Tell me about "the 80's"

[ss55]

I have often heard people reference the 80's as the farm crisis. Often times inflation is also referred to when talking about the 80's. Could someone explain to me exactly what happened prior to, and during this time frame?

Also, do you think a time like the 80's could happen again? Are we nearing a time like this right now with the inflation that we have seen the past few years?

Just wondering what a person could do to prepare themselves for times like this if that is what might be in our near future. I am in my mid 40's and wanting to purchase land to expand, but am a bit hesitant as I hear more and more reference to "the 80's"

Try researching the 1980 US grain embargo against the Soviet Union

United States grain embargo against the Soviet Union - Wikipedia

en.wikipedia.org

 

[jwal10]

I farmed through the 70's and the 80's. I actually downsized in 1980 and quit borrowing at the bank for seed and fertilizer in the spring, because cash farming and savings made more money than borrowing to farm. I had been planting winter wheat for years without borrowing for seed and fertilizer in the fall.

My brother started farming with Dad in '77. He borrowed all he could from FmHA. Spring of '80, he just walked when FmHA would not lend him any more. He had to find a job. Mom and Dad sold the farm that summer. It took all the machinery and livestock and their 1/2 of the crop that fall to pay off FmHA. Mom and Dad let someone else fertilize and harvest the crop that spring for 1/2 the crop. Sold the farm, bought a new house in town with the down payment and they got monthly payments for the farm.

I bought my last new tractor, a 4240, in 1980. Downsized from 1600 acres to 800, mostly owned. Sold off the big equipment, a 4640 and 2 4440's and farmed with 3 4240's and older, smaller equipment that I had for the cannery crops. Changed from winter wheat, peppermint and cannery crops to grass seed, clover seed, peppermint, rotation crops, cover crops and 80 acres of corn silage for an organic dairy. My health was going downhill. My last year was 1992. Sold the land I had bought in the 70's, for cash. I had bought it on contract and was paying 4% interest. Sold most of the original homestead. Built a new house in town, took 2 years to get health good enough to work 1/2 time for the city for 16 years. Retired in 2011 at 55 because of health, never was able to work more than 1/2 time.

Times were good for us through the 80's. I really enjoyed it and farming was all I ever wanted to do. Gave the family home to daughter, built son a cabin, here and what farm we had left. He is using the equipment I had kept to maintain the farm we had left. 68 now, don't need much or want much, live on 1 acre with a nice pond to fish, off grid, in a small cabin, greenhouse, small shop and garden beds. My health is better but restricted, no stress....James

 

[ss55]

I have often heard people reference the 80's as the farm crisis. Often times inflation is also referred to when talking about the 80's. Could someone explain to me exactly what happened prior to, and during this time frame?

Also, do you think a time like the 80's could happen again? Are we nearing a time like this right now with the inflation that we have seen the past few years?

Just wondering what a person could do to prepare themselves for times like this if that is what might be in our near future. I am in my mid 40's and wanting to purchase land to expand, but am a bit hesitant as I hear more and more reference to "the 80's"

Just wondering what a person could do to prepare themselves for times like this if that is what might be in our near future. I am in my mid 40's and wanting to purchase land to expand, but am a bit hesitant as I hear more and more reference to "the 80's"

Pencil out your cash flow very carefully, be prepared to ride out some years of poor crops, some years of poor prices and try to minimize your exposure to high risks. Right now it is easier and far less risky to rent land and make some profit that way than it is buy land at today's high prices and try to pay for the land solely by farming it. Rents will rise and fall with the farm economy, a mortgage principal will remain fixed regardless of how farm economy changes.

Make sure any new investments will pay for themselves. If the farm operation is not cash flowing well now, expansion may now change that. If it takes an off-farm job to build up a nest egg to buy more farmland in the future, take the off-farm job. In many isolated rural areas it takes a skilled job to earn a decent income, don't be afraid to learn a new skill if it helps pay for the farm.

You have heard the expression: Buy low and sell high. Try to buy farmland when no one wants it rather than when every believes the farm economy can only go higher and everyone wants to jump on the farming gravy train.

 

[sammydwm]

Folks bought a dairy farm in 79, paid 190000 for the land and buildings and another 65000 or so for the personal property. Interest was 14%
but things were comfortable. Then prices started dropping and land values went south as well. So many places were getting foreclosed that there was a moratorium placed on foreclosures...unfortunately my folks lawyer didn't get the news and when farm credit told them to have an auction and leave in 85 they did. Fast forward to 89, dad had found a good paying job and had a little inheritance and found a farm near our old one that looked good. Went to farm credit and applied for a loan, they asked what he was doing with the place he still owned....he was gobsmacked...so he deeded our old place to farm credit and bought it back at current prices..paid 57,700 for the land and buildings and we had built a 20x70 silo and cleared some acres when we were farming...

