Business survival strategies of farmers and lenders under financial and natural adversities
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This dissertation consists of three studies and focuses on the coping mechanisms of agricultural producers and lenders as they responding to natural and economic adversities. The studies address several important issues ranging from technology adoption of hybrid seeds in South African countries to how lender and borrower perform in financial and natural hardship. The first study focuses on the smallholders’ technology adoption of hybrid seeds in response to drought conditions. The hybrid seeds adoption patterns of smallholder farmers in Kenya from 1990’s to early 2000’s are analyzed. This can help government in the developing countries to implement effective policies to increase both percentage of adoption of hybrid seeds and the quantities of adoption. Credit restriction and difficulty of access to market and infrastructure are major barriers for smallholder farmers to adopt new technology. The second study applies the stochastic Translog input distance function and stochastic frontier analysis (SFA) method to evaluate the operational efficiencies of Farm Credit System (FCS) lending institutions. According to the FCS structure, the efficiency analysis is conducted on lending institutions classified based on type (such as banks and associations) and on asset size. Moreover, we compare the temporal efficiencies of FCS lending institutions before and after the most recent financial crisis. In addition, the study addresses the measurement of technical efficiency change (TEC) and allocative efficiency change (AEC). This will help clarify the contributions of different factors to total factor productivity change and, thus help FCS make operating adjustments to maximize total factor productivity. The third study employs comparative analytical techniques that evaluate farmers’ financial and temporal endurance during the recession period. We analyze the loan performance of farm borrowers in the loan program of the Farm Service Agency (FSA). FSA provides supports to farmers with lower credit scores with direct and guarantee loan programs. The split population model is employed to analyze the determinants of both the probability of loan default and the length of time until the eventual occurrence of default.