Final answer:
Farmer Fred is hesitant to extend trade credit to Gleason's Market. Gleason's agrees to execute a promissory note instead, which Farmer Fred agrees to because it provides a legal and enforceable agreement for the repayment of the trade credit.
Step-by-step explanation:
Farmer Fred agrees to accept a promissory note from Gleason's Market because it provides a legal and enforceable agreement for the repayment of the trade credit, thereby reducing the element of uncertainty associated with the extension of credit.
A promissory note ensures that Gleason's Market is obligated to repay Farmer Fred the amount agreed upon, which can offer a level of security in case the market fails to pay as per the regular credit terms.
This is particularly relevant given that farmers like Farmer Fred face a vulnerability that spans across a yearly cycle with the harvest dictating their financial stability, and a failed repayment can lead to significant financial distress.
The experiences shared by Robinson and Friday illustrate the risks inherent in lending, as failing to repay loans can result in renegotiations and strain on relationships. Similarly, Farmer Fred is seeking to mitigate risks associated with granting credit. With a promissory note, Farmer Fred has a documented commitment that reduces the risk of non-payment, which is a crucial aspect of maintaining his farm's financial security.