 

[urbancase]

Try researching the 1980 US grain embargo against the Soviet Union

United States grain embargo against the Soviet Union - Wikipedia

en.wikipedia.org

that's the part i remember the whole deal with wheat, i remember things were tight and dad was in his mid 60's at the time. i started taking over in the mid eighty's as dad need more help and was not a person to upgrade equipment so i started.

 

[jon f mn]

I bought my first farm the year I graduated in 1980, spent $160.000 for 160 acres financed by FmHA. The next year it was evaluated at $43,000 and I was basically done farming. I did hold on for a couple years, but soon left and did other work. I did keep farming a few acres of rented land for many years after that, but it was tough going with corn as low as $1.90/bu.

 

[Hobo,NC]

I have often heard people reference the 80's as the farm crisis. Often times inflation is also referred to when talking about the 80's. Could someone explain to me exactly what happened prior to, and during this time frame?

Also, do you think a time like the 80's could happen again? Are we nearing a time like this right now with the inflation that we have seen the past few years?

Just wondering what a person could do to prepare themselves for times like this if that is what might be in our near future. I am in my mid 40's and wanting to purchase land to expand, but am a bit hesitant as I hear more and more reference to "the 80's"

I did not farm I opened my first garage in 1979 at that time everyone's employer was telling them times were bad we can not pay you anymore we are just holding on helping you keep a job. Us two left that shop then a few years later two more left and succeeded running their own shop. The shop we left was the most successful shop in town by underpaying their employees they created 3 shops to compete with. The same was with the biggest body shop in town two employees left they became the the biggest shop in town. It was a big gamble at that time to quit a job you could not barrow money from a bank I had to play with small finance company's I brought a new house in 1982 the interest rate was 16%. We were making money enoufh to pay cash for most of out equipment. During the 80's we made good money it was in the early 90's things changed for us. Small operations with little exspence succeeded, large shops all made you think they were going broke. It was a time not to be in debt it was a time if you could hold on to some money you could buy cheap. Dealers were shutting down it seamed like there was a fire sale every week.

 

[GChief]

Farm Aid - Wikipedia

en.wikipedia.org

 

[JD Dave]

Land is the farmer's biggest investment. It's great when he can buy in at the low and benefit from rising land prices. Too many people get snagged when commodity prices are high and expand too quickly and then, 5 or 10 or 20 years out, the lower income will not pay the mortgage. As some have said on this forum, you better push the pencil, do the math, figure in the risk and plan accordingly.

 

[NY 986]

Land is the farmer's biggest investment. It's great when he can buy in at the low and benefit from rising land prices. Too many people get snagged when commodity prices are high and expand too quickly and then, 5 or 10 or 20 years out, the lower income will not pay the mortgage. As some have said on this forum, you better push the pencil, do the math, figure in the risk and plan accordingly.

Banks borrow from the Federal Reserve. The Fed raised rates to banks to cool 1970's inflation which were at the worst at the end of that decade. Retail borrowers may have paid 20 percent or more at the beginning of the 1980''s but its not like the banks were being charged a fraction of that. My neighbor who worked for White Farm Equipment at the time told of White borrowing at 18.5 percent interest to provide retail credit at 21 percent interest minimum. Riskier borrowers paid over 24 percent. Now if you had your own money to loan then you could make big money. An area agri-business man at the same time told of making 21 percent interest on a 100,000 dollar note.

 

[flying belgian]

Banks borrow from the Federal Reserve. The Fed raised rates to banks to cool 1970's inflation which were at the worst at the end of that decade. Retail borrowers may have paid 20 percent or more at the beginning of the 1980''s but its not like the banks were being charged a fraction of that. My neighbor who worked for White Farm Equipment at the time told of White borrowing at 18.5 percent interest to provide retail credit at 21 percent interest minimum. Riskier borrowers paid over 24 percent. Now if you had your own money to loan then you could make big money. An area agri-business man at the same time told of making 21 percent interest on a 100,000 dollar note.

Yeah. Just think about that. The borrower was paying 20% and the saver was getting 15% So the one was doing 35% better than the other. Not hard to figure who's going to come out of that one and who's not.

