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Farm and lender structural change: implications for federal credit

Charles B. Dodson (Economic and Policy Analysis Staff, Farm Service Agency, United States Department of Agriculture, Washington, District of Columbia, USA)
Bruce L. Ahrendsen (Department of Agricultural Economics and Agribusiness, University of Arkansas Division of Agriculture, Fayetteville, Arkansas, USA)

Agricultural Finance Review

ISSN: 0002-1466

Article publication date: 2 May 2017




The purpose of this paper is to examine changes in the structures of US farms and lenders and identify prospective implications for federal credit.


Data from US farm operations for 1996-2014 were adjusted to 2014 values using commodity price indices. Farm size groups were constructed by value of farm production to analyze changes in farm numbers, production, assets, debt, leverage, liquidity, profitability, land tenure, commodity type, contract production, organization type, and use of Farm Service Agency (FSA) direct and guaranteed loans by farm size. Bank, Farm Credit System (FCS), and FSA data from 1996 to 2015 were adjusted to 2014 values. Lender size groups were constructed to analyze changes in bank and association numbers, farm loans, and use of FSA guaranteed loans by lender size.


The greatest consolidation has been by farms with over $2 million in production. More farm debt is held by large, complex organizations, frequently with multiple operators, more variable income, and greater reliance on production contracts and operating and nonreal estate credit. Large farms have greater leverage, are more profitable, and have a larger share of household income from the farm. Banks and FCS institutions are fewer and larger, yet smaller institutions use FSA guarantees to a greater extent. Larger farms tend to be more reliant on both direct and guaranteed FSA loans and are likely to become more dependent on FSA credit.


Changing farm and lender structure together with softening farm income may require FSA farm loan program changes to meet any increase in loan demand. Policy alternatives are provided to meet changing demand for farm credit.



This work was supported, in part, by the USDA National Institute of Food and Agriculture, Hatch/Multistate Project No. 1005079. However, any opinions, findings, conclusions, or recommendations expressed in this publication are those of the authors and do not necessarily reflect the view of the US Department of Agriculture or the University of Arkansas.


Dodson, C.B. and Ahrendsen, B.L. (2017), "Farm and lender structural change: implications for federal credit", Agricultural Finance Review, Vol. 77 No. 1, pp. 78-94.



Emerald Publishing Limited

Copyright © 2017, Exemption for U.S. Government Material

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