The Farm Crisis of the 1980s
The Farm Crisis of the 1980s completely altered the fabric of rural America. During the 1980s, American farmers confronted an economic crisis more severe than any since the Great Depression. Agricultural communities throughout the Midwest and across the nation were devastated. Families were forced from the land, lenders collapsed, and businesses on rural main streets closed—many to never reopen. It was a decade of turmoil and of activism.
The Boom and Bust Cycles in Agriculture
The seeds of the 1980s Farm Crisis were sown decades earlier.
Roaring Twenties: The Great Depression Starts Early in Iowa
- Farmers guaranteed high prices for crops and livestock by the U.S. government after World War I. Farmers put more acres in cultivation and increased the size of their herds.
- Farmers borrowed money from local banks to buy more land and machinery. As the demand for land increased so did the price for land, and sales of Iowa farmland rose sharply.
- The U.S government ended its guarantees. Farm prices were allowed to drop back to natural prices—determined by supply and demand.
- Farmers who had borrowed money could not pay off their loans.
- Debts acquired during the 1920s came due for many Iowa farmers.
- Iowa losses half of its family farms to foreclosure.
- Many businesses in small town Iowa closed due to declining population.
World War II
(1941 - 1945)
- By 1941, 58% of all farms have cars; 25% have phones; 33% have electricity.
- Farmers being the change from horses to tractors and increasing technological practices characterize the second American agricultural revolution; productivity per acre begins sharp rise.
- World War II causes price controls and food rationing during wartime emergency.
Post World War II Era
- Farmers witnessed revolutionary advances in agricultural technology
- New machinery, seeds, pesticides, fertilizers, resulted in greater efficiency and productivity.
- For most, rural life in Iowa was good.
Farmers Race to Feed the World: “Go Big or Get Out”
(1970 - 1979)
- U.S. grain reserves were lowered which in turn raised the price of grain.
- Poor weather conditions resulted in diminished yields overseas. Demand for U.S. agricultural products exploded.
- The Soviet Union negotiated a multiyear contract for wheat and feed grains in 1972.
- In 1973, President Nixon's Secretary of Agriculture, Earl Butz responded by calling upon American farmers to plant "fencerow to fencerow," and “get big or get out." Producers took his words to heart and the race to feed the world was on.
- As land values increased, lenders and farmers alike mistakenly concluded the ideal conditions would become the norm. Borrowing became the order of the day and there were plenty of lenders eager to accommodate optimistic farmers.
- The Federal Reserve changes their lending policies to hold the line on inflation. The Fed's actions made the cost of borrowing money prohibitive for all Americans. But the effect on farm families and rural bankers was especially severe.
- In 1979 the Soviet Union invaded Afghanistan and President Jimmy Carter enacts a grain embargo stopping shipments of grain to the Soviet Union. The embargo wasn’t lifted until 1980 when President Ronald Reagan took office.
Iowa farmers struggled throughout the 1980s in an attempt to save their family farms. It took protests down the streets of Washington D.C. and loud rumblings of discontent from all corners of the country for the federal government to step in and change agricultural and lending policies to help out the Iowa farmer.
The Effect of the Farm Crisis on Rural America
Small Town Iowa Suffers During the Crisis
The Farm Crisis decimated small towns where many businesses closed. It spread into the cities where manufacturers of farm implements and other agricultural supplies laid off thousands. The Quad Cities in eastern Iowa and western Illinois lost an estimated 20,000 manufacturing jobs during the 1980s farm crisis. John Deere laid off workers by the thousands. Waterloo, Iowa lost 14 percent of its population in the early 1980s and scores of homes were left abandoned. The economic impact of the Farm Crisis rippled throughout the Midwest. The Farm Credit System faced its own collapse and eventually would be bailed out by the government. Rural banks started closing and untold millions were lost. The scope of the crisis grew rapidly. It is estimated that for every four farms that went under one rural business closed.
The Family Unit Suffers During the Crisis
For some, the stresses of the Farm Crisis became too much to bear. The increase in rural murders and suicides pointed to the hardships facing many. The feeling of camaraderie long prevalent in rural communities was often damaged beyond repair. Moreover, some of those who were struggling reported feeling shunned by their friends and neighbors. The family structure suffered. Farm men put up walls of silence, isolation and denial. Farm women often had to take on more responsibility regarding the farming operation. Alcohol abuse and domestic violence in rural communities became more common.
