AN ANALYSIS OF FUNDING DECISIONS FOR NICHE AGRICULTURAL PRODUCTS

Abstract

This paper examines the flow of funds from providers of capital to niche agricultural users of capital. Various programs through the US government, state/local economic development and private agencies work to improve the flow of capital to the niche agricultural sector. However, despite the expansion of programs aimed at providing financial resources to the agricultural sector, many sectors remain poorly served. Previous studies have suggested that agencies need to facilitate the flow of capital to small agricultural firms. The results showed that providers of capital believed more technical assistance was the best way to increase the flow of capital to producers. However, few providers of capital provided technical support. Regression analysis showed that the number of applications funded was significantly associated with the (1) weak/no business plan and (2) age of funding agency, while the percent of funds committed was significantly associated with weak/no business plan. The results provide managerial implications that can be used by funding agencies and niche agricultural producers to better understand obstacles to capital acquisition. Agencies may better understand the lack of technical assistance advice, especially because of the role of technical assistance in developing business plans, financial strategies and collateral requirements.