The Relationship of Farmer Goals Other Factors to Credit Use

Due primarily to inflation, the desire to own assets soybeans, peanuts, and some beef animals and swine. for appreciation and new technology, capital needs in The average farmer was nearly 49 years old and opagriculture continue to increase rapidly. Accompanyerated approximately 460 acres of cropland. Total ining this increase in the need for capital is an increase vestment averaged over $582,000 and total debt over in the use of credit. A better understanding of what $79,000 per farm. motivates farmers to make decisions as they do would The paired-comparison method was used to rank enhance economic analysis in general and in particular basic farmer goals. The technique is based on each recases involving credit decisions. The purpose of this spondent indicating the preferred goals for all possible analysis was to provide additional insight into ecocombinations of pairs of goals. This method provides nomic goals of farmers and how goals, farm characan ordinal scale as well as each item's numerical poteristics, and other factors affect the amounts of credit sition on a ranking scale. It estimates the closeness or used for annual production items and intermediate and disparity of goals in the framework of scales by aslong-term assets.' signing a relative value of 1.00 to the most preferred Several studies of farm goals have been made. Patgoals and a value of 0.00 to the least preferred. In this rick and Eisgruber (p. 494) concluded that farm family study, each individual's preferences were ranked, ingoals could be grouped into four major areas: living dividuals whose choices were inconsistent were elimstandard; farm ownership; leisure/children; and creditinated, and these results were then used to form using, risk-taking behavior. Harman et al. used eight common scalar values by age group. Descriptions of goals developed from previous research and consulthe method can be found in Brannen, Harman et al., tations with agricultural workers and farmers. Smith and Smith and Capstick. and Capstick added two more goals to those studied by Harman but concluded that a low number of goals enSpecification of Credit Models hances the quality of response from the individuals inu ~~~~~~~terviewed.~~ ' 'It was hypothesized that the amount of credit used Harman etal. found that anumberoffactorsaffect per farm was a function of a number of endogenous as Harman et al. found that a number of factors affect well as exogenous factors. Endogenous factors ingoals. However, studies have shown that the family life ude capal inesen, land i enous faors incycle is a major factor in explaining changes in goals tpes o etepies produed, alternative methods o (Fitzsimmons and Holmes; Heady, Back, and Peterson; Ernest; Voss). Harman et al. selected goals so that acquiring control of resources, equity position, perthey were relatively independent of each other. Howsonal goals, and other personal characteristics of the ever, they concluded that to some degree a problem of operator. Exogenous factors include the cost of exinterrelationships between goals did exist and that it tending credit, the interestrate, thelender's perception may be impossible to select goals that are completely of the risk involved, the characteristics of the credit ininy be i le to select gs that are stitution, and so forth. Multiple linear regression was i~nd~ependent.~ ~used to determine the relationship between the amount