Debt can:
• create and maintain an adequate business size – to take advantage of economies of size, for example.
• increase the efficiency of the farm business – to change production systems or methods to improve process and product quality by reducing costs, improving timeliness, and so on.
• adjust the business to changing economic conditions – to purchase new technology, adapt to new markets, for example.
• meet seasonal and annual fluctuations in income and expenditures – to allow for purchasing sufficient resources (fertilizer and seed at planting, for example) before products are sold (at harvest, for example).
• protect the business against adverse conditions – to allow for payment of expenses and other obligations when revenue falls short due to adverse weather, disease, price fluctuations, for example.
• provide continuity of the farm business – from one generation to the next