Effects of capital rationing and tax incentives on the internal growth of an aquacultural firm

Effects of capital rationing and tax incentives on the internal growth of an aquacultural firm

Aquoculture, 38 (1984) 261-273 Elsevier Science Publishers B.V., Amsterdam 261 - Printed in The Netherlands EFFECTS OF CAPITAL RATIONING AND TAX I...

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Aquoculture, 38 (1984) 261-273 Elsevier Science Publishers B.V., Amsterdam

261 - Printed

in The

Netherlands

EFFECTS OF CAPITAL RATIONING AND TAX INCENTIVES INTERNAL GROWTH OF AN AQUACULTURAL FIRM

JOHN B. FLYNN*,

NEIL R. MARTIN**,

Jr. and GREGORY

D. HANSON**

*USAID, APO, Monrovia (Liberia) **Department of Agricultural Economics and Rural Sociology, University, Auburn, AL 36849-4201 (U.S.A.) (Accepted

20 December

ON THE

202 Comer Hall, Auburn

1983)

ABSTRACT Flynn, J.B., Martin, N.R., Jr. and Hanson, G.D., 1984. Effects of capital rationing and tax incentives on the internal growth of an aquacultural firm. Aquaculture, 38: 261-273. Capital rationing and tax incentive issues for an aquacultural firm are developed in the context of intensive firm growth (growth from within rather than through acquisition) with a channel catfish enterprise. Beginning firm debt levels and stringently imposed debt limits (which the firm was not permitted to exceed) were found to have prominent effects upon pond construction levels and growth in profitability. Wide fluctuations in interest rate levels had little impact upon growth of the aquacultural enterprise, although higher interest rates significantly reduced profitability. The tax incentive examined also had little effect upon firm growth. The methodology developed and the effect of the capital, debt, interest rate level and tax features analyzed provide insights that may apply wherever capital and credit rationing impacts upon investment decisions by aquacultural firms. INTRODUCTION

The decision to expand aquacultural production frequently requires acquisition of capital assets such as processing and transport equipment, pumps, boats, ponds, etc. With a few notable exceptions (e.g. some cases of international aid) these capital purchases are at least partially financed with borrowed capital requiring scheduled debt and interest repayment. An overriding question then becomes how much debt is appropriate. Capital rationing applies when the manager (internal rationing) or lender (external rationing) limits the infusion of additional capital. For most producers the effects of capital rationing and credit rationing are identical, because debt use is increasingly the only viable means for acquiring additional assets. Capital rationing issues have become particularly important in the U.S. during recent years. In several states in the southeast, from 40-60% of farmers with government subsidized loans are currently in default on loan payments. This statistic increased from 12% to 38% nationwide between 1979 and early 1983. Studies have shown that agricultural financial markets have

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o 1984

Elsevier

Science

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262

not been characterized by perfect competition (Penson and Lins, 1980), have experienced high and inflexible rates (Swackhamer and Doll, 1969) and have exhibited non-price rationing activities (Harris, 1974). In countries as diverse as Brazil and Thailand “agricultural credit programs currently make up a very large part of the efforts aimed at agricultural development” (Adams and Graham, 1980, pp. l-2). In spite of the massive amounts of capital directed to farmers in low income countries, more than US$3 X 10” in 1981, the intractability of capital and credit use issues has recently led to innovative programs such as credit insurance (De Velasquez, 1980). Capital rationing issues are particularly important for aquacultural enterprises requiring pond construction to impound water (Waldrop and Smith, 1980): The pond investment often exceeds the value of the land on which the ponds are built, and also permanently alters the nature of land use as dams, levees and drainage structures are difficult and expensive to move. This contributes an irreversible aspect to the project, heightening the importance of the initial capital commitment decision for both producer and lender, As is frequently the case with aquacultural enterprises, efficiencies in pond construction (economies of size), feeding and harvesting with large size production units have tended to encourage the success of large investments compared with more limited projects (Adrian, 1971; Waldrop and Smith, 1980; Crews et al., 1981). Technology for channel catfish production has advanced rapidly (Lovell, 1979), resulting in intensive production with large (8 ha) ponds. The combination of large pond size and high per hectare populations is associated with higher risk of losing the fish because of increased frequency of drastically depressed dissolved oxygen levels (Boyd et al., 1980). Because large and/or growing firms usually depend more heavily on financial leverage (use of debt financing), the risk of losing large, heavily stocked ponds because of oxygen depletion has made the credit-rationing issue even more fundamental in a rapidly expanding aquacultural sector. Finally, from one to one and one-half years may pass between the pond construction phase and the first fish harvest. During this time cash expenses, including debt service, are a burden which can present a major obstacle to the success of the aquacultural firm. METHODS

