The US Farm Crisis and the Restructuring of American Agriculture: Domestic and International Dimensions

Abstract

The US farm crisis — or ‘farm financial stress’, as it is often referred to euphemistically in America — is actually an ensemble of many crises of national and international political economy. Its most immediate and salient components, as experienced directly by farmers, are heavy debt loads (and hence onerous debt service obligations), rapid declines in the value of farm land and other agricultural assets, low prices for many of the most important US farm commodities (especially soybeans, wheat, and corn), and a somewhat heightened pace of voluntary and involuntary liquidation of assets since 1981. More structurally, the US farm crisis is closely rooted in extraordinarily high real interest rates that have prevailed due to Reagan Administration fiscal and monetary policy, which have had a dramatic effect on the capital-intensive — and hence interest-rate-sensitive — agricultural sector. The farm crisis also reflects the contradictions of continued increases in US (and world) productive capacity in the basic grains and oilseeds due to technological change. The capacity to produce has relentlessly increased even as the means for purchasing and valorising this expanded production have stagnated. The US farm crisis is also a policy crisis — a protracted struggle among many contending forces that makes it virtually impossible to arrive at a political solution to problems of the agricultural economy without (and, in some respects, despite) massive state intervention and subsidy programmes.KeywordsMonetary PolicyReal Interest RateCommodity PriceExport SaleAmerican AgricultureThese keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.