Farmer’s Distress


What caused the 1980s Farm Crisis? Who did it impact? Explore the stories about this period in time. Do any of the factors contributing to the '80s Farm Crisis exist today?

Causes of the Farm Crisis:

In the post-World War II era, farmers witnessed revolutionary advances in agricultural technology-new machinery, seeds, pesticides, fertilizers, resulting in greater efficiency and greater productivity. During the 1950s and '60s, American agriculture's biggest problem was what to do with huge surpluses of grain. All that changed in the 1970s as the massive stockpiles were drawn down, and as a result, commodity prices rose. At the same time, demand for U.S. agricultural products exploded. The Soviet Union negotiated a multiyear contract for wheat and feed grains in 1972. And within a span of two years, wheat prices doubled, corn prices tripled. Farmers responded with increased production, and 1973 and '74 were prosperous years in rural America.

In an attempt to reduce inflation, the Federal Reserve tightened its monetary policy in 1979. As a result, interest rates rose to levels not seen since the Civil War. The prime lending rate soared from an average of 6.8 percent in 1976 to an all-time high of 21.5 percent in 1981. The impact of the Fed decision was felt throughout the U.S. economy, but its effect on farm families and rural bankers was especially severe.

Rising Farm Debt and International Events Impact Farmers:

Most farmers borrow money to pay for land, equipment, seed, and other supplies. In 1950, total U.S. farm debt amounted to $12.5 billion. By 1984, the nation's farm debt was double what it had been in 1978 and 15 times the 1950 amount. At the same time, net farm income plummeted from $19 billion in 1950 to just $5.4 billion in 1984. That same year, the Federal Reserve estimated that 19 percent of America's farmers held 63 percent of the nation's total farm debt. Younger farmers -- many of whom were just starting their careers -- had little choice but to borrow large sums of money.

When President Jimmy Carter halted grain shipments to the Soviet Union in 1980 in response to Russia's invasion of Afghanistan, prices collapsed. Those who were heavily in debt were among the first to go out of business.

Lasting Impact of the Farm Crisis:

By the time Congress intervened in the mid-to-late 1980s, many farmers, families, and communities felt the damage had already been done and it was a case of too little too late. Yet the farm crisis brought about profound social, political and economic reforms in the agricultural sector.

Though barely remembered by much of the urban population, painful recollections of the worst economic downturn since the Great Depression are seared into the memories of many rural Americans, as the combination of too much debt, slumping commodity prices and ill-advised government policies created a perfect storm that came to be known as the farm crisis of the 1980s.


Angelina Matthew,

Journal Coordinator,

Global Journal of Agricultural Economics and Econometrics
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