December 6, 1984 -- I feel a hundred years old. Fourteen years of farming and we never made a dime. I'm 44 years old and I'm back to zero. I'm ready to sell out. I hate to lose my home place, but I can accept defeat when I have to. I could mourn forever all the lost dreams. I don't sleep well and the rage in me is about to explode. I just can't go on. I have to hide my feelings from the kids, from the folks. (A Farm Wife’s journal, Southern Iowa)
Activism and Help Rural America
In the 1930s, everyone in America suffered—urban people, the rich banker, the poor farmer. Everybody lost massively. Everybody was living close to survival. And it meant for kind of a national unity. With the farm crisis in the 80s, basically it was only the farmer. And this meant the farmer was alone in an island of difficulty. And that is really something that eats at the soul sometimes deeper than being part of a more general phenomenon. (Congressman Jim Leach, U. S. House of Representatives 1977 -2007)
Individual farmers were hurting, but many wanted to believe it was as bad as it was. Agriculture was in serious trouble. According to some, one of the most perplexing frustrations was the seeming indifference with which officials in Washington D.C. viewed what was happening on the farm. The national “tractorcades” to Washington, D.C. in 1979 and 1980 are among the best remembered expressions of discontent in the Heartland. Led by the American Agriculture Movement, or AAM, the protests were some of the earliest signs of distress in farm country. Protests were staged to hinder sheriff's sales and auctions of foreclosed farms. In some cases, farmers became activists helping others face the loss of their farmsteads. By 1985, half the counties in Iowa had some form of grassroots effort to address the crisis. Hollywood stars testified before Congress. One of the most well-known national organizations was Farm Aid founded by singer Willie Nelson. The first Farm Aid concert was held in Champaign, Illinois in September of 1985. Fifty-four acts performed before a crowd of 78,000 and millions of dollars were raised for farm families.
Government Moves Slowly: Help for Rural America
So you had a philosophical chasm really between those who believed the government's role should be limited if not completely non-existent and those who really felt that at times like this you needed the government to create the kind of stability and the kind of certainty and the kind of framework necessary for survival. That clash occurred in public policy debates for months and months. (South Dakota Senator Tom Daschle, 1987-2005)
Interest rates soared from single to double digits, hitting a record 21.5 percent in 1981, and In January 1984, the Federal Reserve Board issued a report estimating that one-third of all American farmers held nearly two-thirds of the nation's total farm debt. By the time Congress got involved in the mid to late 1980s many felt it was too little too late. By then the damage was largely done. Still, the Federal government’s response brought about some of the most profound policy reforms the agricultural sector had ever seen. That clash occurred in public policy debates for months and months. Some key pieces of legislation from the 1980s included the Food Security Act, more commonly known as The 1985 Farm Bill. It allowed for lower commodity price income supports and created several conservation programs. Then in 1986, Congress introduced Chapter 12 Bankruptcy which allowed family farmers to restructure their finances and avoid liquidation or foreclosure. In 1987, the Agriculture Credit Act authorized a $4 billion financial assistance package for financially vulnerable institutions of the Farm Credit System.
We said to the farmers with all this debt and they were paying these high interest rates leftover from the early 80s and the late 70s, come in, we're going to restructure it, we'll buy back your loans, those debts, we'll stretch it out over 20 years and we'll give you a lower interest rate. . . then we gave the Farm Credit System enough money to be able to do that. And that stopped the bleeding. (Iowa Senator Tom Harkin, 1984-2008)
Impact of the Farm Crisis on Modern Day Agriculture
The Farm Crisis of the 1980s accelerated a long established trend of farmers leaving the land and farms being consolidated. In 1935 the number of farms in the U.S. reached an all-time high of 6.8 million. By 1990 there were only 2.1 million farms. Years have passed since the 1980s Farm Crisis. Most farmers who struggled and survived those tumultuous times remember the decade as a nightmare from which they could not awaken.
- The Farm Crisis, directed by Laurel Burgmaier (Johnston, Iowa: Iowa PBS, 2013), DVD.
- National Institute of Food and Agriculture, United States Department of Agriculture. “Growing A Nation: The Story of American Agriculture” agclassroom.org.