It is not only farmers and government credit agencies that are encountering financial problems in farm credit markets. A 1986 GAO study found that more than half the FmHA borrowers were either technically insolvent or had extreme financial problems. Thus, the high degree of financial stress by FmHA borrowers in the mid-1980s should not be surprising. Department of Agriculture (USDA) with a historical mission of providing credit to high-risk farmers. The Farmers Home Administration (FmHA) is the primary farm lending agency of the U.S. Congress responded and in late 1987 a multi-billion dollar package of Federal assistance to help bail out the FCS was passed. The government-sponsored Farm Credit System (FCS) has lost some $4.8 billion since 1985 through mortgage and loan defaults-more than any other financial institution in U.S. The regional variation in problems of farm borrowers is important to farm lending agencies, also under financial stress. However, the amount of financial stress in agriculture varied considerably from region to region, being greatest in the Northern Plains, Lake States, and Corn Belt. ![]() In early 1987, 104,000 commercial farm operators (17 per cent of the total) with $28.4 billion of debt were considered to be “under financial stress” so that lenders could lose $6.3 billion on these loans. ![]() Pasour is a professor of economics at North Carolina State University at Raleigh.įarm credit problems are front page news.
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