The current downturn in market prices for a number of farm commodities, like milk, pork, major grains (corn, wheat, rice, barley) and oilseeds (soybeans, canola), along with downward slides in farmland prices and machinery purchases illustrate a farm economic recession.
Beef and egg prices could remain high for a while, but signals indicate an end to their price surges within about a year because the numbers of beef cows and laying hens are increasing. Drought in some agricultural areas and an overabundance of precipitation in other regions are having variable effects, but the USDA safety net and low interest rates on loans provide considerable protection from a dramatic slump.
Whatever happens, almost no farm economists predict another major farm crisis like those of the 1930s and 1980s, but we are in a retraction of the farm economy.
The farm economic pendulum shifts with some regularity. Major farm economic depressions in the U.S. have occurred about every 50 years: the 1880s, the 1930s' Great Depression and the Farm Crisis of the 1980s.
Booms in farming have occurred with similar regularity: the late 1890s to early 1900s, the period that began amid World War II and lasted for several years and the recent era of record commodity and land prices that started around the middle of the past decade and ended in 2013.
Smaller recessions, recoveries and periods of economic growth have occurred in between the major farming depressions and booms. We are into a moderate recession now.
Moderate farm recessions occur about every 25 years, which is commonly considered a generation; major depressions occur about every two generations. Are we in for a major depression in the 2030s?
My father, who came from a long line of farmers, offered an observation that has stuck with me: "Every third generation forgets what their grandparents went through." He went on to say that if the third generation didn't curtail their mistakes, their children (the fourth generation) would lose everything.
My grandparents went through the 1930s and I am the third generation after that depression.
Working hard and being self-sufficient were lessons my grandparents taught my parents, who in turn taught me. Yet, I made the mistake of buying two farms during the early 1980s when land was expensive. I wish Dad had been around to advise me, but he had passed on.
Working harder was insufficient, and I paid a price in 1990 when I lost part of my right foot in a combine auger because I was overworking and insufficiently attentive to safety. I sold both farms shortly thereafter.
Generations forget, like young farmers over the past few years of considerable prosperity who purchased land themselves or induced their elders to buy farm land and equipment when it was highly priced.
I learned from my mistakes and still don't purport to be an agricultural economics expert, but I know something about dealing with farm crises from my own experience and from developing the first counseling program for farmers who were struggling during the farm crisis of the 1980s.
Stages of adjustment
During the 1980s farming debacle, Dr. Ursula Delworth (deceased) and I developed a five-stage model of adjustment to loss or restructuring of the family farm. It was first published in The Clinical Psychologist in 1990 and was reprinted in many publications.
Over the past three years I have revised the stages somewhat because precipitating conditions and resources for coping have changed since the 1980s for agricultural producers.
The stages of psychological adjustment to this farm economic downturn, if operators are at risk of significant hardship, are the following:
• First, farm owners and operators have to acknowledge that a negative change in household income will likely occur and could demand alterations in lifestyle. There is alarm, but also hope that conditions will improve, even in the face of negative predictors for economic improvement.
• Second, financial problems gradually worsen, such as being unable to make scheduled loan payments and concern that loss of significant assets could occur. Usually this is accompanied by worry among the operators, and those dependent on them, like their children and employees. Anxiety and searches for solutions become more desperate; personal and family stress mounts.
• Third, if the economic insufficiency persists to the point that loan foreclosure or cessation of the farming operation occurs, the emotional turmoil reaches critical levels.
Depression typically follows anxiety, and sometimes distressed people consider thoughts of unworthiness to continue life. Medical, legal, financial and professional behavioral health assistance are often needed.
• Fourth, plans for recovery slowly develop, both economically and emotionally. The rebound may take several years, whether it involves continuing to farm or the necessity to find other employment, but hope gradually returns as life goes on and prosperity emerges.
• The fifth stage involves achieving satisfaction from surviving, the development of wisdom, frugal habits and passing along the knowledge gained to successors.
Restraining ourselves from buying too much during boom eras is probably a major lesson for most of us.
Mike Rosmann is a Harlan, Iowa, psychologist and farmer. To contact Rosmann go online to: www.agbehavioralhealth.com.