Source: UNIVERSITY OF GEORGIA submitted to NRP
AGRICULTURAL AND RURAL FINANCE MARKETS IN TRANSITION (NC1014, NC221, NCT-194)
Sponsoring Institution
National Institute of Food and Agriculture
Project Status
COMPLETE
Funding Source
HATCH
Reporting Frequency
Annual
Accession No.
1004877
Grant No.
(N/A)
Cumulative Award Amt.
(N/A)
Proposal No.
(N/A)
Multistate No.
NC-_old1177
Project Start Date
Oct 1, 2014
Project End Date
Sep 30, 2019
Grant Year
(N/A)
Program Code
[(N/A)]- (N/A)
Recipient Organization
UNIVERSITY OF GEORGIA
200 D.W. BROOKS DR
ATHENS,GA 30602-5016
Performing Department
Agricultural & Applied Economics
Non Technical Summary
The proposed research activities are intended to help improve relationships between organic farmers and lenders. Research activities will also dwell on issues arising from policy changes and other factors affecting the decisions made by lenders and farm operators in their operations. Research plans will address the needs of both farmers and lenders by helping them determine strategies in coping with modifications in their operating environments.
Animal Health Component
55%
Research Effort Categories
Basic
10%
Applied
55%
Developmental
35%
Classification

Knowledge Area (KA)Subject of Investigation (SOI)Field of Science (FOS)Percent
60261103010100%
Knowledge Area
602 - Business Management, Finance, and Taxation;

Subject Of Investigation
6110 - Economy of the United States and sectors thereof;

Field Of Science
3010 - Economics;
Goals / Objectives
Examine the impact of recent fluctuations in capital and commodity markets on the performance, management, and regulation of agricultural financial institutions Evaluate the management strategies, capital needs, and policy impacting the financial performance and long-term sustainability of firms in the food and agribusiness sector Identify financial institutions and services that benefit agricultural producers and rural communities and expand agricultural markets, especially those producers that are beginning, young, from socially disadvantaged groups, and/or involved in producing specialty crops
Project Methods
Farmers and lenders surveys will be used to obtain primary data for analyses of important issues.Secondary data will also be relied on to supplement any primary data obtained.All applicable methods of quantitative and qualitative analyses will be employed to adequately model research issues being investigated on.

Progress 10/01/14 to 09/30/19

Outputs
Target Audience:Agribusinesses, industry commodity associations, policymakers, fellow academic professionals and researchers Changes/Problems: Nothing Reported What opportunities for training and professional development has the project provided? Nothing Reported How have the results been disseminated to communities of interest?The results were published in reputable peer reviewed academic journals. Presentations to industry and academic audiences were also made at the local, national, and international levels. What do you plan to do during the next reporting period to accomplish the goals?Future plans include continued research work on issues related to immigration policy and farm labor linkages. An evolving project looks at health-related issues, including mental health repercussions. There are also projects being initiated and pursued that are dealing with several new agribusiness venture ideas, such as the development of beef branding facility, a phosphorus-based fertilizer plant using poultry litter, Georgia local branding benefits, and the policy implications of the vidalia onion industry official pack date regulation.

Impacts
What was accomplished under these goals? A study conducted further evaluation of determinants of loan decisions made by the Farm Service Agency by focusing on loan packaging decisions as these apply to various racial and gender minority borrowers. Significant research time and effort have been devoted to the evaluation of the H2A guest farm worker program to discern any necessary policy and implementation procedure modifications in order to increase its reliability as a legal recourse for hiring the needed foreign farm labor inputs.

