GREENWICH, N.Y. — In continuation of last week’s Hansen’s Histories, the farming boom of the 1970s created a crisis in the 1980s. The decade brought about hardship and changes to farming, farm life, and rural communities that can still be felt to this day.
The 1970s brought unprecedented prosperity to American farmers as soaring prices, increased exports, and increased production brought in record income. Many farmers took on debt to expand their operations during that time. (To review 1970s agriculture, find last week’s Hansen’s Histories here.) However, by the end of the 1970s the farming boom was slowing and would soon come to a screeching halt by the early 1980s.
The first factor to cause this crisis was the raising of interest rates. Inflation was a major problem for consumers in the 1970s. Throughout the decade inflation averaged around 7% and got as high as 12%. In 1979 the Federal Reserve decided to raise interest rates as a way to control the inflation that had been dogging Americans for nearly a decade. Interest rates were pushed to very high levels topping at 21.5% in 1981 and they remained hovering around 20% for several years.1 Many farmers were in debt having taken out loans to purchase land and other equipment in order to expand their operations. With this high increase in interest rates many were having difficulty paying these loans. The raise also decreased the value of farmland which was the collateral which many farmers had used to attain loans in the first place. Farmland values dropped by as much as 60% in some places between 1981 and 1985.2
The other contributing factor to the Farm Crisis was the Soviet Union’s invasion of Afghanistan which also occurred in 1979. Throughout the 1970s a great amount of U.S. grain was exported to the Soviet Union through trade contracts contributing to the boom. In retaliation to the invasion, President Jimmy Carter enacted an embargo on the Soviet Union’s grain purchases. Due to this measure American grain farmers suddenly had one of their biggest customers barred from the market. The action cost farmers money and led to a great drop in grain prices.
The Carter administration eventually purchased the grain meant for export at a price of $2.25 billion to provide some financial support for affected farmers. The embargo was lifted in 1981 when Ronald Reagan became President. Just as the Soviet Union helped kick off America’s farm boom, the nation contributed to the farm crisis.3
These changes affected all farmers to some degree as low crop prices and low exports decreased income, but it was especially hard on beginning farmers and those who had expanded in the previous decade. One Iowa farmer in reflecting back on that time said, “There were a lot of good farmers who did everything right, but their timing was bad.” These farmers had taken on considerable debt and these factors made it difficult to pay off that debt. Some borrowed more money hoping conditions would improve but this did not happen and debts compiled. A report in 1984 measured U.S. farm debt at $215 billion and found that approximately two-thirds of this debt was held by just one-third of the farm population.4 For some these debts became insurmountable leading to a wave of farm foreclosures.
The struggles of farmers in the 1980s had a wider effect that spread beyond the farm. The inability to pay back loans led many rural banks to fail. This was especially true in the Midwest and some southern states like Oklahoma and Texas where the crisis hit hardest.5 Losing farms meant families moving to new places in search of work which decreased the populations of rural communities. Less people in rural towns harmed rural businesses, schools, churches, and other institutions.
One statistic posited that for every four farms that closed it led to the closure of one rural business.6 Many communities lost grocery stores, restaurants, and other establishments since farmers had little money to spend or did shopping at places that may be farther away but were cheaper. Larger cities were affected as well. Farm equipment manufacturing which occurred in cities were forced to lay off workers as less machinery was being purchased with the economic hardships less farms in operation.7
The Farm Crisis caused a deeper human impact that cannot be portrayed with facts and figures. The crisis created divisions within communities. Farmers that were struggling were sometimes shunned or perceived as “poor managers.” Farmers’ financial struggles were somewhat of a taboo subject and something that “you didn’t talk about” leading many to suffer in silence. The situation caused discord between bankers and farmers as banks were unable or unwilling to help as the crisis deepened. With hard times affecting farm communities the camaraderie and neighborliness that those communities are typically known for vanished for a time.8
Farmers that struggled to maintain their farms or lost them were racked with feelings of shame, embarrassment, sadness, anger, or failure. Many felt misled or swindled by experts who convinced them that the good conditions of the 1970s would be the new normal. Losing a farm that had been in a family for generations was an incredibly painful experience that some farmers went through.
The stress of the situation caused troubles within families as family members had to take on new roles or extra jobs to make ends meet. The era saw an increase in cases of alcohol and domestic abuse within households. Most tragic of all, the era saw an increase in the rate of murders and suicides. The suicide rate amongst farming populations was 4x higher than normal in the 1980s.9
Another layer of the crisis that made it difficult was the lack of understanding from policy makers and those who did not live in rural areas. While leaders in deeply affected states were scrambling to help farmers in any way they could, national leaders either did not fully understand the severity of the crisis or gave the impression that they were indifferent to the struggles of farmers leading to a slow response. To draw attention to their hardships many grassroots farm advocacy groups were formed by the mid-1980s doing everything from protesting sheriff sales to lobbying for helpful legislation.
