A simulation study of maximum feasible farm debt burdens by farm type [Minnesota]

Extract: This paper probes the question of how much debt could have been maintained successfully by farm types in southern Minnesota 1966-75. The approach was to (a) obtain yearly estimates of enterprise cash flow rates of return; (b) to estimate annual cash income for representative farms of specif...

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Bibliographic Details
Published in:American journal of agricultural economics 1980-11, Vol.62 (4), p.727-733
Main Authors: Hanson, Gregory D., Thompson, Jerry L.
Format: Article
Language:English
Subjects:
Beef
Cash
Cash income
Crops
Debt
Debt capacity
Debt service
Farms
Hogs
Sensitive agricultural products
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Summary:Extract: This paper probes the question of how much debt could have been maintained successfully by farm types in southern Minnesota 1966-75. The approach was to (a) obtain yearly estimates of enterprise cash flow rates of return; (b) to estimate annual cash income for representative farms of specified asset size and enterprise types, and relate this to consumption, taxes, and debt service demands on cash income; (c) to identify the maximum feasible debt ratio (MFDR) for farm types under strict and more lenient loan-servicing conditions ; (d) to explore the sensitivity of MFDRs to changes in rates of return earned on assets, enterprise diversification, and farm size.
ISSN:0002-9092
1467-8276
DOI:10.2307/1239771