PurposeIn recent years, socially disadvantaged farmers and ranchers have increased their usage of nontraditional lending nearly converging to levels of usage observed for nonsocially disadvantaged groups. The purpose of this research is to explore explanations for this trend in lending utilization by socially disadvantaged farmers and ranchers by examining factors that influence credit usage and credit choice.Design/methodology/approachA multinomial logit is used to estimate the probability of loan choice given characteristics of the producer and farm.FindingsWhile not a causal analysis, the results suggest that farm characteristics, which differ between socially disadvantaged and nonsocially disadvantaged producers, are associated with a lower likelihood of credit usage by an average socially disadvantaged farmer. For those that have loans, socially disadvantaged producers exhibit higher debt-to-asset ratios and lower current ratios, characteristics that are typically associated with higher than observed probability of usage of loans other than nontraditional. Socially disadvantaged producers also have lower value of assets which is associated with a higher probability of nontraditional loan usage.Originality/valueThis research is among the first to examine loan usage of socially disadvantaged producers using nationally representative data.

This paper examines the payments made to minority producers, focused on African American producers, from the COVID‐19 program, Coronavirus Food Assistance Program (CFAP), of the United States Department of Agriculture (USDA) and compares it with one of the other more recent ad hoc program payments, the Market Facilitation Program (MFP). There were two rounds of the CFAP, and combinedly (as of March 2022), the program made direct payments of $31.0 billion ($11.8 billion from CFAP 1 and $19.2 billion from CFAP 2) starting in 2020. The MFP made a total payment of $23.5 billion (in two rounds, MFP 2018 and MFP 2019) to producers affected by the retaliatory tariffs placed on US producers by trade partners across multiple years. CFAP made almost $600 million in direct payments to minority producers, including Black or African American producers. Black or African American only producers received more than $52 million in CFAP payments. CFAP payments were proportional to the value of agricultural commodity sold for most minority producers. The 2017 Census of Agriculture showed that the majority of minority producers, including African American producers but excluding Asian producers, raised livestock. CFAP made the highest payments to livestock minority producers. The CFAP payment distribution pattern shows that payments reached minority producers who often did not receive Government payments. CFAP made more payments and as a share of total program outlays to minority producers compared to MFP. However, for Black or African American only producers, even though the magnitude increased (because CFAP disbursed more funds compared to MFP), the share of payment received did not increase.

PurposeThis paper examines credit products, operational performance and business models employed by nontraditional lenders (NTLs) in agricultural credit markets.Design/methodology/approachTwo research methods were employed in this study: (1) an executive interview to collect primary data and (2) a case study approach to analyze the findings and develop insights.FindingsThe findings indicate the presence of significant differences among lenders across and within three categories of NTLs (large volume, vendor financing and collateral-based NTLs). For example, collateral-based NTLs employ different strategies focusing on types of loans, funding sources, commodities they support and geographic coverage to further segment the market. NTLs in this study were able to capture market by successfully identifying gaps in the supply side of agricultural credit and developing products that meet the needs of that niche (e.g. heavy renters, large operations, producers seeking fixed interest rates for term loans, financially fragile producers). Most of the interviewed NTLs had credit standards comparable to those of traditional lenders and consider them both competitors and partners since many NTLs partner with traditional lenders on participation loans, loan servicing and/or sourcing funds.Originality/valueThe supply side of a nontraditional lending has not been studied extensively due to the proprietary nature of data. The executive interviews conducted in this study allowed for accumulation of industry data, which is not available otherwise.

Using data from the 2009–2020 Agricultural Resource Management Surveys, we compare the financial position and performance of African American farms to that of other U.S. farms. The results suggest that, relative to others, the average African American farm has lower total value of production, net cash farm income, government payments, assets, and debts. We obtained mixed results regarding financial performance, with African American farms having lower profitability, liquidity, and efficiency than others but higher solvency. To our knowledge, this study is the first to provide a contemporary overview of the status of African American farms using detailed, farm‐level financial data.

This paper evaluates producer risk management decisions accounting for government provided risk management programs. An analytical model is developed to investigate the effect of crop insurance and Farm Bill program choice on producer demand for hedging in the futures market. Simulation results show government programs has potential to alter the optimal hedging decisions of producers. Yield protection insurance is found to complement hedging in most locations, while revenue insurance is generally found to substitute for hedging. Farm Bill programs are found to have varying effects based on price level.