ABSTRACT
This chapter considers the possible responses by farmers to policy options affecting agricultural finance, and their implications for the structure of agriculture. It shows that one of the espoused purposes of tax policy is to explicitly and directly alter firm behavior and consequently the structural characteristics of the industry. The chapter focuses on the firm level and structural implicaions of financial policy where the impacts are more indirect. The seasonality of farm production and the relatively large capital requirements for entering agriculture and building the capacity to generate income are major factors behind the growth in debt capital. In their marketing activities, farmers have sought greater flexibility in timing of sales, more effective use of market information, and improved methods of transferring or sharing risk with other parties. The short-term actions will also determine the viability and vitality of different groups of farmers once economic recovery occurs.