 

[GeneMO]

I was a newly hired crop insurance " claims coordinator" in 1985. Working for Mo. Farm Bureau. I went into the Farm Bureau office in Adair county, Mo., up on the Iowa line area. They are always proud of their county membership, and they keep a little plaque on the wall with the yearly membership. I asked the agent what had happened all through the early 80's, as the membership was about cut in half. I will never forget his answer. He said " Paint disease"! I asked what the heck that was. He said there had been a few good years, bankers encouraged everyone to expand, plant "fencerow to fencerow" and everyone was buying new machinery ( "new paint", hence the paint disease comment) . They had a really bad hail storm up there in about 1983, then some dry years, but mostly 15-18% interest on things. I had built a new house in 1984. We took out an "ARM" adjustable rate mortgage. It started at 12%, but could go up or down one % a year, with a cap at 5%. So it could have went to 17%, and dumb like, I was OK with that. Fortunately it kept going down, but that is where interest rates were. Oh, and speaking of inflation, I got out of college in 1976, and we thought $14,000 was a pretty good starting salary, by 1985, for my first job, I signed on at $21,000. That is poverty levels now. But we were not doing too bad. Wife was making $18,000 as a school teacher. People would turn up their noses at those salaries now. But then, what does your money buy? Oh, I also remember, Gold was $560 and ounce, Silver was $5.50 an ounce by the late 80's. Now gold is $2,300 an ounce and Silver is $28.50

 

[BarnyardEngineering]

Folks bought a dairy farm in 79, paid 190000 for the land and buildings and another 65000 or so for the personal property. Interest was 14%
but things were comfortable. Then prices started dropping and land values went south as well. So many places were getting foreclosed that there was a moratorium placed on foreclosures...unfortunately my folks lawyer didn't get the news and when farm credit told them to have an auction and leave in 85 they did. Fast forward to 89, dad had found a good paying job and had a little inheritance and found a farm near our old one that looked good. Went to farm credit and applied for a loan, they asked what he was doing with the place he still owned....he was gobsmacked...so he deeded our old place to farm credit and bought it back at current prices..paid 57,700 for the land and buildings and we had built a 20x70 silo and cleared some acres when we were farming...

So the place sat abandoned for four years?

 

[730 virgil]

I saw an former employer a few days ago.
He was telling about late 70s early 80s 70 things were going good he had lot full of new machinery if he didn't have he could get it .
Then farm prices started going backwards farmers quit buying here he was machinery to sell but no one to buy it.
paying interest just like the farmers no money to pay banker.
So he had a going out of business sale.
mid 80s I worked for two farmers who went under. my dear old m-i-l had nerve to tell me it must have because of the hired man.
She caused more than a few problems between my wife and I.
Was not Mrs 730, her mom was God send a real saint.

 

[sammydwm]

So the place sat abandoned for four years?

actually they had allowed a guy to move on and told him they were going to loan him the money to buy the place, He spent money to put an extension on the end of the barn to put a roof over the barn cleaner, then they told him that they couldn't loan him the money and kicked him off....but yeas for most of the 4 years there was no one on it

 

[showcrop]

If people don't remember, the Stamp Farms LLC in Michigan bankruptcy is a good read about greed and robbing Peter to pay Paul.

 

[cdmn]

You could study up on Jack Welch and Ivan Boesky. I think there were changes in bookkeeping rules. Used to be a
well-run company had funds for replacing old buildings and equipment and for paying pensions. Then outsiders started buying them up to cash out the funds into their own pockets and then sell what was left with a big bank debt attached.

 

[Jaden]

I seem to remember the government PIK (Payment in kind) farm program had some impact too. Don't remember the details.

 

[buickanddeere]

I have often heard people reference the 80's as the farm crisis. Often times inflation is also referred to when talking about the 80's. Could someone explain to me exactly what happened prior to, and during this time frame?

Also, do you think a time like the 80's could happen again? Are we nearing a time like this right now with the inflation that we have seen the past few years?

Just wondering what a person could do to prepare themselves for times like this if that is what might be in our near future. I am in my mid 40's and wanting to purchase land to expand, but am a bit hesitant as I hear more and more reference to "the 80's"

If nothing else . Automotive manufactures started building HP back into the engines by the mid to late 1980’s . While improving fuel efficiency at the same time .

 

[centash]

12 percent interest, 12 percent inflation, 12 percent unemployment....at the same time. No jobs, everything got crazy expensive.... I was just starting farming, my Farm Credit loan was for 16 percent....but you had to prove you could cash flow it before they loaned you any money.

Ah, yes, the good old days...

Ben