The activism spread to a national level mainly through celebrities who took up the cause of the farmer. In 1985 Farm Aid was formed by singers Willie Nelson, John Mellencamp, and Neil Young to raise awareness and funds for struggling farmers. Films from the mid-1980s like Country and The River dealt with the hardships of farmers and some of those films’ actors like Jessica Lange and Sissy Spacek later testified before Congress on the issue. While these local and national actions helped bring awareness, the vast majority of farmers did not participate in those kinds of activism.10
Congress eventually did get involved by the late 1980s passing some important farm legislation. A Payment in Kind (PIK) program was instituted to help reduce grain surpluses and improve farm income. In 1985 the Food Security Act, better known as the 1985 Farm Bill, was enacted which allowed for lower commodity price income supports and began conservation programs which farmers would participate in to qualify for the support. In 1986 Chapter 12 Bankruptcy was added allowing farmers to restructure finances so as to avoid liquidation or foreclosure. In 1987 the Agricultural Credit Act gave a $4 billion bailout to the Farm Credit System to help its vulnerable financial institutions. These measures were able to help farmers get a better grip on their financial difficulties. While the Ronald Reagan administration sought to bring about “smaller government” practices, agriculture was an area where they actually expanded government intervention.11
The crisis of the 1980s eventually passed, however it created major changes in American agriculture which are still felt today. The crisis accelerated the trend of a decrease in farms that had been on-going. In 1935 there were approximately 6.8 million farms in the U.S. In 1990 that number had decreased to 2.1 million.12 This development also furthered the trend of consolidation with farms getting bigger to be productive. Farmland values bottomed in 1987 and would take twenty years before they recovered. The era led to agriculture policy changes which still influence agriculture today. The loss of farms led to a loss in rural populations which in turn hurt many rural communities and their institutions. There was also the personal loss of many farmers sadly losing loved ones or parts of their heritage that came with losing a farm. While this is a difficult era to look back on for many, it offers many lessons which today’s farmers, economists, policy makers, and others can learn from.
1 Iowa PBS, “Factors Leading to the Farm Crisis,” YouTube, 2013, 0:47, https://www.youtube.com/watch?v=73YQoZBof1Q&list=PLvrLtntb03x9EuSyUJ3f9Od8COVD90xRw&index=6.
2 Tom Doran, “45 years of AgriNews: 1970s boom turned into 1980s crisis,” Agrinews, March 21, 2022, https://www.agrinews-pubs.com/business/2022/03/21/45-years-of-agrinews-1970s-boom-turned-into-1980s-crisis/.
3 “Afghan Boycott,” Wessel’s Living History Farm, accessed January 19, 2023, https://livinghistoryfarm.org/farminginthe70s/money_06.html.
4 Iowa PBS, “Farmer’s Debts Increase,” YouTube, 2013, 2:59, https://www.youtube.com/watch?v=LDp_vCQK-ZQ&list=PLvrLtntb03x9EuSyUJ3f9Od8COVD90xRw&index=7.
5 Federal Deposit Insurance Corporation (FDIC), History of the Eighties: Lessons for the Future. Vol. 1, An Examination of the Banking Crises of the 1980s and Early 1990s (Washington, DC: FDIC, 1997), 275-276, https://www.fdic.gov/bank/historical/history/259_290.pdf.
6 Iowa PBS, “Farm Crisis Impact on Rural Communities,” YouTube, 2013, 2:58, https://www.youtube.com/watch?v=4dFC13KNrvs&list=PLvrLtntb03x9EuSyUJ3f9Od8COVD90xRw&index=17.
7 Ibid, 2:02.
8 Iowa PBS, “The Farm Crisis Divides Rural Communities,” YouTube, 2013, 0:10, https://www.youtube.com/watch?v=uDQ80k_qQ9c&list=PLvrLtntb03x9EuSyUJ3f9Od8COVD90xRw&index=15.
9 Iowa PBS, “Farm Crisis Results in Murder and Suicide,” YouTube, 2013, 0:13, https://www.youtube.com/watch?v=jhUYee3On0Q&list=PLvrLtntb03x9EuSyUJ3f9Od8COVD90xRw&index=14.
10 Iowa PBS, “Rural Advocacy Groups During the Farm Crisis,” YouTube, 2013, 3:43, https://www.youtube.com/watch?v=3PraXzbk3GM&list=PLvrLtntb03x9EuSyUJ3f9Od8COVD90xRw&index=12.
11“The Farm Crisis of the 1980s,” Iowa PBS, accessed January 19, 2023, https://www.iowapbs.org/iowapathways/mypath/2422/farm-crisis-1980s.
12 Ibid.
Chandler Hansen grew up and lives in Easton, NY. He is a graduate of Gordon College where he earned a bachelor’s degree in History. He serves as a writer and editor for Morning Ag Clips.