Farm credit member‐borrowers' preferences for patronage payments

Brian Briggeman (Federal Reserve Bank of Kansas City – Omaha Branch, Omaha, Nebraska, USA)
Quatie Jorgensen (University of Arizona, Tucson, Arizona, USA)

Agricultural Finance Review

ISSN: 0002-1466

Publication date: 8 May 2009

Abstract

Purpose

Many associations in the Farm Credit System, which are financial cooperatives, pay their member‐borrowers a cash patronage payment based on the amount of loan volume with the association. In today's competitive lending environment, some Farm Credit associations have offered lower interest rates on new loans but these new member‐borrowers have to forgo their cash patronage payment to receive this new, lower‐interest rate loan. The purpose of this paper is to identify Farm Credit member‐borrowers' preferences for patronage refunds received as a cash payment versus lower fixed real estate interest rates.

Design/methodology/approach

Preferences for patronage refunds or lower fixed interest rates are elicited from Farm Credit Services of East Central Oklahoma member‐borrowers via conjoint analysis.

Findings

Results show that member‐borrowers strongly prefer patronage refunds compared to lower fixed interest rates.

Originality/value

This paper fulfills a need to better understand patronage refund programs within the Farm Credit System.

Keywords

Citation

Briggeman, B. and Jorgensen, Q. (2009), "Farm credit member‐borrowers' preferences for patronage payments", Agricultural Finance Review, Vol. 69 No. 1, pp. 88-97. https://doi.org/10.1108/00021460910960480

Download as .RIS

Publisher

:

Emerald Group Publishing Limited

Copyright © 2009, Emerald Group Publishing Limited

Please note you might not have access to this content

You may be able to access this content by login via Shibboleth, Open Athens or with your Emerald account.
If you would like to contact us about accessing this content, click the button and fill out the form.
To rent this content from Deepdyve, please click the button.