1985 Farm Crisis

The 1985 Farm Crisis: What One Hand Giveth, the Other Taketh Away

Things do not happen overnight. Sometimes, it takes years for events to unfold. In 1985 farmers throughout the Midwest US struggled to keep the family farms that had been in their families for generations. Corporations hovered like vultures waiting to pick on the next farmer whose bank foreclosed on the farm. It was something right out of the Great Depression, albeit, 50 years in the making. The resulting crisis would cause Ronald Reagan to slightly bend his economic model to get the farmers through the crisis.

During the Great Depression, the Agricultural Adjustment Act began a policy of subsidizing farmers to not grow certain crops and to leave certain fields fallow. Due in part as a reaction to the Dust Bowl, but more so, the FDR administration wanted to raise the price of crops to help farmers. By controlling the supply, the government felt the price would fluctuate less. Due to mechanization fueled by gasoline power tractors, combines, and other farm equipment, the American farmer was producing more crops than ever before. For 40 years, the system worked and it worked well. However, things started to unravel for the American farmer beginning in the middle 1970s.

Several factors merged to create the crisis.

1. Technology continued to evolve. Not only were machines partly responsible, but also new methods of farming and irrigation along with new insecticides and herbicides combined with genetics changed drastically how much one farmer could produce. In 1940, one American farmer could feed 15 people. But 1960, that number increased over 400% to 65.

2. To keep up with the changes and to grow more, farmers leveraged themselves by borrowing money to support their expansion of their operations.

3. Interest rates were very low in the beginning of the 1970s. Farmers borrowed more because it was a good deal.

4. The price of oil and gasoline skyrocketed in the OPEC Embargo in 1973. The cost of farming grew immensely.

5. As a result, the economy turned south.

6. Jimmy Carter did not help. When the USSR invaded Afghanistan, the US placed an embargo on farm products to the USSR.

7. As foreign markets dried up, debt piled up. Farmers began to struggle to survive as farm prices continued to sink.

In 1978 and 1979, farmers drove their tractors to Washington to protest Farm policy. An estimated 3000 farmers went and some even stayed for the winter camping out on the mall. The policy did not change except for a moratorium on foreclosures from the FHA.

When Reagan took office, things were not much better. Bumper stickers could be seen around America to protest their plight.

  • “Crime Doesn’t Pay… Neither Does Farming.”
  • “Corn is in the barn, but it’s not worth a darn.”
  • “Parity Not Government Charity.”
  • “All we want for Christmas is 100 percent parity.”
  • “If you eat, you have a stake in the farmer’s plight.”

Reagan’s economic philosophy did not mesh with the growing crisis. In fact, Reagan initially cut subsidies to farmers. When the economy did not improve, banks began to raise interest rates and the crisis grew. Foreclosures skyrocketed. Violence became an everyday aspect of rural life. If a farmer was having an auction to sell off machinery or to auction off the land, sometimes shots were fired, people were killed, or kidnapped. The banker and the auctioneer became the villains of the heartland.

Farm life had changed drastically since the 1930s. The number of farms shrank while the average size of the farm grew. It took fewer and fewer people to run a farm and the population of rural America was turning greyer. In Nebraska, it was estimated that 1/3 of all farms were at risk in the 1980s of being foreclosed. Farm support groups began to grow to help farmers save their farms. It was not enough.

By 1985, Reagan was wanting to end all subsidies and let the market dictate what the price of farm products should be.  Deregulation was Reagan’s dream. However, the crisis was turning into a nightmare. Bob Dylan, in an off handed comment at Live Aid, said the organizers should take some of the money and give it to the farmers. Three people were listening that day: John Mellencamp, Willie Nelson, and Neil Young. The three men would put together a benefit concert called Farm Aid to aid the farmers. It would be held at Memorial Stadium in Champaign, Illinois.

As a soon to be college senior, I made the trip from west central Illinois with my friends, Jim Jones and Craig Schaeffer. We left at 6 in the morning and got home at 3 in the morning. It was a day filled with many memories of great acts (BB King, Beach Boys, Eddie Van Halen and Sammy Hagar, Tanya Tucker, Bob Dylan, and many more). I remember it was cold, chilly, and overcast. When the concert started, the sun came out for a brief period but as soon as Bon Jovi was roundly booed, it turned in to an all day soaker. It did not let up until 8 p.m. However, the concert did raise national awareness about the farm crisis.

Mellencamp, who would routinely criticize Reagan, was from the heartland of Seymour, Indiana. His 1985 album, Scarecrow, contained the title track, Rain on the Scarecrow, about the farm crisis. It had been my impetus in attending. The title track laid out what was happening around the center of the country.

