Explaining Regional Demand for Federal Farm Credit Programs: An Ordinal Probit Approach

Demand for federally subsidized farm credit varies regionally, with farm borrowers in some regions very dependent on USDA credit programs. Counties are grouped based on their level of demand for Farm Service Agency (FSA) direct farm ownership (FO) and farm operating loans (OL). Ordinal probit techniques are applied to analyze factors influencing county-level variation in the use of the loan programs. Results suggest that counties with the highest level of demand are more likely to have a Farm Credit System branch office, are more likely to be dependent on farming, have a greater share of farms owing debt, and have fewer guaranteed FSA borrowers and racial and ethnic minorities.