Date of Graduation

8-2012

Document Type

Thesis

Degree Name

Master of Science in Agricultural Economics (MS)

Degree Level

Graduate

Department

Agricultural Economics and Agribusiness

Advisor

H.L. Goodwin

Committee Member

Bruce Dixon

Second Committee Member

Michael Popp

Keywords

Social sciences; Best management practices; Finance; Production economics; Young and beginning producers

Abstract

America's agricultural producers continue to age. According to the U.S. Census of Agriculture, the average age of farm operators increased from 55.3 in 2002 to 57.1 in 2007. During the same period, the Census shows a thirty percent decrease in the number of farmers under age 25. Young and beginning producers (YBPs) entering agriculture face high startup costs and a shortage of land to own or rent.

With these concerns in mind, this manuscript details the impact of an innovative proposed loan program for YBPs in Arkansas, which would offer concessionary interest rates and loan fees by participating banks for adopting selections from a menu of practices that achieve environmental improvements along with maintaining or improving farm profits on cropland. The practices selected for this proposed loan program include: (1) conservation tillage; (2) integrated pest management; (3) buffers; (4) cover crops; (5) land leveling; (6) underground irrigation pipe; (7) crop rotations; (8) tailwater recovery systems; (9) planting seed varieties that require less water, fertilizer, chemicals, or other inputs; and (10) following the irrigation and planting standards in the Arkansas crop production handbooks. The proposed project would help these YBPs become more profitable producers, reduce FCS's risk on loaning to YBPs, and help create a new class of potential borrowers who need a little extra assistance to become more successful over the longer term.

To measure the loan program's impact, budgets were developed for corn, cotton, rice, soybeans, and wheat prior to loan program participation. Budgets were then developed and compared to determine the YBP profitability on these five crops from adoption of no-till, a crop rotation, or a no-till crop rotation and program participation. Results indicate YBP per acre profitability is improved from loan program participation and adopting program practices.

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