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Nontraditional credit in the Wisconsin dairy industry

Nontraditional credit in the Wisconsin dairy industry The purpose of this article is to document and evaluate patterns of nontraditional credit use among Wisconsin dairy farmers. Using a survey-based case study approach, this article analyzes farmer and farm characteristics, farmers’ utilization of credit and farmers’ perceptions of nontraditional lenders. The findings are connected to ongoing structural change in the dairy sector and economic theories of trade credit.Design/methodology/approachData were collected using an incentivized online survey of Wisconsin dairy farmers distributed through existing university and industry networks. A total of 16 farmers completed the survey. The sample is treated as a focus group case study, and participants’ responses are examined using summary statistics and correlational analyses to describe emergent patterns in the industry.FindingsAmong survey respondents who utilize agricultural credit, nearly 80% (11 of 14) borrow from at least one nontraditional lender, and nontraditional credit comprises 17% of their total borrowing, on average. Much of this borrowing occurs through the financial arm of a vendor and is used to finance equipment or machinery purchases. Despite widespread use of nontraditional credit, no surveyed farmers preferred nontraditional lenders over traditional lenders.Originality/valueThis is the first study to analyze the use of nontraditional credit specifically among Wisconsin dairy farmers. Dairy farming is a capital-intensive endeavor, and recent structural change in the sector has increased surviving dairy farmers' demand for credit. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Agricultural Finance Review Emerald Publishing

Nontraditional credit in the Wisconsin dairy industry

Agricultural Finance Review , Volume 82 (2): 19 – Mar 1, 2022

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Publisher
Emerald Publishing
Copyright
© Emerald Publishing Limited
ISSN
0002-1466
DOI
10.1108/afr-05-2021-0068
Publisher site
See Article on Publisher Site

Abstract

The purpose of this article is to document and evaluate patterns of nontraditional credit use among Wisconsin dairy farmers. Using a survey-based case study approach, this article analyzes farmer and farm characteristics, farmers’ utilization of credit and farmers’ perceptions of nontraditional lenders. The findings are connected to ongoing structural change in the dairy sector and economic theories of trade credit.Design/methodology/approachData were collected using an incentivized online survey of Wisconsin dairy farmers distributed through existing university and industry networks. A total of 16 farmers completed the survey. The sample is treated as a focus group case study, and participants’ responses are examined using summary statistics and correlational analyses to describe emergent patterns in the industry.FindingsAmong survey respondents who utilize agricultural credit, nearly 80% (11 of 14) borrow from at least one nontraditional lender, and nontraditional credit comprises 17% of their total borrowing, on average. Much of this borrowing occurs through the financial arm of a vendor and is used to finance equipment or machinery purchases. Despite widespread use of nontraditional credit, no surveyed farmers preferred nontraditional lenders over traditional lenders.Originality/valueThis is the first study to analyze the use of nontraditional credit specifically among Wisconsin dairy farmers. Dairy farming is a capital-intensive endeavor, and recent structural change in the sector has increased surviving dairy farmers' demand for credit.

Journal

Agricultural Finance ReviewEmerald Publishing

Published: Mar 1, 2022

Keywords: Nontraditional credit; Dairy; Wisconsin; Vendor financing

References