STOCHASTIC DYNAMIC MODELING: AN AID TO AGRICULTURAL LENDER DECISION MAKING

Factors affecting a lenderÂ’s decision to grant farmers operating credit in North Dakota are quantified in an intertemporal loan profitability model using stochastic dynamic programming. Experimental data obtained from a panel of lenders demonstrates the sensitivity of an optimal policy to changes in a lenderÂ’s discount rate, a borrowerÂ’s repayment status, and patronage. The value of credit scoring models that appraise a borrowerÂ’s credit worthiness also is determined.Agricultural Finance,

Role of Extension in a Research University

University administrators are placing greater emphasis on research and extramural funding in an effort to raise their stature among peer institutions. While Extension faculty could feel threatened, they actually have an opportunity to fill the void in land grant mission being vacated by research and teaching faculty. Assuming great roles in applied research and teaching activities will strengthen traditional Extension programs and provide new opportunities for growth.Teaching/Communication/Extension/Profession,

Exploratory flutter test in a cryogenic wind tunnel

A model consisting of a rigid wing with an integral, flexible beam support that was cantilever mounted from the wall in the NASA LaRC 0.3-m transonic cryogenic tunnel was used in a flutter analysis study. The wing had a rectangular planform of aspect ratio 1.5 and a 64A010 airfoil. Various considerations and procedures for conducting flutter tests in a cryogenic wind tunnel were evaluated. Flutter onset conditions were established from extrapolated subcritical response measurements. A flutter boundary was determined at cryogenic temperatures over a Mach number M range from 0.5 to 0.9. Flutter was obtained at two different Reynolds numbers R at M = 0.5 (R = 4.4 and 18.4 x 10 to the 6th power) and at M = 0.8 (R = 5.0 and 10.4 x 10 to the 6th power). Flutter analyses using subsonic lifting surface (kernel function) aerodynamics were made over the range of test conditions. To evaluate the Reynolds number effects at M = 0.5 and 0.8, the experimental results were adjusted using analytical trends to account for differences in the model test temperatures and mass ratios. The adjusted experimental results indicate that increasing Reynolds number from 5.0 to 20.0 x 10 to the 6th power decreased the dynamic pressure by 4.0 to 6.5 percent at M = 0.5 and 0.8

AGRIBUSINESS TRADE CREDIT -- A PARADOX

This article utilizes the Survey of Small Business Finances to compare and contrast trade credit practices of rural small business firms. The results show that these firms borrow money and then re-lend it to others in the form of trade credit. There is a strong direct relationship between various forms of debt held by these firms and their level of accounts receivable (e.g., trade credit extended to customers). The actual level of re-lending varied among firms depending on their adoption level of computers that are used for cash management and credit services. Accounts receivable balances were also dependent on sales levels, costs of doing business, and other income. The most important source of funds for re-lending was obtained from mortgages and stockholder loans. These fund sources provide continuity in trade credit availability. The results also identify key factors affecting demand for trade credit extended to agribusinesses by other firms' accounts payable. A strong inverse relationship exists between accounts payable and other credit sources, indicating they are substitutes. Greater availability of credit from mortgages, other loans, and credit lines, reduces demand for accounts payable. However, they are not perfect substitutes. Demand for accounts payable varies with level of sales, cost of doing business, other income, and adoption of technology.agribusiness, trade, credit, finance, Agribusiness,

RURAL SMALL BUSINESS FINANCE: EVIDENCE FROM THE 1998 SURVEY OF SMALL BUSINESS FINANCES

The 1998 Survey of Small Business Finances provides robust information on the financing of small businesses including an overview of their firm's organization, financial characteristics, and credit use. Information from the survey is used in this study to compare the financial characteristics of urban and rural small businesses. Overall, rural small businesses have very similar financial characteristics, access to technology and financial services, sources of financial capital, and creditworthiness when compared to urban small businesses. Nonparametric rank order statistical methods were required when comparing dollar values of urban and rural small businesses because normality assumptions were violated due to the high concentration of small firms. On average, rural and urban small businesses were strong financially and profitable. Accounts receivable and inventory comprise nearly a third of total assets. Most were organized as either sole proprietorships or corporations. The majority of small businesses utilized computers, primarily for accounting/bookkeeping, administration, and email. Primary financial services are used for transactions and trade credit. Two-thirds of purchases involve trade credit from more than 20 trade credit suppliers, on average. Both urban and rural small businesses rely on a wide variety of sources for financing and use each to the same degree. Rural small businesses possess higher creditworthiness, but nearly one-fourth still report being delinquent on business obligations.rural, small, business, finances, survey, Community/Rural/Urban Development,

RABOBANK'S OFFER TO PURCHASE FARM CREDIT SERVICES OF AMERICA -- A CASE STUDY

Rabobankâs offer to purchase Farm Credit Services of America (FCSA) for $600 million was a surprise because few people ever envisioned 1) fragmentation of the Farm Credit System and/or 2) a foreign lender gaining large market share of U.S. agricultural financial markets. Although FCSA has formally rejected the offer, the action has generated intense public debate about cooperative dividend policy, capital adequacy standards, government sponsored entity (GSE) status of the Farm Credit System and credit gaps in rural America. This case study provides a brief overview of FCSA, Rabobank, and motivation for the purchase offer. Next, the actual deal and timeline for implementation are described, had the offer to buy been accepted by FCSA. Finally, lingering issues raised by the offer are discussed. These issues will likely be important topics of deliberation in forthcoming federal farm and agricultural credit program legislation.agricultural finance, capital dividend, policy, government sponsored entity, Agricultural Finance,

POTENTIAL CORN ACREAGE EXPANSION FOR ETHANOL PRODUCTION: WESTERN NORTH DAKOTA--MINOT

Several recent developments have stimulated farmers' interest in raising corn for ethanol production in northwestern North Dakota. The purpose of this study is to estimate the corn supply response of western North Dakota farmers for ethanol production. Two focus groups of western North Dakota farmers (Williston and Minot) were organized. The market premium over prevailing local corn prices that was required by western North Dakota farms to entice additional production of an ethanol specific hybrid was determined. Aggregation of these farm responses yielded a supply function of corn for the region. Results show that sufficient corn can be produced in the surrounding region to support a 12 million gallon ethanol facility if modest price premiums are provided. The availability of short-season hybrids adapted specifically to the region may constrain expansion.Ethanol, corn supply, response, Crop Production/Industries, Resource /Energy Economics and Policy,