Beyond The Amber Waves Of Grain

An Examination Of Social And Economic Restructuring In The Heartland

Paul Lasley

• Publisher: Routledge
• Year: 2021
• ISBN:
  9780429716010
• Edition: 1
• Topic: Ciencias sociales
• Subtopic: Sociología

This book explores the large-scale impacts of economic restructuring in the Midwest in response to the 1980s farm crisis. Drawing upon detailed surveys from twelve north-central states, the authors offer a comprehensive view of farm restructuring and its social, economic, and political consequences. The study goes beyond the farm gate to look at the broader implications of those changes for agriculture policy, related industries, and areas still dependent upon farming, contributing to the literature on economic restructuring. Like the factory closings in the Rust Belt, the dramatic failure of agricultural industries in the Farm Belt has caused fundamental changes in the organization and control of production. The impact of job losses and economic depression and the shattering of a way of life have shaken public complacency about the stability of many fundamental American myths. Beyond the Amber Waves of Grain looks at the farm crisis not as a purely agricultural, nonurban issue but as one that adds to our understanding of the overall social impacts of economic change. The book takes up the story of Midwestern farm enterprises in the wake of the farm crisis of the 1980s. Using data drawn from detailed surveys of 3, 940 farm households in twelve north-central states, the authors offer a comprehensive view of the social and economic restructuring of agriculture and explore the consequences for farm enterprises, farm households, and farming communities. The study goes beyond the farm gate to look at the broader implications for related industries and communities dependent upon farming, for agricultural and rural policies, and for farm women and men, contributing to the literature on economic restructuring and its outcomes.

1 Farm Restructuring and Crisis in the Heartland: An Introduction

DOI: 10.4324/9780429046643-1

Linda M. Lobao and Paul Lasley

A dramatic restructuring of the farm sector has been underway since World War II. This restructuring is evident to the most casual observer throughout many parts of the rural Midwest. Abandoned farmsteads, deserted rural schools and churches, and boarded-up businesses tell the story of changes in farming and its effects upon the rural culture. Whenever hard times come to farming, rural institutions are also affected. Statistics tell a similar, if not equally compelling, story: from 1940 to 1990, the number of farms was reduced by two-thirds and the farm population declined from nearly one-fourth of all Americans to about 2 percent.

Restructuring of farming also has brought fundamental changes in the organization and control of production. Many analysts argue that a dualistic farming system has emerged in the postwar period (Goss, Rodefeld, and Buttel 1980; Krause 1987). That is, an increase has occurred in the relative number of small farms operated part-time and of large farms, particularly those with a half-million dollars or more of annual gross sales (Stam et al. 1991). Moderate-sized "family farms" that use little hired labor and whose households depend mainly on farm income for their livelihood have been edged increasingly out of this system.¹ These farms historically formed the backbone of the traditional rural community.

The declining farm population and family farm and the passing of agrarian community life have long concerned some farm organizations, scholars, and policy makers. Until recently, however, most persons either ignored these changes or regarded them as inevitable trade-offs in creating a modern, highly productive, capital-intensive agricultural system that would serve the needs of domestic consumers as well as international markets. The postwar farm economy was viewed as stable and even as buoyant for a period during the 1970s. An array of programs and policies such as the Farm Credit System, commodity and acreage set-aside programs, and Farm Credit Acts were in place to safeguard farming, protect farm income, and reduce risk. Many of these originated in New Deal legislation, the direct result of the lessons learned from the Great Depression.

The financial "crisis" of the 1980s rocked public complacency about farm restructuring. Americans were confronted with the fact that bucolic notions of farm life did not match the actual hardships and that the Jeffersonian ideal of family farming was shattered. Policy makers discovered that long-standing policies and programs were insufficient and that a massive government bailout of the farm sector would be necessary. Academic and other researchers became aware of their limitations in anticipating the crisis and assessing its magnitude (Hari 1990). Some observers raised more fundamental issues about the trajectory of farm change in the postwar era, including its environmental and social sustainability. Traditional farm organizations were forced to reconsider their platforms and to compete for public attention with newly emerging grass-roots groups. For farmers, the crisis called into question a valued way of life and a possible career path for their children. At the extreme, it meant the loss of household savings, the violation of intergenerational trust whereby farmland passed down through generations, and sometimes the loss of human life.

