(Mt) – SUNY Oswego Management Agriculture Finances Question

SOLUTION AT Academic Writers Bay

View attached explanation and answer. Let me know if you have any questions.Hi, I finished. There is not a lot of information about Castello Verde especially since it was recently incorporated. There are no public financial records nor public data available so I had to make up a story about it. I describe different financing sources that are available for farmers and agricultural companies and also made a proposal that would benefit agricultural companies. Please check my work and contact me if you have any doubts.OutlineTitle PageTable of ContentsBackgroundPurpose of the Research ProjectGeneral Information About Government Funded Farm LoansTypes of Farm Loan Services Offered by the FSARequirements to Access FSA LoansFarm Ownership LoansFarm Operating LoansAlternative Private Commercial LoansDifferences Between Private Commercial Loans and FSA LoansWhat is the Best Option for Castello Verde?Proposal for Alternative Financing MethodsReferencesANALYSIS OF AGRICULTURAL FINANCING SOURCESAnalysis of Agricultural Financing SourcesBy YOUR NAMECourseDateANALYSIS OF AGRICULTURAL FINANCING SOURCESTable of ContentsBackgroundPurpose of the Research ProjectGeneral Information About Government Funded Farm LoansTypes of Farm Loan Services Offered by the FSARequirements to Access FSA LoansFarm Ownership LoansFarm Operating LoansAlternative Private Commercial LoansDifferences Between Private Commercial Loans and FSA LoansWhat is the Best Option for Castello Verde?Proposal for Alternative Financing MethodsReferences2ANALYSIS OF AGRICULTURAL FINANCING SOURCES3BackgroundThe agriculture industry in the United States represents 5% of the country’s grossdomestic product totaling $1.055 trillion per year as of 2020 and employing 19.7 million fulltime and part-time workers (10.3% of America’s total labor force). Farms contribute $134.7billion to the American economy (Economic Research Service U.S.D.A., 2022). Americanagriculture industry is extremely important to the whole world since the United States is thelargest exporter of agricultural products especially soybeans, corn, tree nuts, beef, and cotton.American food exports totaled $139.5 billion during 2018 and the main international markets areCanada, Mexico, the European Union, Japan, China, and South Korea (Maxwell, 2019). Thefollowing charts show the contribution of different agricultural economic sectors to the grossdomestic product and employment distribution within the overall industry.ANALYSIS OF AGRICULTURAL FINANCING SOURCES4Purpose of the Research ProjectThe purpose of this research project is to analyze different financing options foragricultural businesses. There are several possible sources ranging from federal loans handed outby the Farm Service Agency (FSA) to loans provided by private commercial lenders. Eachlender has its own eligibility requirements and usually cater different target markets.Organizations that offer the most favorable loan conditions (interest rates and terms) alsodemand more stringent eligibility requirements. On the other hand, companies that grant loansmore easily, also charge significantly higher interest rates. There are some lenders that work forspecific organizations like credit unions or agricultural cooperatives.Besides analyzing current offerings of agricultural loans, I will also propose a hybridsystem of loans that can help farmers and businesses obtain cheaper loans and allow them toexpand and grow.ANALYSIS OF AGRICULTURAL FINANCING SOURCES5General Information About Government Funded Farm LoansDue to the strategic relevance of the agricultural industry in the United States, thegovernment has provided financial assistance to American farmers since 1933 as a result of theAgricultural Adjustment Act of 1933 which was part of President Franklin Roosevelt’s NewDeal program. The Farm Service Agency was established in 1937 as part of the Farm SecurityAdministration (now called Department of Agriculture) which was established in 1935 (FarmService Agency U.S.D.A., 2022).Farm loans are subsidized in the United States since they carry very low interest rates.The total amount of farm loans approved and handed out during 2021 was $2.1 billion whichrepresents an annual increase of $100 million. The following table was retrieved from the FarmService Agency’s website, and it shows the current interest rates being charged for differenttypes of farm loans.ProgramInterestRatesFarm Operating- Direct2.750%Farm Operating – Microloan2.750%Farm Ownership – Direct3.250%Farm Ownership – Microloan3.250%Farm Ownership – Direct, JointFinancing2.500%Farm Ownership – Down Payment1.500%Emergency Loan – Amount ofActual Loss3.750%ANALYSIS OF AGRICULTURAL FINANCING SOURCES6Total current farm loans as of September 30, 2021, totaled $6.67 billion distributed alongthe entire 50 states and American territories. According to the latest Farm Loans ProgramObligations Report issues by the FSA, the states with the largest share of farm loans are:StateTotal loans (in billions)Arkansas$329.2Illinois$398.7Kansas$530.4Minnesota$385.1Nebraska$391.5Oklahoma$424.5Wisconsin$388.8The total amount of outstanding farm loans decreased between 2020–2021 from $7.52billion to $6.67 billion mainly due to significant decreases in emergency loans and operatingloans (both guaranteed and direct). The reasons for this is that luckily, damage caused by naturalevents or other emergencies decreased during 2021, and the prices of agricultural productsincreased significantly during 2021. Agricultural exports are all commodities, and their prices arenot set by individual farmers. Instead, the price of agricultural commodities are set in tradingmarkets, especially the Chicago Mercantile Exchange which sets the global reference price basedon global demand and supply. The agriculture industry was the first globalized industry sincemajor events happening in South America, Asia, or Europe can result in significant priceANALYSIS OF AGRICULTURAL FINANCING SOURCES7changes. One of the reasons why the Great Depression was so devastating was the SmootHawley Tariff Act of 1930 which hurt global agricultural prices and resulted in the bankruptcy ofthousands of farms in the United States and millions all over the world (Government of theUnited States of America, 2022).The lessons learned from President Hoover’s failed agricultural policies and the damagemade to the American society and th…

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