Hughes and Adair / The Impacts of Recent Changes in Personal Income and Business Profit Taxes on Investments in the Farming Sector

Lowenberg-Deboer and Boehlje / Evaluation of State Legislative Programs to Assist Beginning Farmers

Barry and Calvert / Loan Pricing and Profitability Analysis by Agricultural Banks

Royer / Financial Impact of Mandatory Equity Programs on Farmer Cooperatives

Newman / Cooperative Equity Redemption Plans and Financial Strength: New Empirical Evidence

LaDue / Influence of the Farm Credit System Stock Requirement on Actual Interest Rates

Abstracts

Hughes and Adair / The Impacts of Recent Changes in Personal Income and Business Profit Taxes on Investments in the Farming Sector <top>

The Economic Recovery Tax Act changed the U.S. tax structure to stimulate investment. Amendments to the act reversed some of these changes but preserved the original intent. The purpose of this article is to analyze the impacts of these tax laws on investments in the farming sector. Although the most obvious impact of decreasing tax rates is to encourage investment, when the effects of these changes on government deficits and investments in other sectors are included, farmers are shown to have less incentive to invest in their businesses than they would have without the tax cuts.

Lowenberg-Deboer and Boehlje / Evaluation of State Legislative Programs to Assist Beginning Farmers <top>

Since the mid-1970s interest has grown in state programs to aid beginning farmers. State legislation is characterized by three approaches: direct loan programs based on tax-exempt bonds, loan guarantee programs, and tax incentives for landowners who sell or lease their land to beginning farmers. Most state programs focus on  subsidizing real estate purchases. The public cost  of the approaches differs substantially. The bond-based direct approach is the highest cost method now used in the Unites States. Relatively low-cost options include tax incentives for landowners who lease land to beginning farmers and matching grants for savings toward a farm purchase by prospective farmers.

Barry and Calvert / Loan Pricing and Profitability Analysis by Agricultural Banks <top>

The unique characteristics of agricultural banks combined with changing financial environment have made loan pricing and profitability analysis important banking issues in the 1980s. This article presents results from a nationwide survey of agricultural banks about their pricing and profitability analysis of farm loans. Results indicate widespread use of various pricing methods, although base rate polices, floating rates, marginal cost pricing, balances, differential pricing, and customer profitability analysis are used more formally by large banks with more complex legal structures. Structural changes in banking suggest greater use of these methods in the future.

Royer / Financial Impact of Mandatory Equity Programs on Farmer Cooperatives <top>

Farmer cooperatives have recently been placed under increased pressure to retire patron equities. The U.S. General Accounting Office has suggested the possibility of requiring cooperatives to pay interest or dividends on retained equities and/or retire retained equities within a certain time. Analysis of the impact of these programs and two alternative programs conducted using a deterministic growth model . The primary disadvantage of mandatory equity programs is the loss of financial flexibility that cooperative would incur. To avoid the threat of mandatory equity programs, cooperatives need to do a better job of retiring and servicing patrons' equity.

Newman / Cooperative Equity Redemption Plans and Financial Strength: New Empirical Evidence<top>

This article examines specific types of equity redemption policies and associated financial performance of Kansas grain marketing and supply cooperatives. Policies are evaluated at a more disaggregated level than in previous work. Significant differences in size, inactive membership, solvency, financial leverage, and profitability are identified.

Cooperatives maintaining revolving fund programs were significantly stronger than all others, although cause and effect were not identified. This study concludes that, although many cooperatives have been able to adopt policies for equity redemption, financial strength of cooperative differs sufficiently that specific types of mandatory equity redemption would cause problems for some cooperatives.

LaDue / Influence of the Farm Credit System Stock Requirement on Actual Interest Rates <top>

Variability exists in the specific stock requirement plans of Federal Land Bank and Production Credit Associations. The stock requirement increases annual equivalent rate by one-half to two percentage points depending on the level  of the stock requirement, the interest rate, whether automatic of end-of-period cancellation is used, and other factors. Farm Credit System rates should be adjusted for the stock requirement when being compared to other rates at both the farm and national levels. National average Federal Land Banks rates, after adjustment for the stock requirement, have remained below commercial bankl long-term real estate rates for the past several years.

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