Impact of Selected Financial Options on a Typical Cash Grain Farm in Central North Dakota

This paper presents a study which evaluates the financial consequences of three policy options that farmers might follow in response to financial stress.' The study compares these options to the effects of higher commodity prices or increased government subsidies and to the effects of lower commodity prices or decreased government subsidies. The analysis estimates the yearly cash flow, net income, and balance sheet statistics of a farm over a four-year period using the Farm Financial Simulation Model (FFSM) developed by Schnitkey et al. (1985). The three policy options evaluated are as follows: sale of 35% of the assets with a lease-back plan, a partial debt forgiveness, and a reduction in interest rates