The first step in the study was the development of a representative farm firm model. The number of hectares and other resources were based on an average farm in the western Black Belt of Alabama, as described in the U.S. Agricultural Census (Bureau of the Census, 1980). Currently most commercial fish production in the state occurs in this region. Non-catfish enterprises for the model farm are also representative of many sub-tropical agricultures: a beef brood herd, cotton, and soybeans.

263

Optimal enterprise levels for the representative farm were determined with a computerized multiperiod linear programming model (Flynn, 1982). This systematic optimization and planning procedure selects enterprises with the greatest return per unit of the most limiting resource. Enterprises which generate the highest level of net income are thus assured of inclusion in the farm organization. Cost, price and yield data prepared by agricultural extension economists were used to estimate expected production levels and resultant net farm income. Optimal organization for the representative farm was determined for each of the 10 years in the planning horizon. Through integer programming the indivisible nature of large, bulky assets (such as tractors or ponds which cannot be purchased in fractional amounts) was also incorporated into the model. The computerized decision model described above comprises a useful investment management tool. Issues such as pond size, stocking rates, optimal expansion, or growth rates and cash flow constraints can be analyzed with the model in addition to capital rationing issues. Several limitations must be noted, however. First, the quality of model results reflects the accuracy as well as comprehensiveness of the user’s assumptions. Second, as the complexity of assumptions increases, the cost of manager and computer time increases significantly. Third, the model abstracts from the issue of the producer’s attitude toward risk. The case analyzed is that of profit maximization. However, producer risk aversion behavior is consistent with internal credit rationing, an issue to be treated in the next section. The results which follow center on two key attributes of growth for an aquacultural firm, namely, investment in fish production assets and change in net worth. Hectares of ponds built provides an appropriate measure of investment. The focus on net worth requires that profits from sale of fish be reinvested in the firm (less an annual farm family consumption withdrawal of $12,000 in real terms). Change in firm net worth is measured over a 10 year “planning horizon”. For the model firm analyzed, 90,000 fish weighing 0.45 kg each are projected to be marketed from each hectare of pond water. The per kilogram price for the fish was $1.43, resulting in gross receipts of $58,500 per hectare. Variable costs, excluding labor and interest (and also investment and overhead costs) are projected to be $40,976. The following technical and resource constraints were also developed for the model firm. The farm possessed 50 ha of rowcrop land and an additional 162 ha suitable only for beef production. Only rowcrop land was available for pond construction. An 8-ha pond requires 746 h annual labor, 8.9 ha of land area and costs $20,000 to construct. Construction of 2-, 4- and 8-ha pond units (only) was permitted in the model. The annual rate of interest on short-term loans was 14% and on long-term loans 12%. Again, the model considers only internal growth possibilities. Growth through land acquisition was not feasible because of hypothesized limited availability of adjacent land, limited expansion capital available for

264

purchase of land and personal preference sociated with inside-firm expansion.

for the lowered risk commonly

as-

RESULTS

The following results are for base conditions unless otherwise indicated. Base conditions assume no initial firm debt, debt not to exceed 30% of assets, the conservation tax deduction taken and the interest rates indicated above. Alternative levels of beginning debt The’amount of debt which an aquacultural firm has at a point in time has an important bearing upon the feasibility of increasing future debt to finance additional fish production investment. A small total debt to total asset ratio reassures both producers and lenders as to the prospects of additional capital investment because (1) initial debt service requirements are small and this provides an earnings cushion for larger principal and interest payments, and (2) a large surplus of assets relative to debt provides high quality loan collateral. A high ratio of initial firm debt to assets will almost invariably result in severe rationing of additional capital. This study considers three initial debt levels for the firm (Table I).

