When the next farm crisis comes, we won't have the state and local resources to deal with it. If local health administrators can save any for this rainy day, they need to do it.
In the 1980s we had a “farm crisis.” It began during the Carter administration and continued into the Reagan years. It was most intense in the Upper Midwest and northern Great Plains. Between 1981 and 1986 it has been estimated that one-quarter of the assessed valuation of America’s farms, based on land primarily, simply disappeared.
These were bad times in the heartland. Some of us who lived elsewhere remember the headlines: “Foreclosed farmer kills wife, children, banker, self,” being repeated with variations. Other markers included increases in child abuse and neglect, divorce, alcoholism and other forms of substance abuse. At least two commercial films and a public television documentary series were based on the troubles of farm people and families caught in the hopelessness of the situation.
The response took many forms. Local communities put together mental health agencies. Regional farm family organizations demonstrated to block farm auctions. State legislatures imposed moratoria on farm foreclosures. Willie Nelson’s Farm Aid concerts were nationally televised. Farmers’ organizations outmaneuvered President Reagan and Treasury Secretary Stockman in those men’s efforts to move American agriculture from reliance on subsidies to a free market system. As a variety of new farm price supports moved through Congress a frustrated President Reagan remarked that he might prefer to keep the grain and export the farmers.
The ’80s crisis was preceded by a lucrative agricultural export market and cheap money in the ’70s, with farm family incomes above the national family income average. Farmers and non-farmer investors bid up the price of land. In 1981 the large harvests, the closures of some export markets, and a more valuable dollar compared to other currencies meant farm product prices sank. Farmers couldn’t make their land payments and began loosing their land. Farming community banks and other businesses failed. It was bad.
Over the last three years, production agriculture has been profitable while most of the rest of the country has been in a slump. This has led to a surge in land prices.A conference on land investing, sponsored by the FDIC in March of this year, was entitled “Don’t Bet the Farm” (it warned that land prices could be in an unsustainable bubble).
Farm product prices have been quite high for the past three years. Earlier this year lobbyists for the current farm bill appropriation were painting it as a jobs bill based on robust commodity exports, explaining how agriculture is pulling America out of the recession. World demand for agricultural products is expected to double in the next 40 years. Extremely low interest rates are attracting investors with no background in agriculture to buy farmland. Land prices in Iowa are estimated to have doubled in the past six years. Price increases in nearby states exceed 50 percent.
I could go on at length speculating about what the next Farm Bill will look like and the probability of a collapse of land prices. Suffice it to say that the current Farm Bill is up for redrafting this fall. Several of the titles in the current bill have direct bearing on land values. Each title and subtitle has its own complex constituency in Washington. Existing provisions are reflected in current land values. The next Bill is likely to be less generous than the current Bill. Interest rates can only go up. On the other hand, bankers have been warned not to lend on inflated land values as collateral as they did in the ’70s. The bottom line is, I can’t imagine land values rising as fast as they have and staying up.
Production agriculture runs on credit: credit not just for land but also for seed, for fertilizer, for fuel, for help and for the extremely expensive equipment to work the land. Rising interest rates, falling exports, a year or two of weak harvests, or some unwise provisions in the new Farm Bill—any of these could put some operators into trouble and trigger another farm crisis.
If we have another farm crisis, will the rest of the country care? In the 1980s the rest of the country did care. At that time ordinary people recognized the term, “farm crisis.” A New York Times—CBS national poll in 1986 indicated that 50 percent of respondents favored increased spending on farm programs.
If we find ourselves with another farm crisis in the near future I doubt we’ll get a similar response. In 1981 the upper Midwest large acreage single crop farm may have represented “farm” to most Americans. Today, with the “buy local” and farm market movement, more Americans perhaps realize that most farm families live on small acreage, work off as well as on the farm, and subsidize their farming to raise their kids on a farm. Large-scale production agriculture involves a minority of farm families except in a few states.
Much of the rest of our population is already in the foreclosure nightmare. Whole neighborhoods have been lost. Hispanic and black populations have been particularly hard hit, losing about half their net worth. Even their non-farm rural neighbors have been having a hard time while the production farming community has been doing OK. This crisis, if it comes, may not be greeted with an outpouring of sympathy. It is hard to imagine much federal assistance such as we saw in the earlier farm crisis. Once again a few big farms will get bigger.
Furthermore we’ll have less in the way of local and state resources to deal with the health and mental health impact of such a crisis. Medicaid and state grant programs are already broke. If health care administrators have anything to put away for a rainy day this would be a good time to stash it. I know. It’s already raining.
Wayne Myers, a pediatrician, founded the University of Kentucky Center for Rural Health and served as its director. He also served as director of the Office of Rural Health Policy in the Department of Health and Human Services’ Health Resources and Services Administration. He is a past president of the National Rural Health Association. This article first appeared in The Rural Monitor, a publication of the Rural Assistance Center. Contact RAC at: [email protected]