Mike Rosmann: Did we learn our lesson from last farm crisis?Many farm economists and some of my farmer friends, who remember the farm crisis of the 1980s, are concerned we could be heading into a similar episode. “It feels like the late 1970s,” they say.
By: By Mike Rosmann, INFORUM
Many farm economists and some of my farmer friends, who remember the farm crisis of the 1980s, are concerned we could be heading into a similar episode.
“It feels like the late 1970s,” they say.
During the 1970s, crop prices were very favorable in comparison to input costs, which fueled a surge in farmland values.
According to Iowa State University Regional Economic and Community Analysis Program data, Iowa farmland prices rose from $419 per acre in 1970 to $2,147 in 1981. Iowa farmland reached its low point during the farm crisis, at $787 per acre in 1986.
In 2000, Iowa farmland sold for an average of $1,857 per acre and in 2011, it reached $6,708 per acre. Farmland prices currently are strong in most parts of the United States and Canada, along with commodity prices.
There are important differences. Whereas overall inflation and interest rates on borrowed money were very high in the late 1970s, currently both are at their lowest in quite some time.
There are more income protections in place for farmers, such as crop insurance payments, which are tied to whatever level the producer selects.
Some segments of agriculture, such as dairy producers, have been struggling for several years and often are not participating in the current rush to purchase farmland, whereas in the 1970s nearly all segments of agriculture were booming and almost all farmers were eager to buy land.
Have we learned anything from the last big farm crisis?
I will mainly concentrate my analysis within my scope of expertise, which is the social, psychological and human condition.
We learned we can recover easier from financial losses than from the emotional turmoil that accompanies losing the family farm. Losing the family farm is one of the most stressful processes farmers and ranchers can experience.
When liquidation of the family farm is required, hopes for the future are dashed. The family also feels guilty about letting down forebears who struggled to acquire the land.
We know the threat of losing the farm is associated with an increased risk of suicide.
Becoming re-employed takes away some of the financial sting after losing the farm. Hard-working former farmers usually get back on their feet financially in just a few years.
Emotional recovery takes an average of 8 to 10 years for clients I have assisted, with three years being the briefest recovery I have observed. For some people, it takes a lifetime.
People who lost their land during the farm crisis may no longer experience acute emotional pain after a few years, but, like our ancestors who experienced the Great Depression of the 1930s, they exhibit a changed attitude toward life.
They become low risk-takers, frugal, suspicious of good fortune and likely to survive future trauma.
Business ethics and bankruptcy-liquidation laws now provide more protections to farmers. Borrowers’ rights have been strengthened.
For example, borrowers are strongly encouraged to have trusted family members and advisers present during all foreclosure proceedings.
Distressed borrowers are encouraged by lending agents and attorneys to seek professional behavioral-health counseling. Farm-financial counseling and mediation services are available in most states.
Many federal and state programs to make farming safer and healthier were initiated during and after the 1980s farm crisis. Regional Agricultural Safety and Health Centers were established in agricultural areas of the United States and Canada.
The AgriSafe Network and AgrAbility programs were founded to offer specialized medical and rehabilitation services to people involved in agriculture.
Farm Crisis hotlines/
helplines and websites were set up for farm people to access free of charge, along with crisis counseling.
Funding for many of these programs is now in jeopardy. Farm-crisis hotlines remain in only 10 states.
Current drastic cuts or elimination of federal funding for agricultural safety and health centers and crisis hotlines for distressed farm people come at a bad time, if predictions for a farm economic recession are correct.
These programs deserve continuation in an ongoing fashion to address the cyclical stresses that accompany farming and ranching.
So, did we learn anything from the farm crisis? Yes, but maybe not enough.
Some farmers again are overextending themselves financially by buying farmland at too-high prices. Congress is allowing valuable “human-capital” programs that stemmed from the 1980s farm crisis to be dismantled.
A proper role for federal and state departments of agriculture – and governments in general – is to protect the resources needed to produce food, fiber and renewable energy, most notably the people in agriculture.
This is more proper than to guarantee direct payments and other price supports.
Will the new farm bill address this? Will other funding sources arise to provide farm crisis assistance?
Mike Rosmann, who founded the nonprofit network AgriWellness Inc. in 2001, grew up on a mixed-grain and livestock farm in western Iowa. He serves on the adjunct faculty at the University of Iowa and teaches agricultural behavioral health to physicians, behavioral healthcare professionals and other providers who work with farm and rural populations.