No initial debt The effect of initial debt burdens on the catfish enterprise can be seen directly in pond building activity. This is shown in Fig. 1 where maximum firm debt is limited to 30% of assets. The no initial debt situation is shown by the top line (the top dotted portion of Fig. 1). As shown, two 8-ha ponds were built in the first period. Cotton was produced on the rowcrop land remaining after pond construction and the non-rowcrop land produced a herd of 250 beef cattle throughout the planning horizon (Base case, Table II).’ Also, part of the rowcrop equipment was sold in period one, with the proceeds used as operating cash. No pond building occurred in period two because the maximum firm debt limit was (temporarily) reached. Long-term debt in period two increased sharply because of three factors: (1) partial repayment of the loan for pond construction, (2) purchase of catfish equipment for 16 ha of ponds, and (3) the catfish enterprise required heavy operating cash withdrawals, part of ‘The initial value of farm assets was $336,055. Land values are quite low in the counties studied, ranging from $1063 to $1539 per ha (1978). Machinery was depreciated over 10 years with a straight-line method. Thus one tenth of the aggregate machinery inventory was replaced every year. Net worth can decline during initial years due to the high cost of investment and the lag in sales receipts when new ponds are introduced (as well as due to interest and consumption expense). Short-term debt finances working capital. The maximum permitted debt ratio for the farm limits this borrowing.

265 TABLE Capital

I rationing

and tax factors

Initial debt position 1 No beginning debt 2 Debt is 35% of borrowing 3 Debt is 70% of borrowing Maximum debt allowed 4 No borrowing permitted 5 Total debt may not exceed 6 Total debt may not exceed Interest rate levels 7 Long term rate 8%; 8 Long term rate 12%; 9 Long term rate 16%; 10 Long term rate 20%;

short short short short

analyzed

in study

capacity capacity

30% total 70% total term term term term

assets assets

rate 9% rate 14% rate 19% rate 24%

Government tax incentives 11 Conservation tax deduction 12 No tax incentives

Fig. 1. Total channel catfish ponds limited to 30% of total assets.

built

with

three

initial

debt

situations.

Total

debt

is

which was financed by borrowing on long-term security and transferring the cash to operating capital. Single &ha pond units were built at the beginning of each of periods three to five. Capital rationing limited more rapid pond building. Capital limitations in period five were so severe that soybeans, having a lesser operating capital requirement, replaced cotton on the rowcrop land. After period five, enough land for a 4-ha pond remained, but no further pond construction oc-

340,400 17,822 2,228 20,000 0 1 85,888 0 110,955 23,712 23 250 0

14,002 0 0 77,406 4,241 121,242 25,032 32 250 0

3

342,740 22,200 3,273

2

20,000 0 1 122,471 0 123,521 28,464 15 250 0

361,306 24,210 3,836

4

20,000 0 1 163,295 0 132,521 32,625 0 250 0

387,610 32,282 6,242

5

0 0 0

172,137 56,734 101,876 39,288 6 250 0

179,366 24,752 127,029 39,288 6 250 0

501,672 31,900 6,201

7

0 0 0

449,727 22,200 3,273

6

164,238 96,614 81,135 39,288 6 250 0

0 0 0

560,423 13,900 1,404

8

156,570 144,763 67,355 39,288 6 250 0

0 0 0

5,400 0

623,069

9

0 6 250 0

127,038

144,163 204,119

0 0 0

683,851 5,400 0

10

*Net worth measured at year end. Base case assumptions include 11,100 fish per hectare stocking rate, 2-, 4- and B-ha pond sizes available, and conservation tax incentives included. bAdjusted gross income is a tax term approximating total receipts less cash expense and depreciation. ‘The model permitted up to one year’s production to be carried forward. This markedly decreased tax liabilities since production expenses could be claimed when incurred, usually one tax year prior to the sales revenue associated with this expense. Cashflow, marketing and production constraints may not permit sales to be delayed in a typical situation.

