The market for agricultural credit in Virginia was analyzed to provide market intelligence to financial institutions which extend credit to Virginia farmers. The agricultural environment in the U.S., the South, and Virginia were reviewed concerning the effect of current agricultural sector transition on producers, lenders, agribusinesses, and rural communities. The agricultural credit delivery system in Virginia was studied. The credit use and needs of Virginia farmers and agricultural customers of three Virginia banks were also evaluated. The market for agricultural credit in Virginia was found to be stable. Virginia agriculture is in relatively good financial condition, benefiting from the state's diverse and strong general economy. The use of agricultural credit varied demographically, with one-half of Virginia farmers owing no agricultural debt. Virginia farmers considered Interest rates most important te iender selection and desired the implementation of financial services such as tax planning, estate planning, and financial management seminars. Statistical analysis revealed the presence of market segmentation variables but failed to definitely identify segments. Bank customer survey group responses varied from those of Virginia farmers in general and from each other. Challenges facing Virginia agricultural lenders include adapting to the new agricultural environment, meeting the changing needs of the modified customer base, and competing with new sources of credit. A synopsls of recent studies and statistical information concerning U.S., Southern, and Virginia agriculture and results of the 1987 Virginia Agricultural Credit Use and Needs Survey are included. / Master of Science

The purpose of this study was to analyze loan penetration for agricultural institutional lenders in a 10 county area of Virginia and to generate specific recommendations to the Roanoke Association of the Farm Credit Banks of Baltimore. Alleghany-Bedford-Botetourt-Craig-Franklin-Halifax-Henry-Patrick-Pittsylvania-Roanoke County area of Virginia. This area had a very diversified commodity mix, but the main enterprises included dairy, tobacco, and beef. The case study approach was used to assemble information on the agricultural lenders in the study area rather than a statistically valid random sample. Forty-two agricultural lenders were surveyed for a response representing 86 percent of the total debt outstanding. While the Farm Credit Service was the largest agricultural lender in Virginia and the United States, Farmers Home Administration was the largest agricultural lender in the study area. Over $181 million of agricultural debt was outstanding as of December 31, 1980 in the study area. Over 60 percent was farm mortgage debt. Almost 2/3 of total farm debt outstanding was in Franklin, Halifax, and Pittsylvania Counties. The major portion of debt outstanding was to dairy, tobacco, and beef producers. In contrast to FmHA and commercial banks, Farm Credit served older borrowers who had more equity. The average Farm Credit borrower had a lower gross farm income than FmHA borrowers. Farm Credit serves a great deal of parttime farmers, particularly beef producers concentrated in the area of the main offices. It was concluded that the Roanoke Farm Credit Association should be more aggressive. Recommendations to improve Farm Credit's market penetration were developed under three different leadings. Farm Credit should develop a young farmer program. This would enable them to obtain some of the better FmHA borrowers. The marketing programs of Farm Credit need to be emphasized and other marketing services should be offered. The services suggested included tax, estate and financial planning. Farm Credit's market penetration was expected to increase in the future. Cutbacks in FmHA lending and uncertainty and changes for many commercial banks will contribute to this increase. / Master of Science

Agricultural loans issued to farmers in Virginia from the years 1980-1985 are examined to determine the factors which significantly predict repayment ability. Through a review of literature, extension meetings, conferences and informal conversation with agricultural lenders in the state, a list of financial variables and operation characteristics is compiled and analyzed. Results of the analysis are considered in terms of their immediate and potential assistance to lenders in making loan decisions. Using data from various commercial banks, Production Credit Associations and Farmers Home Administrations throughout Virginia, a model is developed to determine repayment ability of a borrower. Results indicate that several factors are significant in determining this process. Financial ratios such as percent equity, current debt, cash flow I and cash expense-cash receipt are important in determining if a borrower will repay his loan as scheduled. A number of operation characteristics were also found significant. These include: the number of creditors of the borrower, the amount of diversification of the operation and the amount of non-farm income. The results of the study should prove to be a significant aid to lenders and implies need for further research in the loan repayment area. / M.S.