ERIC Number: ED272764
Record Type: RIE
Publication Date: 1986-Aug
Reference Count: 0
The Financial Condition of Agriculture. An Income Analysis.
Reinsel, Robert D.; Joseph, Anthony
This report examines U.S. agriculture's financial characteristics by assessing farm financial health directly from income and balance sheet measures. Measures of net operating margin, net cash income to the farm family unit, and equity are employed as indicators of a farm operator's financial strength. Effects of interest expenses on cash income are also examined. A discussion of research objectives precedes a review of related studies of the financial condition of U.S. farmers. The next two sections define the net operating margin criterion and its use in evaluating the financial condition of farm businesses or enterprises and define income to the family unit, or cash available for family living and principal repayment or investment, and its use in assessing the farm family unit's financial condition. The following two sections examine the effects of interest expenses on cash income and assess a farm's ability to withstand negative income shocks based on its net worth or equity. The conclusions section cites heterogeneity among U.S. agricultural producers as a major problem confounding farm policy and policy analysis and shows that about 345,000 producers had negative family cash income (FCI), 310,000 had FCI greater than $40,000, and 68,000 had FCI over $100,000. (YLB)
Publication Type: Reports - Descriptive
Education Level: N/A
Authoring Institution: Economic Research Service (USDA), Washington, DC.
Note: Colored ink may affect reproducibility.