@article{Kropp:164516,
      recid = {164516},
      author = {Kropp, Jaclyn D. and Katchova, Ani L.},
      title = {The Effects of Direct Payments on Liquidity and Repayment  Capacity of Beginning Farmers},
      address = {2011},
      number = {1639-2016-135168},
      series = {University of Kentucky Ag Econ Staff Papers},
      pages = {30},
      year = {2011},
      abstract = {U.S. decoupled direct payments, paid to farm operators  based on historic yields and base acreage under the 2002  Farm Bill, may alter a farmer’s access to credit or his  ability to meet debt servicing obligations. Data from the  U.S. Department of Agriculture (USDA) Agricultural Resource  Management Survey (ARMS) for the years 2005, 2006 and 2007  are used.  We find a positive significant relationship  between the level of direct payments (in dollars) and the  term debt coverage ratio for experienced farmers,  suggesting that direct payments improve repayment capacity.  However, this relationship is not significant for beginning  farmers. We also find a negative significant relationship  between the number of base acres and the current ratio for  experienced farmers, while this relationship lacks  significance for beginning farmers. We provide evidence  that decoupled direct payments impact a farmer’s liquidity  and repayment capacity. This paper also contributes to the  growing body of research investigating the mechanisms by  which decoupled payments have the potential to distort  current production.},
      url = {http://ageconsearch.umn.edu/record/164516},
      doi = {https://doi.org/10.22004/ag.econ.164516},
}