ABSTRACT
This chapter describes the meaning of financial stress and discuss alternative measures of producers' actual or potential levels of stress. It examines the nature and extent of financial stress in American agriculture. Special emphasis is given to describing variations in the incidence of financial stress among farming areas, among farms of different sizes, and among farms producing different types of commodities. Dairy producers have recently been confronted with the problem of adjusting to substantial production surpluses and depressed prices, while cash grain producers have been substantially impacted by declining export markets. Indicators of cash flow or income adequacy are often expressed in terms of the number of dollars by which the sum of cash inflows exceeds the sum of demands for cash outlays. The viability ratio is defined as annual household net income divided by annual household financial obligations. The indicators are designed to measure one or more of three financial characteristics: solvency, liquidity, or profitability.
