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Writer's pictureKarnik Aswani

The 1980s Farm Crisis in the USA

Updated: Mar 24

Farming plays a crucial role in driving economic growth across various sectors. It provides the essential foundation for the food we rely on every day, sustaining society. So what happens when this industry is threatened? This could lead to reduced trade, a surge in food production and a mountain of other economic effects.


In a crisis, the government may restrict food exports to secure domestic supply. With high demand and potential shortages, farmers may boost production. Disruptions in the supply chain could reduce international trade. People, especially in the crisis-induced throes of uncertainty, may favor locally made products, shaping domestic production.


In the 1980s, an agricultural crisis occurred in the United States. The crisis can be attributed to a variety of factors including declining farm incomes, rising interest rates, falling land values and high levels of debt.


In the lead-up to the crisis, farmers faced financial challenges as their incomes went down. This happened because the prices they got for their crops were lower, and it cost more to grow and produce them. Plus, they had fewer chances to sell their products to other countries. 


To make matters worse, interest rates went up, making it more expensive for farmers to borrow money. This caused the prices of farmland to go up, making it really hard for farmers to buy or keep their land. With all these problems, many farmers ended up with a lot of debt that became too much for them to handle, leading to some facing bankruptcy.


A case study in Iowa highlighted the onset of the crisis in the mid-1970s as farmers sought to build their wealth by acquiring land. Their strategy was to cultivate crops on this land to generate income.


Unfortunately, as commodity and land prices surged, farmers struggled to meet their financial obligations. Compounding the issue, interest rates rose significantly as part of measures to counter inflation, impacting agricultural exports and leading to a drop in farm income. 


Additionally, the Soviet Union's decision to cease buying crops from the United States further affected the trade balance, contributing to a decline in the gross domestic product and, consequently, diminishing income for farmers.


How would the political parties view this crisis? Republicans generally prefer less government involvement in the economy, advocating for minimal interference in private businesses and enterprises. They also support measures like increasing capital to ensure stability in key sectors such as banking and agriculture.

Democrats generally advocate for an increased government role in supporting American food production, including aiding financially struggling farmers to prevent widespread economic challenges.


For someone who finds economics fascinating, agricultural economics stands out as a crucial field. After all, we all need food to survive, and the prices of everyday groceries can affect everyone, especially those in lower and middle-income brackets.

The way food prices fluctuate doesn't just impact individual families; it also plays a role in bigger economic indicators, like the overall economic output of a country and its international trade.


Right now, many households are facing challenges in making ends meet, and some are even struggling to put enough food on the table. If we see a decrease in the inflation rate, it could mean good news for families — more people might be able to afford their groceries.


The 1980s farming crisis showed us how changes in agriculture can affect everyone. Falling incomes, rising debts and global shifts hit farmers hard, impacting the entire economy. This should remind us of the importance of sustainable farming practices and global economic stability for the well-being of our communities.


The opinions expressed in this article are those of the individual author.

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