ABSTRACT
This chapter examines the public-private farm and rural credit record to better place the current structural and financing revolution in context. The evolution of agricultural lending industry that is likely to occur in the next decade raises several public policy issues. Agricultural finance policy will likely evolve as a series of carefully targeted programs designed to maintain a competitive industry structure aid to address clear instances of market failure. To achieve those objectives, several new policies may come into place to facilitate continued economic integration of agricultural sector with the rest of the economy. The justification for public programs to supply reasonably priced credit to either farm or rural sectors of the country will be challenged on several fronts. Traditional farm production activities may account for only a small portion of a firm’s business activity. The volume of financial services demanded by large-scale integrated farms will exceed the capacity, loan authority, and credit limits of most local financial institutions.