Publications


    Progress 10/01/18 to 09/30/19

    Outputs
    Target Audience:Agribusinesses, industry commodity associations, policymakers, fellow academic professionals and researchers Changes/Problems: Nothing Reported What opportunities for training and professional development has the project provided? Nothing Reported How have the results been disseminated to communities of interest?The results were published in reputable peer reviewed academic journals. Presentations to industry and academic audiences were also made at the local, national, and international levels. What do you plan to do during the next reporting period to accomplish the goals?Future plans include continued research work on issues related to immigration policy and farm labor linkages. An evolving project looks at health-related issues, including mental health repercussions. Thereare alsoprojects being initiated and pursued that are dealing with several new agribusiness venture ideas, such as the development of beef branding facility, a phosphorus-based fertilizer plant using poultry litter, Georgia local branding benefits, and the policy implications of the vidalia onion industry official pack date regulation.

    Impacts
    What was accomplished under these goals? A study conducted further evaluation of determinants of loan decisions made by the Farm Service Agency by focusing on loan packaging decisions as these apply to various racial and gender minority borrowers. Significant research time and effort have been devoted to the evaluation of the H2A guest farm worker program to discern any necessary policy and implementation procedure modifications in order to increase its reliability as a legal recourse for hiring the needed foreign farm labor inputs.

    Publications

    • Type: Journal Articles Status: Published Year Published: 2019 Citation: Williams, O.D. and C.L. Escalante. The Economic Importance of Replacement H2A Foreign Farm Labor Inputs. Journal of Agribusiness. 37,1, Spring 2019, pp. 53-63.
    • Type: Journal Articles Status: Published Year Published: 2019 Citation: Dhakal, Chandra, C.L. Escalante, and C. Dodson. Heterogeneity of Farm Loan Packaging Term Decisions, A Finite Mixtures Approach. Applied Economics Letters. 26:18, 2019, pp. 1528-1532.
    • Type: Journal Articles Status: Published Year Published: 2019 Citation: Luo, T. and C.L. Escalante. The Emigration of Adult Children and Smoking Behaviors of Parents. China Agricultural Economic Review. 11,2, 2019, pp. 317-335.
    • Type: Journal Articles Status: Published Year Published: 2019 Citation: Escalante, C., O. Williams, H. Rusiana, and L. Pena-Levano. Costly Foreign Farm Replacement Workers and the Need for H2A Reforms. Journal of the American Society of Farm Managers and Rural Appraisers. 2019, pp. 14-20.


    Progress 10/01/17 to 09/30/18

    Outputs
    Target Audience:Target audience includes farmers, policy makers, industry stakeholders, and fellow researchers in the agricultural, labor, and health economics areas of study. Changes/Problems: Nothing Reported What opportunities for training and professional development has the project provided? Nothing Reported How have the results been disseminated to communities of interest?Yes, the completed studies were presented at various academic and professional conferences -- at the regional, national, and international levels. What do you plan to do during the next reporting period to accomplish the goals?Pursue current research activities on health and labor issues in the farm sector. Current work is also underway focusing on the H2A guest farmworker visa program -- its implementation issues and possible program modifications to increase its reliability as the only legitimate foreign farm labor hiring alternative.

    Impacts
    What was accomplished under these goals? A study was conducted to analyze the relative financial strength and endurance of small, beginning farmers operating smaller farms during the last economic recession of the late 2000s. As this business category is expected to be more vulnerable to economic shocks, results indicate that the sample farms from the FSA national dataset fared well. The results of this study emphasize the need for continued external support and the lenders' consideration of these farms' business potentials. Fringe health benefits provided by employer in addition to direct compensation can influence an individual's decisions on actual and expected employment duration. This study analyzes the job retention potentials of employer-provided health benefits (EPHB) among farm workers in the United States especially during a period of farm labor shortage conditions. This study's results imply that EPHB could be an effective tool for retaining either undocumented workers on the farm even after legalizing their status or other foreign farm workers hired under contractual arrangements. A study was conducted using Farm Service Agency (FSA) lending data to verify if previous racial and gender bias allegations still persist in more recent lending decisions. Beyond loan approval decisions, the study focused on trends in direct loan packaging terms for approved single proprietorship farm borrowers. Results indicate that while no significant disparities were noted in loan amounts and maturities prescribed for various racial and gender minority groups, non-white male and female borrowers were usually charged higher interest rates than the others. Loan pricing differentials could have been the lenders' strategy for price management of borrowers' credit risks.

