AGRICULTURAL CREDIT Original PowerPoint Created by Jonathon Pike Copied from Cal Poly Modified by Georgia Agriculture Education Curriculum Office June 202

Capital Resources Intermediate goods used to produce other goods which typically generate income over extended periods of time

Examples of Agricultural Capital Buildings Equipment Houses Livestock Fuel

Credit is Capital Capital+Labor+Management=Profits

Most businesses are interested in expanding. Two ways to increase the size of a business are to: a. Physically increase by purchasing or renting more property b. increase the efficiency and productive capacity of existing business

Productive Credit is used to increase production or income. Purchase Land Livestock Equipment Seed Feed Fuel

Consumption Credit is use to purchase consumable items used by the family and does not contribute to the business income Food Clothing Household goods

Sources of Credit Short Term Credit Intermediate Credit Long Term Credit

Short Term Trade Creditors - Major Equipment Manf. 1) Merchants supply -for production 2) Equipment Dealers provide financing for purchase Short Term Continued:

Contract Farming -dealer supplies all materials -farmer paid flat fee -risk is small, farmer still gets $ Commercial Banks Production Credit Association (PCA)

Long Term Credit Federal Land Bank Life Insurance Companies Commercial Banks Individual Relatives

Intermediate Term Credit Through PCA Through Farmers Home Administration Life Insurance Companies Commercial Banks Individual Relatives

Collateral or Security -Long Term Loans covered by a mortgage -Intermediate & Short Term covered by assets as collateral