1980s Farm Crises

Home Introduction Early Deere&Co. 1980s Farm Crises 1980s Struggle U.A.W. Implements Joe Gruman Gary Handke Recession Survival Late 1980s Conclusion Notes

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    Factors such as high interest rates, the strong dollar, droughts, a 25 percent drop in the value of farmland, and a midwestern flood began to hurt the farmers in the early 1980s. Also, in 1980 President Jimmy Carter embargoed American grain shipments to the Soviet Union, causing large surpluses for farmers. The embargo drained a major market for the United States, and grain prices began to drop. With the Soviet Union out of the market, storage grain bins began to overfill. Eventually, this led to farm foreclosures and implements going-out-of-business sales.

    An Iowa State professor of economics Neil E. Harl estimated that over three percent of the 2.4 million farmers in the United States were leaving the farming business each year during the 1980s' recession. A survey predicted that about 60,000 people were displaced due to the foreclosures. In 1985 the U.S. Agriculture Department estimated that net farm income declined by 30 percent and land values were reduced by 50 percent, forcing one of three commercial-sized farms to be unable to pay their bills.

    The agricultural debt in the United States that was forcing farmers to declare bankruptcy reached $216 billion in 1984, of which $17 billion was in Iowa alone. In fact, high crop surpluses and low commodity prices caused a seven percent decline in the value of land in 1986. The average income among farmers was rising, but it was used to pay off farm debts rather than to buy new tractors and combines. Even after state rural communities were allotted $1 billion by the government for the crop damage from the flood of 1984, farmers still were unable to get ahead.

    As one farmer Karol King said of his tractors, "All [the tractors are] getting a lot of age on them...But we'll keep them a few more years. You can put a lot of repairs into a machine for what it costs to buy." Another factor that prolonged the buying of farm equipment was the 1983 government payment-in-kind program that reduced the farmer's output. In 1985 the government estimated that there were around 2.2 million farmers in the United States, 630,000 of which were Deere customers. Robert Hanson, Deere & Company's chairman, said, "At least two-thirds of those big producers that we look to for a very large share of our business, they're making money. Don't let me imply that they are pleased with their results, just as we're not pleased with ours. But they are not in financial trouble."

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