Unique financing strategies among beginning farmers and ranchers: differences among multigenerational and beginning operations
ISSN: 0002-1466
Article publication date: 9 December 2021
Issue publication date: 1 March 2022
Abstract
Purpose
Beginning farmers have unique challenges securing credit because they are less likely to have established sales and collateral for secured loans. This article explores US beginning farmers’ financing strategies relative to those of established operations, with a focus on the source of financing and debt structure (short- vs long-term usage). Agricultural operations commonly use nontraditional financing tools and strategies to start, build and/or sustain their businesses. This article provides a comparative overview of financing strategies comparing established operators to operations with only beginning operators, as well as those multigenerational operations with at least one beginning operator.
Design/methodology/approach
The study uses 2013–2016 USDA Agricultural Resource Management Survey data to explore how various financing patterns vary across US beginning farmers and ranchers with a particular focus on understanding differences where (1) all operators are beginning, (2) there is a mix of beginning and established operators and (3) all operators are established.
Findings
This article explores how the nature of beginning farmer status, human capital resources and alternative marketing strategies may influence financial management strategies and lead to differential use of nontraditional financing sources for beginning farmers and ranchers.
Originality/value
Though exploratory, the authors hope that attention to patterns among US beginning farmers and ranchers of reliance on human capital resources including off-farm income and type of beginning farm operation, nontraditional government support programs and alternative marketing strategies can provide important information as to the role of nontraditional credit in the US farm economy.
Keywords
Acknowledgements
This material is based upon work supported by a USDA/ERS cooperative agreement, USDA/NIFA Award Number 2018-70027-28584, as well as the Colorado Agriculture Experiment Station. The authors wish to thank anonymous reviewers for their valuable contributions to the final manuscript.
Citation
Thilmany, D., Bauman, A., Hadrich, J., Jablonski, B.B.R. and Sullins, M. (2022), "Unique financing strategies among beginning farmers and ranchers: differences among multigenerational and beginning operations", Agricultural Finance Review, Vol. 82 No. 2, pp. 285-309. https://doi.org/10.1108/AFR-05-2021-0070
Publisher
:Emerald Publishing Limited
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