Profit and loss sharing in agriculture; an application of Islamic banking

Article Abstract:

The problems associated with advancing debt in the farm industry could be alleviated by applying some of the basic principle of Islamic banking: all loans must serve a socially useful purpose, no interest is allowed to accrue, and risk lies solely with the lender. It is too complicated for farms to seek external investment, but banks could act as intermediaries and offer the public agriculture-related mutual funds, which could be made available as capital to farmers. Such a program would reduce the costs of maintaining federal farm programs.

AGRICULTURAL PRODUCTION--CROPS, AGRICULTURAL PRODUCTION--LIVESTOCK, Foreign bank & branches & agencies, Banking industry, Analysis

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Capital structure, business risk, and investor returns for agribusinesses

Article Abstract:

The degree of risk undertaken by agribusiness firms as well as its capital structure are proportional to returns on their investment, i.e., higher risk generates greater investment and minimal risk create minimal returns. Business risk may be lessened by implementing strategies to affect variability of volume input and output, sales price variability, product diversity and fixed costs. The use of options or derivatives and forward contracting are other alternatives.

Financial Management, Methods, Accounting and auditing, Risk management, Financial contingencies

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Is a revised mandate for the US Farm Credit System needed?

Article Abstract:

The US Farm Credit System (FCS) experienced financial problems in the mid-1980s. The FCS, which was the largest among government sponsored enterprises (GSE) prior to 1980, was supported by the promulgation of the Farm Credit Act of 1987. The act stabilized the FCS and helped it regain a profitable base. However, its continued dependence on GSE status must be changed as financial services competitors develop in the agricultural market.

Agriculture, Crop Production, All Other Nondepository Credit Intermediation, Agricultural Credit Institutions, Management, Evaluation, Agricultural credit corporations, United States. Farm Credit System

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