This book, the story of those who survived in farming during the 1980s, is the first systematic account portraying how the crisis period shaped the lives and enterprises of farm people in the grain-producing heartland of the Midwest. It is based on a study of more than 7,000 farm men and women in the 12 North Central states, the region hit hardest by the crisis. We focus on the changes experienced by farm people in three arenas of rural life: the farm enterprise, household, and community. This focus encompasses the major dimensions along which change was said to occur during the crisis. Empirical findings from the chapters that follow are based on a single data set collected in 1989 from farm operators and spouses. The results provide a comprehensive view of farm restructuring and its consequences and enable us to address a number of questions that have remained generally unanswered about the crisis.

The study differs from most others conducted during this period in that results are broadly generalizable and detailed and are based on observations from both women and men. Most previous studies are limited to a single state or, in the case of national sources such as the Census of Agriculture, provide highly aggregated data which do not permit direct, detailed analyses at enterprise and household level. These studies typically collect information solely from the operator, diminishing the role of farm women who are less likely to be defined, either by themselves or others, as operators. Prior research tends to assess empirically a limited range of crisis-related consequences, with primary focus on economic impacts such as financial stability and enterprise adjustments. In contrast, we deal with an array of issues raised by analysts of the crisis, from the extent of deterioration in objective financial well-being to subjective perceptions about the quality of personal and community life and the behavioral responses aimed at coping with hardship conditions.

Changes in the farm sector have been examined mainly by rural social scientists, including agricultural economists, home economists, and sociologists. Typically, researchers in each discipline work independently, employ distinct methodologies and theoretical frameworks, and focus on different research questions. The farm crisis, however, spilled over into many areas of rural life: the farm as a production unit, the household, and the rural community. Its effects could not be captured by purely disciplinary approaches. If sociologists were to study the outcomes of the crisis for the social well-being of women and men, they had to learn more about the structure of agricultural production. If agricultural economists were to map out adjustments in farm management, they had to be concerned with household composition, the gender division of labor, and decision making. Both economists and sociologists came to recognize that survival in farming would be a function not only of objective farm and household attributes but also of farm people's perceptions, feelings, and collective responses to agricultural change. Thus, the present study is the result of interdisciplinary efforts undertaken by a team of sociologists and economists. As such, it highlights points of focus and research traditions of both disciplines and offers a comprehensive view of the effects of farm restructuring.

The significance of our topic extends beyond the farm gate. First, changes in farming have important implications for related industries and for areas still dependent on farming. Although farmers represent only about 2 percent of the population, farming is the cornerstone of our nation's largest industry, agriculture, which employs nearly one American out of four. Moreover, about one-sixth of U.S. counties depend upon fanning for a sizable proportion of local earnings (Carlin 1990: 5). These counties are located mainly in the plains and western corn belt. The ripple effects created by the 1980s crisis jeopardized the non-farm economies and fiscal bases of rural communities located in these regions.

Second, the farm crisis, coupled with downturns in other traditionally rural industries such as mining, oil, timber, and nondurable manufacturing led to a general rural economic recession that continues into the present. The inequality between urban and rural areas which seemed to be diminishing a decade ago, began to widen in the 1980s as evidenced by the increase in poverty, unemployment, and the "working poor" among the rural population (O'Hare 1988). The flooding of large parts of the rural Midwest in the summer of 1993 has further limited the possibility of economic recovery. Focusing on the farm sector, a segment of the rural economy which will continue to experience economic pressure, is important for an understanding of the problems and policy solutions facing many rural areas.

Finally, this study should be viewed as contributing further evidence to the wider body of research on economic restructuring. Most studies on economic restructuring have focused on non-farm industry, paid employment, and urban areas. A relatively large literature exists on the consequences of plant closings, layoffs, and other forms of unemployment. Less is known, however, about the restructuring of self-employment, particularly family enterprises such as farming. Farming often involves unpaid family labor and the use of multiple livelihood strategies that combine formal-sector employment with self-employment such as contracting out with other farmers, as well as home-based businesses such as machinery repair, beauty shops, crafts, child care, and the like. In so far as the non-farm population has faced deteriorating economic conditions and declining opportunities in the formal sector in recent years, this study may offer a more general blueprint about how households cope with economic change.

The Restructuring of Farming in the 1980s

The 1980s crisis was the result of long-term structural trends and specific economic events. Historically, U.S. agriculture suffered from problems of overproduction, unstable and generally low farm incomes, and high government support costs (de Janvry and LeVeen 1986). Exportation of agricultural commodities was encouraged during the late 1960s as a strategy for dealing with these problems. In the process, however, farming became more vulnerable to new sources of price and income instability (de Janvry and LeVeen 1986). During the 1970s, exports expanded almost six times because of favorable economic conditions and the declining value of the dollar (Kolko 1988:171). Farm prices rose and farmers expanded operations by investing in land, machinery and equipment; often they borrowed heavily to do so (Leistritz and Murdock 1988).