Scarecrow on a wooden cross, blackbird in the barn
Four hundred empty acres that used to be my farm
I grew up like my daddy did, my grandpa cleared this land
When I was five, I walked a fence while grandpa held my hand

Rain on the scarecrow, blood on the plow
This land fed a nation, this land made me proud
And son, I’m just sorry, there’s no legacy for you now
Rain on the scarecrow, blood on the plow
Rain on the scarecrow, blood on the plow

The crops we grew last summer weren’t enough to pay the loans
Couldn’t buy the seed to plant this spring and the farmers bank foreclosed
Called my old friend Schepman up to auction off the land
He said, “John, it’s just my job and I hope you understand”

Hey, calling it your job, ol’ hoss, sure don’t make it right
But if you want me to I’ll say a prayer for your soul tonight
And grandma’s on the front porch swing with a Bible in her hand
Sometimes I hear her singing, “Take me to the promised land”
When you take away a man’s dignity he can’t work his fields and cows

There’ll be blood on the scarecrow, blood on the plow
Blood on the scarecrow, blood on the plow

Well there’s ninety-seven crosses planted in the courthouse yard
And ninety-seven families who lost ninety-seven farms
I think about my grandpa, my neighbors and my name
And some nights I feel like dyin’ like that scarecrow in the rain

Rain on the scarecrow, blood on the plow
This land fed a nation, yeah, this land made me proud
And son, I’m just sorry, they’re just memories for you now
Rain on the scarecrow, blood on the plow
Rain on the scarecrow, blood on the plow

Copyright 1985 by John Mellencamp

Shortly after the concert, the Reagan administration began to take the crisis more seriously. When 15,000 farmers showed up for a rally in Ames, Iowa, the crisis had to be taken more seriously. It was turning in to a political issue. Throughout most of rural America, the Republican party is king. By not dealing with the crisis Reagan was threatening to alienate his constituency at the price of sticking to his economic morality of deregulation. Had Reagan stuck to his economic guns, the Republican party could have been lost. Instead, Reagan made the first of many deals to ensure the continuance of the American family farm. Beginning with the 1985 Farm Security Act and grain deals in 1986 and 1988, farm policy became a priority for Reagan. Kansas Senator Bob Dole spearheaded moves in 1986 to increase the aid, and along with Dick Lugar from Indiana, more aid followed in 1987.

Former Nebraska state senator Elaine Stuhr reflected back on the crisis.

“”No, they weren’t. And that’s one of the reasons I think that the women coming together and being supportive and partners in their family farming operations certainly gave them a better understanding of what we were going through. And times were very, very difficult. In fact I was looking at several clippings where bankers said that this was probably one of the most difficult times because of the very low prices. I think corn was like a $1.50 [per bushel]. And then our high interest rates – the rates of inflation [actually interest rates were] going to 19, 20 percent. Even over. We lost many, many young families. I think probably the biggest notice was farm women went to work in town. If there was any opportunity to find employment, this was the time when women would work just to buy groceries and have groceries on their table. It was a very difficult time. And I think one of the reasons was about in 1973 Russia bought corn. And prices were good, up to $3.00, $3.50. And land prices escalated, as well. And so, people were paying as much as $2,200, $2,500 an acre for land thinking the prices would stay up, the interest rates would stay low where they were. But then the culmination of all these things happening in the late 70s and early 80s and that just put the squeeze on many families. And they simply couldn’t make it.”

For many farmers, the way of life they always knew was threatened. More than $25 billion was poured into subsidies in1986. By 1987, there added an additional $4 billion and talked of overhauling the Farm Security Act. For most farmers, things did not change much after the Farm Security Act. Many still lost the farm and a way of life was shattered. Farmers relied more on grassroots groups than government. F arm Aid has given out over $37 million in aid in the past 25 years. Other grassroots groups continue to aid farmers today. While rural America continues to shrink under a growing urbanized country, the number of farms continues to shrink along with the number of farmers. Reagan, even after getting the aid for farmers, still wanted to deregulate the farm industry and price controls. And for many of the corporations that process the agricultural products, that deregulation did take take place just not in the price of crops and meat. While Reagan gave with one hand, the other hand oversaw the change in a deregulated processed foods industry. Today, only a few corporations oversee the processing of agricultural products. In addition, the selling of the products is now also done by a few regional supermarket chains.

For further reading:

http://www.nebraskastudies.org/1000/frameset_reset.html