Net worth ( $)a 310,438 Adjusted gross income ($)b 5,400 Income tax ($) 0 Pond tax deduction ($) Current year 25,997 Carried forward 14,002 g-ha ponds 2 Fish sold (kg) 0 Fish carry forward ( kg)C 0 Long term debt ($) 60,852 Short term debt ($) 12,888 Cotton (ha) 32 Cattle (adult animals) 250 Soybeans (ha) 0

1

Year

Base case optimum farm organization over time

TABLE II

267

curred. Instead, revenues from fish sales were applied toward reducing debt. Net worth increased steadily after the last pond was built reflecting continuous fish production and debt repayment generated from fish sales. As shown in the top row of Table II, catfish production contributed favorably to intensive firm growth when no prior debt existed. Even with capital constraints, building large ponds with accumulated savings (or increased borrowing capacity from debt repayment over a prolonged period) was favored over building smaller ponds. Medium

initial debt

In this initial debt situation 35% ($40,000) of initial borrowing capacity had been utilized prior to considering the channel catfish enterprise as an addition to the farm. This level of beginning debt substantially altered the pond building pattern. Only four 8-ha pond units were built over the planning horizon: one each at the beginning of periods one, three, five and six (as shown by the line-shaded part of Fig. 1). Capital rationing, as expected, was a constraint to further expansion of fish production. Also, the pace of pond construction was delayed until sufficient debt was repaid to provide borrowing capacity to finance the large size 8-ha pond unit. Cotton production was reduced as rowcrop land was taken for pond building, and cash from rowcrop equipment sales returned to operating capital. Cattle were produced in the same quantity as before and final net worth was about $142,474 less than with the zero debt situation, reflecting reduced fish production and higher interest payments (Table III). High initial

debt

In this case, 70% ($80,000) of initial borrowing capacity had been used prior to investment in the aquacultural enterprise. The effect of this large outstanding debt on fish production was very pronounced, limiting construction to one S-ha pond at the beginning of period eight (bottom right, Fig. 1). The high interest payments required to service past debt commitments severely restricted aquacultural profits to only $11,288 over the loyear study period (Table III). Also, less cash intensive soybean production was substituted for cotton since cash was utilized for fish production equipment and fish stock. The lesson is quite clear in the high initial debt case. Under conditions representing production costs and returns in 1981, investment in the aquacultural enterprise was not sufficiently profitable to materially improve the financial well-being of the firm. If the high debt exposure of the firm was due to problems related to previous investments, returns from the aquaculture enterprise were insufficient to overcome these difficulties and restore firm health. This comprises the key difference between (a) presence of prior debt problems, and (b) the ability to significantly expand debt for new aquacultural investment. The large differences in results relating to firm initial debt levels (illustrated in Fig. l), underscores the importance traditionally accorded to rationed use of capital and credit.

268 TABLE

III

Summary net worth

of pond construction, for cases analyzeda

changes

in net worth

and annualized

rate of change

Ponds constructed (ha)

lo-Year increase in net worth ($)

Annualized rate of increase in net worth (%)b

Initial debt position 1 None 2 Medium 3 High

40 32 8

347,796

205,322 11,288

7.4 5.4 0.4

Borrowing level permitted 4 Zero 5 Medium 6 High

16 40 44

135,948 347,796 388,095

3.5 7.4 7.9

Interest rate levels 7 Low 8 Moderate 9 High 10 Very high

44 40 40 40

420,871 347,796 274,220 195,785

8.5 7.4 6.1 4.7

Conservation tax deduction 11 Taken 12 Not taken

40 40

347,796

7.4 6.3

285,721

in

a Unless otherwise indicated, above results are based on optimal conditions which include high stocking rate, conservation tax deduction taken, all pond sizes available, $1.43 per kg catfish price, zero initial debt and medium debt level permitted. Results are for all farm enterprises combined. The farm growth rate without catfish was 2.6% and net worth increased $101,410 during the lo-year study period. bWhile the total increase in net worth is usually $100,000 or more, the annualized rate of increase in net worth is a better measure of growth for farmers to compare with.