The conditions fostering agricultural expansion in the 1970s were reversed in the early 1980s. Farmers were faced with a national recession, a decrease in world demand for U.S. products due in part to the rising value of the dollar and the Russian grain embargo, and low commodity prices. Interest rates and the costs of producing farm commodities continued to rise. As returns to farmland diminished, land values declined: they fell 27 percent nationally from their 1981 peak, and almost 60 percent in some of the major farming states (Leistritz and Murdock 1988: 17). Declines in farm asset values were highest in those counties that specialized in export sensitive crops, wheat, soybeans, corn, cotton, and rice, the first three of which predominate in the Midwest (Gilles and Galetta 1993). Declining land and other farm asset values eroded farmers' equity. As a result, for some farmers, asset values fell below total liabilities and declining farm income made it difficult to service debt.

Farm liquidations increased as lenders reacted by refusing to extend credit to borrowers who appeared to be insolvent or by initiating legal action against farmers delinquent on loan payments (Leistritz and Murdock 1988: 17). Commercial farms defaulting on loans were concentrated in the North Central states with nearly 32,000 of such farms facing financial failure in the nation's hardest hit states of Iowa, Minnesota, and Wisconsin (Hanson 1990:35).

Realization of the crisis was slow at first. Many people did not believe that the booming farm economy of the 1970s could enter a tailspin so suddenly. The first signs of crisis had been evident in the early 1980s, when real interest rates rose, farm exports plummeted, and land values declined. According to Harl (1990: 104), the gravity of these changes for farmers' financial well-being was not recognized widely until about 1984, in part because of the lack of up-to-date information about farm financial conditions and the distribution of debt. Land grant university and U.S. Department of Agriculture (USDA) researchers would reflect later on their shortcomings in collecting the data that could have provided earlier warning and more effective monitoring of the crisis. The media took notice of the crisis at about the same time as the academic community (Harl 1990: 222). Hardly an evening passed during the mid-1980s when stories of farm foreclosures, protests by farmers, and disrupted family life did not make headline news.

The federal government's recognition of the seriousness of the crisis came later. The first comprehensive response came through the Agricultural Credit Act of 1987. The Act provided financial assistance to the Farm Credit System and enabled farmers' loans to be restructured in lieu of foreclosure or informal liquidation. The dollar commitment by the federal government to the farm sector and its lenders exceeded $150 billion through the 1980s (Stam et al. 1991: 3). Without this massive infusion of aid from federal and state governments, substantially more persons would have exited farming.

Although much is known about the causes of the crisis, the magnitude of its effects is still unfolding, in part, because of the quality of existing data. A lack of detailed bankruptcy and foreclosure data, for instance, makes it impossible to determine precisely the number of forced exits from farming. By most accounts the crisis rivaled that experienced by farmers during the Great Depression. From 8 to 12 percent (200,000-300,000) of operators farming in 1980 are estimated to have failed financially by the end of the decade, becoming bankrupt, foreclosed, or financially restructured (Stam et al. 1991: 7).² Estimated forced sales of farmland jumped from 19 percent of all farmland transfers in 1980 to 46 percent in 1986 (Stam et al. 1991: 11). In the most severely affected areas in the Midwest, approximately one farmer in five faced the prospect of losing farm land and savings.

The crisis sent secondary shock waves to agricultural lenders and the input industry. More agricultural banks failed in 1987 than in any year since the Depression (Hanson 1990, 33). Nineteen billion dollars of bad loans (10 percent of all outstanding farm loans) were written off by agricultural lenders from 1984 to 1988 (Hanson 1990: 33). Farmers' capital purchases fell 60 percent from 1979 to 1986, contributing to the failure of International Harvester Corporation and the restructuring of other large agribusiness firms. Dunn and Bradstreet estimated that about 2,200 agricultural service firms failed (Hanson 1990: 33). Although it is recognized that the crisis spread beyond the sectors connected directly to farming and had tertiary effects on rural communities, most of the evidence for the latter is case-specific and anecdotal. Projected estimates by Murdock et al. (1988) suggest that by the mid-1990s, counties dependent on agriculture will experience large declines of the working age population, losses in whole...