    Publications

    • Type: Journal Articles Status: Published Year Published: 2017 Citation: Luo, T. and C.L. Escalante. Employer-Provided Health Benefits and Employment Decisions of U.S. Farm Workers. Agricultural Finance Review. 77,3, 2017, 358-375.
    • Type: Journal Articles Status: Published Year Published: 2018 Citation: Escalante, C.L., A. Osinubi, C. Dodson, and C.E. Taylor. Looking Beyond Farm Loan Approval Decisions: Loan Pricing and Non-Pricing Terms for Socially Disadvantaged Farm Borrowers. Journal of Agricultural and Applied Economics 50,1 2018, 129-148
    • Type: Journal Articles Status: Published Year Published: 2018 Citation: Luo, T. and C.L. Escalante. Health care service utilization of Documented and Undocumented U.S. farm workers. European Journal of Health Economics, 19,7, 2018, 923-934
    • Type: Journal Articles Status: Published Year Published: 2018 Citation: Li, X., B. Brewer, and C.L. Escalante. Pre-Recession Efficiencies and Input Allocation Decisions of Agricultural Banks and Critically Insolvent Banks of the Late 2000s Financial Crises. Applied Economics. 50, 32, 2018, 3515-3531.


    Progress 10/01/16 to 09/30/17

    Outputs
    Target Audience:During the past year, the research and outreach projects undertaken catered to various audiences -- farm business owners, farm workers, industry associations, policymakers, academics, and other analysts interested in farm labor, farm business viability, and economic issues. Changes/Problems: Nothing Reported What opportunities for training and professional development has the project provided?Outreach work on farm labor hiring decisions, with a special focus on the government's H2A guest farm worker visa program and the need to significantly modify certain provisions so farmers can patronize such program that stands as the only remaining legitimate foreign farm labor hiring option. How have the results been disseminated to communities of interest?Yes, research results have generated significant interest and cooperation from industry experts, farmers, farm workers, and academics. What do you plan to do during the next reporting period to accomplish the goals?Follow-up studies on the farm labor-immigration issue will be conducted, including an extension of the H2A farm labor visa program to help increase farmers' patronage of this program. Some credit risk assessment studies are being pursued at the moment that should figure in next year's progress results. Health economics research issues with important agricultural finance implications will also be pursued.

    Impacts
    What was accomplished under these goals? This past year's research and outreach efforts were focused on farm labor issues. Through the analyses of farm employment turnover, employer-provided health benefits, and the health care access of farm workers, these efforts provided important benchmarks for farm businesses that help with revenue enhancement strategies (through increased labor productivity and minimizing supply gaps with more effective hiring strategies) and cost minimization strategies (through more optimal labor hiring decisions and workers' compensation schemes). Other studies focused on the relative vulnerability of newer farm businesses operated by beginning farmers. Through these analyses, farmers are cautioned to be more prudent in their planning and operating decisions to minimize business losses.