Alternative

levels of maximum debt

Firm expansion with an aquacultural enterprise has been in recent years an increasingly popular strategy in the southeast region of the U.S. This section explores the impact on such expansion behavior of a strict capital rationing rule: firm debt may not exceed a fixed level of firm assets. Again, three levels of capital rationing are analyzed (Table I). No borrowing permitted A situation with borrowing activities not permitted, the strictest form of credit rationing, was analyzed to determine if the aquacultural enterprise could be internally financed from existing soybeans, cotton and beef herd enterprises. Starting available cash reserves of $20,000 were assumed, a reasonable assumption for an on-going farming operation with fully owned

269

No Borrowinq

Permitted

Years 7

Fig. :2. Total channel catfish ponds built with alternative initial farm debt existing.

?

9

debt capacity

In

levels. Zero

capital assets. When use of borrowed funds was not permitted, sufficient retained earnings from the farm were accumulated to build only two ponds, one ES-ha pond at the beginning of period five and another at the beginning of period seven (bottom, Fig. 2). The aquaculture enterprise contributed positively to fiim net worth, resulting in an increase of $135,948. However the annual rate of increase declined more than 50% compared to case 1, when medium level debt was permitted (Table III). Note that, even without financial leverage, the alternative of building smaller ponds requiring a lesser capital outlay was not adopted. Instead, larger and more expensive pond units were built, which required waiting for relatively larger savings accumulations. The model choice to forego the small pond option when credit use is not permitted offers an illustration of the impact of strict internal credit (and capital) rationing on the firm’s transition to fish production. Medium

borrowing

capacity

Medium borrowing capacity (and zero initial debt) resulted in a much more rapid rate of pond construction than when no borrowing was permitted (Fig. 2). When maximum debt was permitted to reach 30% of firm assets, a total of 40 ha of ponds were built by the beginning of period five. This rapid rate of pond construction demonstrates the surprisingly strong effect of moderate financial leverage for the aquacultural enterprise analyzed. High borrowing

capacity

The effect of high borrowing capacity (which allowed debt to reach 70% of firm assets) on net worth accumulation and pond building activity was

marked. Again a zero initial debt level was assumed so that the full effect of raising debt limits could be seen. As illustrated in the dotted upper portion of Fig 2, five S-ha units were built at the beginning of period one, and one 4-ha unit was built at the beginning of period three. Pond building in these two periods occupied all suitable land. Heavy borrowing occurred in the early periods to finance pond construction, with the surpluses from catfish production successively applied to reduce debt. Long term debt was nearly eliminated by the end of the planning horizon and net worth increased rapidly as debt was repaid. Net worth, thousand dollars 750 No borrowing 700 650

.--

30’/, debt limit

----

70% debt limit

600 550 500 450 400

-

350 300 -

I

I

I

I

2

3

I

4

I

I

I

I

,

I_

5

6

7

8

9

IO

Years

Fig. 3. Growth in firm net worth over time for three debt capacity situations. No initial debt, all pond sizes available, and high catfish stocking rate.

An annual increase in net worth of nearly eight percent was achieved in the high debt limit scenario (Table III). Comparison of zero, medium and high debt limits as they affected the buildup of net worth is provided by period in Fig. 3. The difference in the farm’s financial health is large, with end-period owner equity of $472,003, $683,851 and $724,150 for respectively zero, medium and high debt capacity limits. Two points can be noted in Fig. 3. First until the third through fifth years, maximum debt limit differences had little effect on growth in owner equity. Therefore the firm must have staying power (and patience) to continue the aquacultural enterprise until the profit generating effects of financial leverage are more fully experienced. Second, moderate use of debt (compared with the high debt limit) achieved most of the benefits of borrowing, while significantly limiting financial risk.

