio Balance Approach,” American Journal of Agricultural Economics, 54(1972):163–174.CrossRefGoogle Scholar
[22]Penson, John B. Jr. and Williams, Dorwin L.. “Financing Farm Businesses in the United States,” Agricultural Finance Review, 36(1976):32–41.Google Scholar
[23]Rose, Peter S. and Fraser, Donald R.. “Bank Leasing: An Overview,” The Bankers Magazine, Summer 1975.Google Scholar
[24]Sullivan, Gene D. “Impact of Holding Companies on Farm Lending by Banks in Florida,” Improved Fund Availability at Rural Banks, Board of Governors of the Federal Reserve System, 1975.Google Scholar
[25]Tobin, James. “A Dynamic Aggregative Model,” Journal of Political Economics, 63(1955):103–115.CrossRefGoogle Scholar
[26]Tostlebe, Alvin S.Capital in Agriculture: Its Formation and Financing Since 1870, Princeton University Press, 1957.Google Scholar
[27]Tweeten, Luther G. “Econometric Models for the Agricultural Sector: Discussion,” American Journal of Agricultural Economics, 57(1975): 181–184.CrossRefGoogle Scholar
[28]Schuh, G. Edward. “The New Macroeconomics of Agriculture,” American Journal of Agricultural Economics, 58(1976):802–811.CrossRefGoogle Scholar
[29]U.S. Bureau of Census. 1969 Census of Agriculture, Volume V, Special Reports, Part ii, Farm Finance, 1974.Google Scholar
[30]U.S. Department of Agriculture.Balance Sheet for the Farming Sector, ERS, Agricultural Informational Bulletin No. 403, September 1976.Google Scholar
[31]U.S. Department of Agriculture. Agricultural Finance Outlook, ERS, AFO-17, December 1976.Google Scholar
[32]U.S. Department of Agriculture.Farm Real Estate Market Developments, ERS, CD-81, July 1976.Google Scholar
[33]Watts, H. W., and Tobin, James. “Consumer Expenditures and the Capital Account,” Studies of Portfolio Behavior, John Wiley and Sons, Inc., 1967, pp. 1–40.Google Scholar