    Publications

    • Type: Journal Articles Status: Published Year Published: 2017 Citation: Escalante, C.L. and T. Luo. Sustaining a Healthy Farm Labor Force: Issues for Policy Consideration. Choices, 32,1, 1st Quarter 2017, pages 1-9.
    • Type: Journal Articles Status: Published Year Published: 2017 Citation: Luo, T. and C.L. Escalante. Employer-Provided Health Benefits and Employment Decisions of U.S. Farm Workers. Agricultural Finance Review. 77,3, 2017, pages 358-375.
    • Type: Journal Articles Status: Published Year Published: 2017 Citation: Luo, T. and C.L. Escalante. The U.S. farm workers employment time allocation and tenure decisions. Economic and Labour Relations Review. 28,2, June 2017, pages 270-293.
    • Type: Journal Articles Status: Published Year Published: 2017 Citation: Pena-Levano, L.M, Escalante, C., and Felix, A. FARM-STPACK: The financial analysis of projects for the small farmers. Journal of the American Society of Farm Managers and Rural Appraisers, 2017, pages 112-127.
    • Type: Journal Articles Status: Published Year Published: 2017 Citation: Lopez-Mathamba, L.A; Pena-Levano, L.M, Escalante, C., and Thome, H. SIPAM: Food and interpretative landscape social touristic project. Journal of the American Society of Farm Managers and Rural Appraisers, 2017, pages 152-166.
    • Type: Journal Articles Status: Published Year Published: 2017 Citation: Rusiana, H., B. Brewer, and C.L. Escalante. Effects of Business Maturity, Experience, and Size on Farms Economic Vitality A Credit Migration Analysis of Farm Service Agency Borrowers. Agricultural Finance Review, 77,1, 2017, pages 153-163.
    • Type: Conference Papers and Presentations Status: Published Year Published: 2017 Citation: M. Song and C.L. Escalante. Precedent Input Allocation Decisions of U.S. Commercial Banks Leading to the Great Recession in the late 2000s. Conference Paper, 22nd Conference of the Eurasia Business and Economics Society, Rome, Italy. May 2017.
    • Type: Conference Papers and Presentations Status: Published Year Published: 2017 Citation: X. Li and C.L. Escalante. Pre and Post Recession Input Allocation Decisions of Farm Credit System Lending Units. Conference Paper. 8th Economics and Finance Conference, International Institute of Social and Economic Sciences, London, UK. May 2017.
    • Type: Conference Papers and Presentations Status: Published Year Published: 2017 Citation: Rusiana, H., B. Brewer, and C.L. Escalante. Financial Strength and Endurance of Small Farm Businesses of Young and Beginning Farmers: A Credit Migration-Transition Probability Analysis, Scientific Research Presentation, 2017 Conference of the International Food and Agribusiness Management Association, Miami, FL. June 2017.
    • Type: Conference Papers and Presentations Status: Published Year Published: 2017 Citation: H. Rusiana and C.L. Escalante. Assessing the Real Value of H2A Farm Labor Inputs: A Simulation-Optimization Approach. Selected Paper, 2017 Annual Meeting of Agricultural and Applied Economics Association, Chicago, IL, July 2017.
    • Type: Conference Papers and Presentations Status: Published Year Published: 2017 Citation: Williams, O., C.L. Escalante, and H. Rusiana. Evaluating the Effects of the H2-A Temporary Agricultural Visa Program in Mitigating Farm Labor Shortages and Maintaining Business Viability in the Southeastern United States. Conference Poster, Southern Sustainable Agriculture Working Group 2017 Conference, Lexington, KY January 2017.


    Progress 10/01/15 to 09/30/16

    Outputs
    Target Audience:Research and outreach efforts are aimed to address the needs of farm businesses and agricultural lenders, whocomprise the bulk of the outreach clientele. The rest of the farm industry also benefits from the outputs produced by the project participants. Other academic audiences are also served through collaborative projects and exchange of ideas/outputs. Changes/Problems: Nothing Reported What opportunities for training and professional development has the project provided?Several graduate students who worked under the project participants were able to hone their research, analytical, quantitative skills, in addition to realizing significant professional growth. Several graduate students have already graduated and are working at reputable academic and financial institutions. How have the results been disseminated to communities of interest?The participants provided outreach services to clientele in the farm production and agricultural lending industries in Georgia. Services include the dissemination of outreach bulletins, responding to consultation requests on farm financial management issues, including the compilation of relevant production and economic data for the clients as decision aids, the provision of technical support for the use of existing farm financial management decision aids. The participants also made several outreach presentations among extension audiences comprised of farm business owners, lenders, and other interest groups in the farming industry. Professional and academic conferences were also used as venues to disseminate and share outputs from the projects. What do you plan to do during the next reporting period to accomplish the goals?The participants will continue to work with graduate students in conducting research in more pressing issues in agricultural finance and agribusiness management. They will also respond to regular demand for outreach work among several interest groups in the farm industry.

