Economic and Marketing Information                                                                                                                                                                                          FOR INDIANA  FARMERS
Prepared by the Agricultural Staff of Purdue University, Lafayette, Indiana      
October  31,   1960
Sources and Use by Central Indiana Farmers
by L. F. HESSER,f M. R. JANSSEN,f and J. H. ATKINSON, Agricultural Economics
THE TYPICAL FULL-TIME FARMER in central
Indiana has an average of $45,000 invested in his
business. Not all farmers own all of the capital necessary to run a modern commercial farm. Where
do they get the money to run their farms? What are
the main uses for borrowed capital? Answers to
these and other questions were supplied by a study
of 150 farmers during the winter of 1959-60.
The typical full-time farmer in central Indiana is
45 years old and farms about 260 acres. He has
farmed about 21 years and owns about 88 percent
of the capital invested. The range, however, indicates considerable variation among farmers in each
of the characteristics studied.
A DISTRIBUTION of total investment per farm
operator (Table 1) shows a high concentration of
farms with a relatively small total investment. The
investment does not include the value of rented land
or the landlord's share of livestock and other personal property. Four of the operators had an investment of more than $200,000.
A large percentage of the operators had relatively
high equities in their businesses (Table 2). Nearly
half had more than 90 percent equity, while 22
percent of the operators used no credit during 1958.
Only 11  (8 percent)   of the operators owned less
Table 1. Operator's Total Investment, 146 Farms, Central Indiana,  1958
Investment
($1000) Number of farms Percent
'40 and over*
120 to 139
100 to 119
80 to 99
60 to 79
40 to 59
20 to 39
Le» than 20
Total
4
3
4
9
19
27
38
42
146
2.7
2.1
2.7
6.2
13.0
18.5
26.0
28.8
100.0
A|l farmers in  this  group   had   an   investment   of   more   than   $200,000.
than 50 percent of this capital. Most of these borrowed from the Farmers Home Administration or
from individuals. There were three farm purchases
on land contract.
Table 2. Percentage of Equity of Operator, 146 Full-
Time  Farms,  Central  Indiana,   1958
Pecentage of equity*
Number of farms
Percent
100
90 to 99
80 to 89
70 to 79
60 to 69
50 to 59
40 to 49
30 to 39
20 to 29
10 to 19
Less  than
Total
10
32
21.9
40
27.4
25
17.1
20
13.7
13
8.9
5
3.4
6
4.1
2
1.4
2
1.4
1
.7
0
0
146
100.0
Farm  Economics   Research   Division,   USDA.
*These represent the operators' lowest percentages of equity for 1958,
as they were calculated as of the day of the largest outstanding indebtedness for that year.
Eighty-five percent of the farmers raised hogs.
Of these farmers, about a fourth raised hogs as the
only livestock enterprise, while the rest raised hogs
in combination with other livestock enterprises. The
remaining 15 percent had either beef cattle, dairy
cattle, or no livestock.
Volume and Sources of Non-real-estate Credit
Commercial banks extended nearly half of the
volume of non-real-estate credit to farmers (Table
3). Production credit associations supplied the next
largest volume. The relatively small number of
loans in each of the remaining sources makes it
difficult to estimate the volume of credit extended
by each. However, they do give a good estimate of
the total volume of credit extended by all lenders
excluding banks and production credit associations.
Banks and production credit associations extended
68 percent of the non-real-estate credit to farmers
in central Indiana. Individuals, the Farmers Home
Administration, and other lenders, such as the Producers Livestock Credit Corporation, Farm Bureau