Farm crisis prompted political push-back
FARGO, N.D.—The 1980s farm crisis became apparent in Iowa and Minnesota and created flashpoints in the Dakotas.
The stage was set by a series of interrelated events—high commodity prices in the 1970s, federal trade interventions, a stronger U.S. dollar, weakened exports, and then falling commodity prices, inflation, high loan interest, and then land devaluations.
The World Bank, reported that U.S. year-end "real interest rate," the difference between loan interest and the annual inflation rate—peaked at a record-high of 8.72 percent in 1981, and for four years in a row averaged nearly twice the 50-year average.
President Ronald Reagan focused on deregulation, lower taxes and cutting social spending. In 1985, Reagan's Office of Management Budget Director David Stockman proposed a 70 percent cut in farm program spending and moved to shift the Farmers Home Administration (now Farm Service Agency) toward loan guarantees through private banks, rather than direct loans.
"For the life of me, I can't figure out why taxpayers have the responsibility to go in and refinance bad debt willingly incurred by consenting adults who went out and bought farmland when prices were going up and thought they could get rich," Stockman famously said, tone-deaf to the political reaction in the country.
Here are some of the examples:
• In 1983, the great Jerusalem artichoke promotion was still rolling in southwest Minnesota, and two ag bankers at Ruthton, Minn., were murdered. Angry farmers organized protests first under the banner of the Minnesota Citizens Organized Acting Together, also known as COACT, and then new groups—Groundswell and the North American Farm Alliance.
• Late summer, 1984, COACT filled the First Bank of Paynesville with 100 protestors in dairy-rich Stearns County. A small COACT group protested the calling of a loan for Gerald and Alicia Kohnen and their son, Donald, who milked 86 cows on a 260-acre farm near the village of Roscoe. The family had paid their note on time but was under-capitalized for the bank's standards. Paul Wellstone, then-assistant to Democratic Farmer-Labor Gov. Rudy Perpich, was one of 37 arrested in handcuffs for trespass. In 1990, Wellstone would go on to upset incumbent U.S. Sen. Rudy Boschwitz, R-Minn., a member of the Senate Agriculture Committee.
• South Dakota farm numbers from 1978 to 1988 fell from 40,000 to 35,000.
• In 1983, Byron Dale, Timber Lake, had an armed confrontation over his ranch loans and use of bogus "sight draft schemes," used as a kind of fraudulent IOU. Dale later became president of South Dakota-based Common Title Bond and Trust, which tried to convince North Dakota and Minnesota farmers to pay bills using "sight drafts."
• On Feb. 12, 1985, about 6,000 South Dakotans attended a rally in Pierre. The entire congressional delegation was there—Sens. Jim Abnor and Larry Pressler, both Republicans, and Rep. Tom Daschle, a Democrat. Among other things, farmers were alarmed at Reagan's plans to reduce farm price supports. State Rep. Jim Burg, D-Wessington Springs, who had criticized the Farmers Home Administration for being too aggressive on credit, appeared on "Nightline" with Ted Koppel, explained that communities were losing farmers, but also "our banks ... our churches ... our hospitals." The South Dakota Farmers Union, led by Lee Swenson, asked for a moratorium on farm foreclosures, restructured debt, and increased commodity loan rates.
• In January 1986, Bruce Litchfield, 38, a federal Farmers Home Administration farm loan supervisor at Elk Point, S.D., shot and killed his wife and two children in their sleep, and then went to his Union County office and shot himself himself. Unnamed friends and clients were quoted by the Associated Press, saying Litchfield was frustrated that going "by the book" wasn't helping financially troubled farmers. Sheriff Eugene "Bud" Rasmussen said that no farmers in the Union County then were in danger of losing their farms. About the same time, Deuel County farmers applied for food stamps and heating aid. These "farmers don't even want their own families to know they're in trouble." the Rev. Leonard Kayser told Newsweek. "They just fail, one by one."
• In North Dakota, sporadic rallies and protests, often revolved around a farmer who had borrowed money to expand in the 1970s.
• Oct. 2, 1982, about 300 farmers were expected for a Farm Crisis Day on the steps of the state capitol in Bismarck. Only 40 attended in the cold rain, and it was moved to the Town House Motor Inn. Farmers, wearing red armbands, said they'd already lost 20 to 25 percent of their equity because of deflating land values. A group called the Dakota Survival League was headed by Elmer Knodel, a Drake farmer. The group wanted a three-year moratorium on farm loan foreclosures. Virgil Rott, a farmer from Edgeley, N.D., told a reporter he'd been pushed by lenders to install expensive irrigation on his 3,000-acre irrigated farm. Now the payments were breaking him despite 100-bushel per acre irrigated corn yields, which he considered good for the times. Rott estimated he had $800,000 in equity but was losing it fast. Rott later filed Chapter 11 bankruptcy on Jan. 30, 1984, owing $2 million to creditors.
• In February 1983, a group of tax protesters led by Gordon Kahl who were involved with a group called the Posse Comitatus were confronted by U.S. marshals near Medina, N.D. Two marshals were shot and killed and three others injured. Kahl died later in a confrontation with federal authorities in Arkansas. His son, Yori, and another associate went to federal prison. Like the Ruthton, Minn., murders, it was associated with the farm crisis but involved non-agricultural factors.
• Spring of 1984, North Dakota Agriculture Commissioner Kent Jones of Devils Lake, a Republican, started the Farm Credit Counseling program, using Industrial Commission funds. The program was similar to a program in Minnesota and hired more than 80 counselors and advocates. In 1985, North Dakota Legislature made the credit counseling program permanent and funded it through the North Dakota Department of Agriculture. The state added a Credit Review Board, which had the power to hire negotiators to deal with creditors to save farmers' homes. Often CRB and credit counselors were the same persons, reporting to two agencies. The counseling program was renamed to the North Dakota Agricultural Mediation Service and was authorized to receive federal funds and added formal mediation. Almost all of the requests for formal mediation came from the creditors.
• At a March 5, 1985, farm sale, about 30 of Rott's friends carried a coffin to a hearse signifying the death of a family farm. They attempted to turn the sale into a "penny auction." Tom Asbridge, a Carson rancher in his own financial trouble, told a reporter he used verbal intimidation on bidders to reduce bids in an effort to hurt the Production Credit Association.
• While farmers were suffering, so were associated agriculture industries. The Steiger Tractor Co., based in Fargo, filed for Chapter 11 bankruptcy protection in 1986 and eventually sold to J.I. Case. The lime-colored tractors that had seen success being exported to Australia and elsewhere with such success, would knuckle under.
A national stage
The plight of farmers took the national stage with the help of celebrity musicians.
On Sept. 22, 1985, an organization called Farm Aid staged a benefit concert in Champaign, Ill., involving performers Willie Nelson, John Mellencamp and Neil Young. It drew 80,000 people and raised $9 million to help struggling farmers.
In June 1987, Nelson and Mellencamp testified before Congress about a family farm crisis and the increasing influence of "corporate monopolies expanding in agriculture."
The Farm Aid concerts continued annually, even through the prosperous commodity price years in 2010. The organization focuses on hurricane, flood and drought relief, or particular emphasis for specific sectors (dairy in 1991, for example) when commodity prices decline.