    Impacts
    What was accomplished under these goals? In collaboration with Kansas State University, a study was undertaken that provides a forward looking forecast on the agricultural lending sector. This survey is designed to identify key trends in the agricultural lending sector to help predict market outcomes and better advise both farmers and lending institutions. Results show a current forecast that predicts increasing non-performing loans and an increase in the need for debt as cash flows of farmers erode over the next year. A study was undertaken to assess the credit migration of small and beginning farmers in the Farm Service Agency program. This study aimed at determining the factors that contributed to a small and beginning farmer increasing their credit score, staying the same, or decreasing their credit worthiness. It was found that small and beginning farmers generally improved their credit worthiness over the time period of the study despite the overall economic downturn the country was experiencing at that time. Researchers at Kansas State University and University of Georgia conducted a third study to assess how the debt load of a farmer affects their optimal capital structure and cost structure of a farm. The results of this study show that the disincentives arise as a farm becomes more indebted and this can increase the costs of the farm resulting in lower efficiencies. These lower efficiencies cause the farmer to use more inputs than are needed and to produce a sub-optimal output mix. Two other projects include collaborations between researches at the University of Georgia and Kansas State University. One study analyzes the choice of debt that farmers use and the second study analyzes the differences in recording and accounting practices for various farm level data sets. Five graduate thesis and dissertation projects completed during the period dealt with issues that address NC-1177 goals. Several publications for academic and outreach audiences were developed from them and released during the year. These projects include the analysis of survival strategies of agricultural banks and certain farming segments (small farms and those operated by young, beginning farm operators) during the last great recession of the late 2000s.The performance of farms operated by racial and minority farmers who obtained loans from the Farm Service Agency was also evaluated to discern ways to improve their relative competitive stance and business viability.The effectiveness of the microloan program was also assessed using survey data collected from Georgia farmers.Another thesis dealt with the determinants of demand for H2A farm worker visas in the Southeast and produced important implications for modifying certain implementation policies.