271

Alternative

interest rates

The impact of four levels of interest rates on pond building activity (hence fish production) is shown quite clearly in Table IV. Four interest rates in the 8-20s interest rate range are provided. The short term interest rate is adjusted to conform with the empirical observation that short term rates collapse toward (and occasionally fall below) long term rates, when interest rate levels are in the low end of their cycle. On the other hand, short term rates tend to increase at a faster rate when the interest rate cycle is peaking (and new loanable funds are scarce). Thus, for each four percentage points increase in long term rates shown in Table IV, short term rates increase five percentage points. The range of interest rates in cases I-IV have been paid by producers in the region examined (at various times) since 1975. The primary effect of the increases in interest rates modelled was to lengthen the time required to construct loo-ha ponds from 4 years (case I) to 8 years (Table IV, case IV). In addition, a 4-ha pond was added in year six for case I (increasing total to 44 ha). This result is in contrast to both the high initial debt and low maximum debt results portrayed in Fig. 1 and 2. Thus, the major capital rationing factors are previous debt obligations and the general availability of credit, rather than the cost of credit for expansion of the aquacultural enterprise. TABLE IV Effects of alternate interest rate levels on pond building activity Case

Short term interest rate (%)

I

Low

II

Long term interest rate (%)

Ponds constructed Beginning of period

Number

Size (ha)

Cumulative total (ha)

9

8

1 2 4 6

2 1 2 1

8 8 8 4

16 24 40 44

Moderate

14

12

1 3 4 5

2 1 1 1

8 8 8 8

16 24 32 40

III

High

i9

16

1 3 5 6

2 1 1 1

8 8 8 8

16 24 32 40

IV

Very high

24

20

1 4 6 8

2 1 1 1

8 8 8 8

16 24 32 40

Note: Zero initial debt assumed, medium level of maximum debt permitted. Cases I-IV respectively correspond to cases 7-10 in Table I and Table III

272

Two features of this outcome require clarification. First, the relatively modest effect of higher interest rates is in part due to the tax deductibility of interest charges as a business expense. As interest costs increased, tax liabilities declined (albeit to a lesser extent). The ability to offset interest costs with tax savings constitutes a major attraction of financial leverage. Secondly, the delay of pond construction caused by the two highest interest rate levels modelled, significantly reduced the annual growth in net worth to 6.1 and 4.7% (Table III). These lower rates of savings not only reduce profit levels substantially, but also increase the vulnerability of the firm to either unanticipated declines in fish prices or increases in production costs. The effect of the conservation deduction on profit Farmers often find it difficult to claim depreciation on ponds because the tax rules usually require the farmer to prove that pond life is limited, and that expected pond life can be readily estimated. However, hill pond construction expenses appear to qualify for the soil and water conservation deduction. According to the U.S. federal income tax authority, “the total deduction in any tax year of expenditures of a capital nature for soil and water conservation is limited to 25% of gross income from farming during the year” (Farmer’s Tax Guide, 1980, p. 42). Any unused deduction may be carried over to succeeding years. This tax feature is of considerable interest to potential fish farmers as it allows pond construction costs to be treated as a cash deduction within the limits of the 25% gross income provision. The impact of this tax provision was evaluated by excluding the deduction feature from the model. At the beginning of the 4th year, three ponds had been built when the tax deduction was not permitted, and four ponds had been constructed when the tax deduction was permitted. The tax deduction accelerated the rate of growth, however, a total of five 8-ha ponds were built with and without the deduction. The combination of higher taxes (when no pond deduction was taken) and delayed catfish production caused terminal net worth to be $62,075 less than when the pond tax deduction was allowed (Table III). This indicates that farmers should explore the feasibility of taking this deduction whenever possible. However, the relatively small difference in both the rate of growth in annual net worth and fish production between cases 11 and 12 in Table III suggests that the tax incentives are much less important than the capital rationing issues, and also that producers would be unwise to base their investment decision on a presumed tax sheltering attribute associated with the aquacultural facilities. CONCLUSION

