ABSTRACT
This chapter considers the emerging issues in agricultural capital markets that will shape the financing of United States (US) agriculture in the later 1980s and beyond. It presents a brief review of the relevant background of the financial markets and the evolution of credit conditions in agriculture up to the mid-1980s. The chapter focuses on the regulatory and policy issues affecting the major commercial farm lenders: the commercial banking industry and the Cooperative Farm Credit System. The historical development of agricultural capital markets in the US is characterized by important innovations and refinements in financial institutions, financial instruments, and lending practices in order to make financial capital available to farmers on the most appropriate terms. Evaluating the effects of financial markets and credit conditions on the structure and performance of the agricultural sector is a complex task. More market-oriented pricing of loans and services is occurring at the bank, department, and customer levels in response to the interest rate risks.
