An analysis of the financial structure and financial management practices of rice producers in the coastal prairie of Texas

Abstract

The general objectives of this study are to identify and analyze the financial practices of rice producers and the structural aspects associated with the rice producing industry of Texas. The current financial interrelations between resource owners and users were evaluated and appraisal made of selected changes in institutional forces, such as Government allotment and price programs, on producer's income and capital position. Results of the analysis indicated that full land renters (nonland owners), who constituted over 50 percent of all rice farmers in the study area, had substantially smaller size operating units, lower income from both farm and nonfarm sources, were more deeply in debt and would be more vulnerable to adverse yields and to reductions in levels of rice support prices and/or allotments. The unique nature of rice allotments being allocated to individual producers in Texas indicates the involved relation of rice farmers with associated land and allotment owners. Associated rice producers rented land andallotment resources to rice farmers and supplied 57 and 22 percent of total land and rice allotments in 1970, respectively. Estimates of costs and returns to the average size farm unit by land tenure groups in 1970 indicated that returns to owner's equity and management was $43,075 for full land owners, $18,679 for ownersrenters and $9,372 for non-land owners. Non-land owners had $.43 in debts for each $1.00 of farm and non-farm assets in 1970 as compared to $.32 for owners-renters and only $.06 for full owners. Availability of allotments for rent or purchase, and uncertainty of Government programs appeared to be a greater deterrent to expansion than availability of credit. ...