    Publications

    • Type: Other Status: Published Year Published: 2015 Citation: Brewer, B.E., B.C. Briggeman, A.M. Featherstone, and C.A. Wilson. Kansas State University Agricultural Lender Survey, Fall 2015 Results. Department of Agricultural Economics, Kansas State University.
    • Type: Other Status: Published Year Published: 2015 Citation: Brewer, B.E., B.C. Briggeman, A.M. Featherstone, and C.A. Wilson. Kansas State University Agricultural Lender Survey, Spring 2015 Results. Department of Agricultural Economics, Kansas State University.
    • Type: Theses/Dissertations Status: Published Year Published: 2015 Citation: Xiaofei Li, THE RESILIENCE OF AGRICULTURAL LENDERS AND BORROWERS IN THE LATE 2000S FINANCIAL CRISES: APPLICATIONS OF EFFICIENCY, SPLIT-POPULATION DURATION, AND CREDIT RISK MIGRATION MODELS, Ph.D. Dissertation
    • Type: Theses/Dissertations Status: Published Year Published: 2015 Citation: Minrong Song, BUSINESS SURVIVAL STRATEGIES OF FARMERS AND LENDERS UNDER FINANCIAL AND NATURAL ADVERSITIES: ANALYSIS OF TECHNOLOGICAL ADOPTION ISSUES, INPUT ALLOCATION DECISIONS, AND REGIONAL DIFFERENCES IN FINANCIAL ENDURANCE, Ph.D. Dissertation.
    • Type: Theses/Dissertations Status: Published Year Published: 2015 Citation: Hofner Rusiana, A CREDIT MIGRATION APPROACH IN THE EVALUATION OF THE RELATIVE FINANCIAL STRENGTH AND ENDURANCE OF BEGINNING SMALL BUSINESS OF YOUNG FARM OPERATORS UNDER RECESSIONARY CONDITIONS, Masters Thesis.
    • Type: Theses/Dissertations Status: Published Year Published: 2016 Citation: Xueqian Luo, THE IMPACT OF LOCAL ECONOMY ON SUB-FEDERAL IMMIGRATION LAWS IN THE U.S. AND HOW THESE LAWS AFFECT AGRICULTURAL LABOR FORCE, Masters Thesis.
    • Type: Theses/Dissertations Status: Published Year Published: 2015 Citation: Xingchi Luo, PRICE DISCOVERY FUNCTION OF CORN FUTURES MARKET: A COMPARATIVE STUDY OF U.S. AND CHINA, Masters Thesis.
    • Type: Journal Articles Status: Published Year Published: 2016 Citation: Escalante, C.L., Y.Wu, and X. Li. Organic Farms Seasonal Farm Labor Sourcing Strategies in the Pre-Arizona Mode of Immigration Control. Applied Economics Letters, 23,5, 341-346.
    • Type: Journal Articles Status: Published Year Published: 2015 Citation: Jones, G., C.L. Escalante, and H. Rusiana. Reconciling Information Gaps in Organic Farm Borrowers' Dealings with Farm Lenders. Agricultural Finance Review. 75,4, 469-483.
    • Type: Journal Articles Status: Published Year Published: 2016 Citation: Wu, Y., C.L. Escalante, and X. Li. Business Maturity and Technical Efficiency: Evidence from Chinese and Indian Microfinance Institutions. Enterprise Development and Microfinance. 27,2, 97-114.


    Progress 10/01/14 to 09/30/15

    Outputs
    Target Audience:Small farmers, especially financially and disdvantaged farmers, dealing with farm labor issues. Organic farmers with credit access problems. Farm lenders to improve relationship with their borrowers. Changes/Problems: Nothing Reported What opportunities for training and professional development has the project provided?Graduate student advisees were given extensive training and research experience in the above agricultural finance issues. Also farmers and lenders were the audience of outreach seminars designed to improve borrower-lender relationships How have the results been disseminated to communities of interest?Through publications and outreach programs. What do you plan to do during the next reporting period to accomplish the goals?To continue doing extensive research in the organic farming credit issue, develop new research on the federal farm guest worker visa program (H2A) as this is an important legal hiring remedy in the face of the ensuing farm labor-immigration policy issue, and more research projects in microfinance.

    Impacts
    What was accomplished under these goals? Produced journal articles on important issues in the farm labor problems linked to stricter immigration policies, the organic farmers' issues in credit access and risk measurement, and the efficiency evaluation of younger and more mature microfinance institutions in China and India. Presented a number of papers in industry and professional conferences.

    Publications

    • Type: Journal Articles Status: Accepted Year Published: 2015 Citation: Escalante, C.L., Y.Wu, and X. Li. Organic Farms Seasonal Farm Labor Sourcing Strategies in the Pre-Arizona Mode of Immigration Control. Applied Economics Letters, Forthcoming in hard print in 2015.
    • Type: Journal Articles Status: Accepted Year Published: 2015 Citation: Jones, G., C.L. Escalante, and H. Rusiana. "Reconciling Information Gaps in Organic Farm Borrowers' Dealings with Farm Lenders." Agricultural Finance Review. Forthcoming in 2015. (
    • Type: Journal Articles Status: Accepted Year Published: 2015 Citation: Wu, Y., C.L. Escalante, and X. Li. Business Maturity and Technical Efficiency: Evidence from Chinese and Indian Microfinance Institutions. Enterprise Development and Microfinance. Forthcoming in 2015.