Source: UNIVERSITY OF KENTUCKY submitted to NRP
AGRICULTURAL AND RURAL FINANCE MARKETS IN TRANSITION
Sponsoring Institution
National Institute of Food and Agriculture
Project Status
COMPLETE
Funding Source
Reporting Frequency
Annual
Accession No.
0215787
Grant No.
(N/A)
Cumulative Award Amt.
(N/A)
Proposal No.
(N/A)
Multistate No.
NC-1014
Project Start Date
Oct 1, 2004
Project End Date
Sep 30, 2009
Grant Year
(N/A)
Program Code
[(N/A)]- (N/A)
Recipient Organization
UNIVERSITY OF KENTUCKY
500 S LIMESTONE 109 KINKEAD HALL
LEXINGTON,KY 40526-0001
Performing Department
AGRICULTURAL ECONOMICS
Non Technical Summary
The goal of this project is to understand and evaluate the recent changes in agricultural and rural finance markets and provide recommendations seeking improvements in programs and policies affecting the well-being of farm and rural households. We will conduct a series of studies addressing the changing structure of the agricultural sector. Several research projects will address the credit risks faced by agricultural lenders and measure the impacts of various government and risk management programs. Upon completion of the project, insights will be gained to ultimately improve the functioning of agricultural and rural financial markets. Producers, rural residents, and businesses should benefit through increased performance and reduced business risk. The lending sector will become more stable and better prepared to face future policy, portfolio and structure-related challenges.
Animal Health Component
100%
Research Effort Categories
Basic
(N/A)
Applied
100%
Developmental
(N/A)
Classification

Knowledge Area (KA)Subject of Investigation (SOI)Field of Science (FOS)Percent
60260303010100%
Goals / Objectives
Goals and objectives: 1. Determine the effects of changes in international competitive balance and federal and state policies affecting agriculture on the financial and economic performance of farms, agribusinesses and rural financial markets. 2. Determine the effects of market, policy, and structural change in the agricultural and financial market sectors on the financial soundness, safety, and management of financial institutions that supply capital to agriculture. 3. Evaluate the management strategies, capital needs, and financial performance required for the long-term sustainability of firms in the food and agribusiness sector. Expected outputs: 1. A comprehensive research base that contains performance and benchmark financial information on farm, agribusiness, lender, and rural capital markets. 2. Research disseminated through publications in refereed journals, popular periodicals, and professional conferences.
Project Methods
Several models will be developed to understand and evaluate the recent changes in agricultural and rural finance markets. Risk simulation models will be developed to measure the impacts of various government and risk management programs. Credit risk models will be developed to assess risk migrations of farm businesses and capital requirements for agricultural lenders. The results of these analyses will identify farm and lender characteristics for increased performance and reduced business risk.

Progress 01/01/09 to 12/31/09

Outputs
OUTPUTS: The outputs for this project relate to the following goals and objectives: 1) to determine the effects of changes in federal and state policies affecting agriculture on the financial and economic performance of farms, agribusinesses and rural financial markets, 2) to determine the effects of market, policy, and structural change in the agricultural and financial market sectors on the financial soundness, safety, and management of financial institutions that supply capital to agriculture, and 3) to evaluate the management strategies, capital needs, and financial performance required for the long-term sustainability of firms in the food and agribusiness sector. The research was disseminated through publications in refereed journals and professional conferences. PARTICIPANTS: Not relevant to this project. TARGET AUDIENCES: Target audiences were peer researchers. PROJECT MODIFICATIONS: Not relevant to this project.

Impacts
Several studies were conducted to understand and evaluate the recent changes in agricultural and rural finance markets. In one study, we found that the measure of small business financial performance is different from a lender and a borrower perspective. In another study, we also found that the measure of creditworthiness is different for crop and livestock farms. These results help lenders to better understand the credit risks they are facing when making loans. In another study, we find that agricultural processors do not exercise market power when alternative marketing options are not available to farmers, which has important implications for the competitiveness of the agricultural sector.

Publications

  • Bayar, E., Saghaian, S., Hu, W., and Katchova, A.L. (2009). "Importance of Nutrition Labels and Serving Size Information in the Context of Overweight and Obesity." Journal of Food Distribution Research 40: 15-21.
  • Durguner, S., and Katchova, A.L. (2009) "Measure of Small Business Financial Performance From a Lender and a Borrower Perspective." The Business Review 13, in print.
  • Durguner, S. and Katchova, A.L. (2009) "How the Measure of Creditworthiness Differ Among Livestock and Crop Farm Businesses" The Journal of American Academy of Business 15, in print.
  • Katchova, A.L. (2009) "Agricultural Contracts and Alternative Marketing Options: A Matching Analysis." Journal of Agricultural and Applied Economics 42, in print.


Progress 10/01/04 to 09/30/09

Outputs
OUTPUTS: The outputs for this project relate to the following goals and objectives: 1) to determine the effects of changes in federal and state policies affecting agriculture on the financial and economic performance of farms, agribusinesses and rural financial markets, 2) to determine the effects of market, policy, and structural change in the agricultural and financial market sectors on the financial soundness, safety, and management of financial institutions that supply capital to agriculture, and 3) to evaluate the management strategies, capital needs, and financial performance required for the long-term sustainability of firms in the food and agribusiness sector. The research was disseminated through publications in refereed journals and professional conferences. PARTICIPANTS: Nothing significant to report during this reporting period. TARGET AUDIENCES: Peer researchers PROJECT MODIFICATIONS: Nothing significant to report during this reporting period.

Impacts
Several studies were conducted to understand and evaluate the recent changes in agricultural and rural finance markets. In one study, we found that the measure of small business financial performance is different from a lender and a borrower perspective. In another study, we also found that the measure of creditworthiness is different for crop and livestock farms. These results help lenders to better understand the credit risks they are facing when making loans. In another study, we find that agricultural processors do not exercise market power when alternative marketing options are not available to farmers, which has important implications for the competitiveness of the agricultural sector.

Publications

  • Bayar, E., Saghaian, S., Hu, W., and Katchova, A.L. (2009). "Importance of Nutrition Labels and Serving Size Information in the Context of Overweight and Obesity." Journal of Food Distribution Research 40: 15-21.
  • Durguner, S., and Katchova, A.L. (2009) "Measure of Small Business Financial Performance From a Lender and a Borrower Perspective." The Business Review 13, in print.
  • Durguner, S. and Katchova, A.L. (2009) "How the Measure of Creditworthiness Differ Among Livestock and Crop Farm Businesses" The Journal of American Academy of Business 15, in print.
  • Katchova, A.L. (2009) "Agricultural Contracts and Alternative Marketing Options: A Matching Analysis." Journal of Agricultural and Applied Economics 42, in print.