Beef packing, beef processing, livestock slaughter, meatpacking costs, computer applications

Abstract

Farmers Home Administration new farm loan activity has rapidly shifted from direct to guaranteed lending. This study determines how this change affects the farm sector and farm credit markets. Objective models constructed of these two alternative credit delivery modes indicate that a complete shift to guaranteed loans would exclude some low-income, low-risk borrowers who previously received direct loans and reduce the agency's role in the farm credit market. The study found that the guarantee program is the cost-effective choice, but this conclusion depends in part upon the elasticities of credit demand and supply. Welfare analyses show that borrowers and lenders are affected differently by the two kinds of credit programs. In order to minimize the deadweight loss to society, credit program selection must take into account the elasticity of farm credit demand and supply. The analysis also indicates that credit program selection depends upon the objectives of program.