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Breakout Sessions
to help farmers
mitigate price and yield risks such as using …
October 3, 2013
costs
1. Market access makes prices received higher
2. Adopt …
December 1, 2016
KFMA Research
until the right time, when prices and policies are more
favorable …
December 1, 2016
KFMA Research
3
cropping mixture, fertility program, farming practices, and operation structure), rather than luck, are leading to the
difference between the financial states.
Data and Methods
Persistence was tested on nearly 1,300 KFMA farmer‐members using panel data from 1993 through 2014.
Five different categories were created to categorize farms into different levels of financial stability. Farms were then
categorized by different threshold values for the variables: Debt to Asset (D/A) ratio and Net Farm Income by Acre.
Debt to asset ratios have often been used when determining the viability of a loan applicant, therefore, it became one
of the key determining factors used to categorize farms into different financial categories. A D/A of 0.4 or lower was
deemed to be a necessary level where a farm was financially favorable. The second break point was if the farm had a
positive net farm income per acre (NFI/AC) or a negative NFI/AC. Due to the nature of farming a positive income is not
always possible, but a farm that is able to maintain breakeven production costs shows management skills and an
ability to properly control for price risk.
Break points, loosely based upon the USDA Economic Research Service financial vulnerability definition, were
used and each farm was assigned to a category for each year that their data were available in the KFMA data set.
Once farm observations not meeting the inclusion criteria were omitted, 28,294 observations remained for further
analysis. Outliers were farms that had D/A above 1 or were negative, an impossible scenario that may indicate a
corrupt entry. Category 1 farms were farms considered to be financially favorable with a positive NFI/AC and a D/A
ratio greater than the lending industry standard of 0.4. These farms were designated as favorable because of their
profitability and their solvent nature. Category 2 farms were farms with a negative NFI/AC, but were not highly
leveraged with a D/A below 0.4 and were called Marginal Income. Category 3 was similar to Category 1 except these
farms had a positive NFI/AC and were considered highly leveraged and lacking the preferred solvency, hence the term
Marginal Solvency. It should be noted that Category 3 and Category 4 were not ordinal but could be considered
equivalent when attempting to rank across categories. However, Category 4 was the poorest rating, including farms
that were highly leveraged with a D/A above 0.4 and negative NFI/AC giving them the designation of Vulnerable. The
Kansas State University Department Of Agricultural Economics Extension Publication …
May 1, 2018
Macro and Global Economic Perspectives
Canadian
piglets, out of which 3.9 million were feeders ranging from 8 to 12‐week old, weighing 10–60 pounds
(USDA 2015). These piglets were brought to Iowa, Minnesota, Illinois, and Indiana, to be fed on price
2 …
Disrupted Economic Activity and Force Majeure - Avoiding Contractual Obligations in Time of Pandemic
April 17, 2020
Ag Law Issues
plant, and now the ethanol price has collapsed and the plant …
July 1, 2021
Beef Cattle
valued at below
average price/cost. The first statement …
November 23, 2021
Beef Cattle
valued at below
average price/cost. The first statement …
May 26, 2022
Recent Videos, Risk and Profit Online Mini-Conference Presentations
exports in order to stabilize prices and market predictability;
…
February 23, 2023
Ag Law Issues
agricultural land; (6) the purchase price paid, or
other consideration …