The impact on firm growth of capital rationing factors and the incentive provided by a pond tax deduction were analyzed. Intensive firm expansion with a channel catfish enterprise was explored rather than growth through acquisitions of new parcels of land or production facilities. This corresponds

273

to the observed behavior of many firms of limited resources for which an aquacultural enterprise offers the potential of both growth and diversification of products. The analytical approach consisted of a mixed-integer linear programming model which maximized returns to limiting production resources. Model results were found to be sensitive to the beginning debt position of the firm and also to limitations imposed on maximum amounts of debt which could be assumed by the firm. Both of these factors proved to have greater adverse effects on pond building activity and profitability than the relatively large fluctuations in interest rates which were examined. This result serves to point out the critical impact that non-price credit rationing can have on growth in aquacultural production. Immediate deduction of pond construction costs, the tax incentive studied, had very little effect upon growth in fish production (while increasing profits to some extent). Finally, the capital rationing issues examined in this study are fundamental to the successful growth of widely varying aquacultural firms. In this respect, the modelling method used offers the prospect of (efficient) applied analysis for a wide spectrum of aquaculture investment decisions.

REFERENCES Adams, D.W. and Graham, D., 1980. A critique of traditional agricultural credit projects and policies. Background Paper No. 1, Colloquium on Rural Finance, Econ. Devel. Inst., World Bank, Washington, DC. Adrian, J.L., Jr., 1971. Commercial Catfish Production as a Rural Development Alternative. Unpublished Masters Thesis, Auburn University, Auburn, AL. Boyd, C.E., Steeby, J.J. and McCoy, E.W., 1980. Frequency of dissolved oxygen concentration in ponds for commercial culture of channel catfish. Proc. Annu. Conf. Southeast. Assoc. Fish Wildl. Agencies, 33: 591-599. Bureau of the Census, 1980. 1978 Census of Agriculture, Vol. 1, part 1, Alabama State and County Data. Washington, DC. Crews, J., Flynn, J. and Jensen, J., 1981. Budgeting for Alabama Catfish Production. Alabama Cooperative Extension Service, Auburn University, Auburn, AL. De Velasquez, V.B., 1980. Experiencia de1 Seguro Agrocrediticio en Panama. Seminorio sobre Perspectivas de1 Seguro Agropecuario en Peru, November 1980m Instituto Interamericano de Ciencias Agricolas, Lima, Peru. Farmer’s Tax Guide, 1980. Department of the Treasury, Internal Revenue Service. October 1980. Flynn, J.B., 1982. Catfish Production as an Intensive Farm Firm Growth Alternative: A Western Alabama Multiperiod Study. Ph.D. Thesis, Auburn University, Auburn, AL. Harris, D.G., 1974. Credit rationing at commercial banks. J. Money, Credit Banking, 6: 227-240. Lovell, R.T., 1979. Fish culture in the United States. Science, 206: 1368-1372. Penson, J.B., Jr. and Lins, D.A., 1980. Agricultural Finance: An Introduction to Micro and Macro Concepts. Prentice-Hall, Englewood Cliffs, NJ. Swackhamer, G.L. and Doll, R.J., 1969. Financing Modern lems and Challenges. Federal Reserve Bank of Kansas City,

Agriculture: MO.

Banking

Prob-

Waldrop, J.E. and Smith, R.D., 1980. An Economic Analysis of Producing Pondraised Catfish for Food in Mississippi: a January 1980 Update. Dept. Agric. &on. Res. Rep. No. 103. Mississippi Agric. For. Exp. Stn., Mississippi State University, Starkville, MS.