Do Non-Traditional Loans Help Beginning and Female Farmers?

Beginning farmers and ranchers (BFRs) and women farmers (WFRs) are growing cohorts within the U.S. agriculture. Compared to traditional producers, they are more credit constrained because of limited collateral usually required by traditional agricultural lenders. In recent years, non-traditional lenders entered agricultural credit markets but their role remains unclear. At the same time, traditional lenders consolidated and even closed facilities. We combine data on the use of Non-Traditional Loans (NTLs) from the 2018 Agricultural Research Management Survey and data on geographic location of branches of traditional agricultural lenders (Farm Credit System Institutions, Commercial Banks, and Credit Unions) and of providers of Alternative Financial Services (AFS) to evaluate whether the use of NTLs and access to lending facilities relates to productivity of BFRs and WFRs. The main finding is that the use of NTLs and access to credit from AFS is not associated with productivity. However, credit constraints remain relevant because BFRs and WFRs with larger number of loans are less productive. We conclude that concerns of producers and policy makers that nontraditional lenders may replace traditional ones to the detriment of productivity of vulnerable groups such as BFRs and WFRs are not supported by the data.