Sustaining the Conversation: The Farm Crisis and the Midwest

Abstract

Sustaining the ConversationThe Farm Crisis and the Midwest Jenny Barker Devine (bio) and David D. Vail (bio) On September 22, 1985, 80,000 people crowded into Memorial Stadium at the University of Illinois at Urbana-Champaign for the first Farm Aid concert. Organized by Willie Nelson, John Mellencamp, and Neil Young, the nationally televised concert explained to urban audiences the devastating economic crisis in America’s hinterlands. Thousands of farmers had lost their farms to foreclosure and thousands more were on the brink. The family farm, a fundamental American institution, was at stake. Rather than yielding solutions to the problem, however, Farm Aid revealed to the public the complexities inherent to American agriculture and raised just $9 million, well below the $50 million expected. At the time, critics deemed the concert a failure and the farm crisis an inevitable byproduct of the free market. Now, thirty years later, Farm Aid has persisted as an organization and the questions it raised in 1985 continue to demand our attention. This issue of the Middle West Review initiates new discussions about the farm crisis of the 1980s with the hope that we can begin to unravel the complexities of this critical moment in midwestern history.1 The farm crisis of the 1980s had no singular cause. It was the product of changing social and technological circumstances in the countryside, devastating droughts, increasing levels of farm debt, and decades of complex, sometimes contradictory, federal policies. After the Second World War, rural America experienced a massive outmigration as mechanization reduced the need for human labor, and rising costs of production stymied profits. Between 1945 and 1974, the total number of farms fell from 5.8 million to 2.3 million. Earl Butz, the secretary of agriculture under President Richard [End Page 1] Nixon, viewed this as a positive trend, urging farmers to invest in more land and equipment. His “get big or get out” mantra led thousands of farm families to take on greater debt and expand their operations. Optimism ran high during America’s bicentennial in 1976, when the newly inaugurated Century Farm Program recognized farms operating continuously under the same family for one hundred years or more. In its first year, more than five thousand certificates were issued in Iowa alone, lending a sense of permanence and stability for midwestern farmers. Less than ten years later many of those Century Farms were up for sale.2 By the late seventies, commodity prices plummeted as a result of grain embargoes and unstable global markets. Confronted with rising production costs, declining land values, unfavorable weather conditions, and federal policies that drove interest rates as high as twenty-one percent in the early 1980s, many farm families faced foreclosure as they struggled to manage their debt. The crisis was most acute in the corn belt of the Midwest, where between 1982 and 1992 one third of all farms faced financial hardship, and nearly eighteen percent of all farms went out of business. In 1983 the American Bankers Association reported that seventeen percent of farmers with outstanding loans would not be able to make payments that year, and for the first time in American history, the total interest owed on farm loans surpassed total farm income. The following year, farm debt reached an all-time high of $215 billion, with only one third of farmers owing sixty-five percent of that amount. The crisis continued, and between 1984 and 1988 agricultural lenders wrote off $19 billion in unpaid loans, approximately ten percent of all farm loans.3 The crisis rippled through the rural economy, and in 1987 three hundred agricultural banks failed, more than in any year since the Great Depression. Between 1979 and 1985, farm machinery sales declined by fifty percent, and firms that manufactured farm equipment laid off 140,000 workers. Many farm families no longer had the ability to patronize local, small town businesses, and with so many businesses suffering, farm families could no longer rely on off-farm wages to buffer hard times. The crisis did not affect everyone evenly. Established farmers, those with well-paid jobs off the farm, and those with smaller operations were more insulated from fluctuations in interest...