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Objective Evaluation for Agricultural Lending

Published online by Cambridge University Press:  28 April 2015

William E. Hardy Jr.  and
Johno B. Weed
William E. Hardy Jr.
Affiliation:
Department of Agricultural Economics and Rural Sociology, Auburn University
Johno B. Weed
Affiliation:
Department of Agricultural Economics and Rural Sociology, Auburn University
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Extract

One of the more significant changes in the U. S. agricultural industry in recent years has been the increased use of credit to finance production and capital expenditures. Since 1970, outstanding farm debt has more than doubled, rising at an average annual rate of 9.3 percent. However, because net farm income has not increased as fast, the debt burden for farm operators has become relatively higher (Melichar and Waldheger).

This increase in debt load has made financial evaluation more difficult for lenders. Narrow profit margins and increased average loan size have made financial institutions more aware of the need to determine, for their loan portfolio, how borrower and agricultural business characteristics relate to debt repayment ability and loan quality.

Type
Research Article
Information
Journal of Agricultural and Applied Economics , Volume 12 , Issue 1 , July 1980 , pp. 159 - 164
Copyright
Copyright © Southern Agricultural Economics Association 1980

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