1980s farm crisis led to big changes on farms and in communities
Mychal Wilmes examines how his brother and other farmers survived -- or didn't survive -- the 1980s farm crisis and what changes agriculture, ag lending and rural communities have seen since then.
Long ago — when the bulk of the southern Minnesota market valued good farmland at less than $2,000 per acre — my brother faced a difficult decision. A parcel went on the market for $1,600 an acre. A decision on whether to bid or not caused him great anguish.
After much hemming and hawing, he decided to make an offer that was ultimately accepted.
“You know, they aren’t making any more land," he said when word got out about what he paid.
It was a go-go time, when equity was not so important and interest rates had not yet reached the stratosphere. Governmental agriculture lenders aggressively pursued loans for farmers. It was said that a farmer who sought a loan to construct a new silo was urged to secure loan money enough for two.
The disaster that followed came as interest rates soared, commodity prices skidded, and land values plummeted. My brother was caught in the vice and had little choice other than to give the land back to the lender. It was a wise decision, proved by his ability to hold on and enjoy lasting farming success.
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The crisis that nearly wrecked his farming career ruined many others. A massive influx of cash saved the government lending institutions and changed their business practices. It also marked the end of an era when borrowers were able to make handshake deals with their local bankers based on good reputations.
Amid the financial wreckage of the ‘80s, farming communities were sharply divided. Some borrowers cut deals involving loan forgiveness and write-downs while others drowning in red ink lost it all. I visited with a farmer who managed to save a small portion of what had been a much larger land holding.
While we talked in the farmyard, a neighbor passed by driving a new pickup.
“He was almost bankrupt two years ago and now he’s got a new pickup and a new tractor, too," the farmer said. “Meanwhile the lender wouldn’t give me the time of day."
There had always been simmering tensions in any rural community as farmers bid against land for sale or rent. The financial crisis of the 1980s eased but other divisive issues arose.
Perhaps the greatest of these was the citing of large hog and dairy operations, which hadn’t been an issue previously. A pastor of a church talked about how one operator’s decision to expand a large hog operation had divided his congregation and community.
“Families who came to our church and were the best of friends won’t talk to each other anymore," he said. “I don’t know where this is going to end, but I hope we can start talking to each other once again."
Lawsuits were filed based on questions about water supply and quality, and odor. I reported on a clash between a family seeking greater economic opportunity and a neighbor family. The farming operation had attended public hearings, gotten the required permits, and expanded the feedlot operation.
The next-door family said the operation had harmed their quality of life.
“I can’t put clothes on the line anymore because the odor clings to them," the housewife said. “We can’t open our windows because the smell filters right into the house."
The rights and wrongs in this regard are difficult to discern.
“Can’t we all just get along?" asked another neighbor.
One wishes that we could do so.
Farming — in all its wonderful diversity — remains vibrant and a bedrock of American democracy. The divisions seen in recent decades remain, but the open wounds have healed.
Rural towns, schools, hospitals and other institutions continue to struggle to rebuild at a time when too many Main Streets suffer from closed businesses and lost population.
Hope remains that the historic value of farmers and rural communities united in pursuit of a vibrant future will yield a bright future.
Mychal Wilmes is the retired managing editor of Agri News. He lives in West Concord, Minnesota, with his wife, Kathy.