The Forgotten Farmer

Last year rural Sac County, Iowa, experienced three bank failures. In the county seat, of Odenbolt (population 1,300), 12 businesses closed, church attendance and collections were down, as were school enrollments which have now declined 7 percent since 1982. Also in 1985 more than 40 Sac County farms were lost to foreclosure, with another 120 in immediate danger.

Across the state in Hills, Iowa, near Iowa City, last December a farmer killed his wife, a man he had bought land from, his banker, and finally himself. At the time of the tragedy, the farmer was almost a million dollars in debt. The local sheriff said the man left a note "indicating he couldn't stand the problems anymore."

Nancille Gilmore is an active Texas United Methodist lay leader. In 1984 she and her husband lost their 680-acre farm in Crosby County. Today she coordinates a church-funded hot line for Texas farm families in trouble. In April she told the Dallas Morning News, "In 1985, Texas was losing farms at a rate of 100 per week. Today it is losing them at a rate of 173 a week."

There is a crisis in American agriculture in the 1980s, a crisis in many ways worse than the one accompanying the Great Depression of the 1930s. There are about 600,000 full-time, family-run farms left in the United States, and they are disappearing at the rate of about 30,000 a year. At least a third of the nation's family farmers are carrying levels of debt that place them in imminent danger of bankruptcy. After 40 years of slow shrinkage, the family farm as an institution, a culture, and a vocation is facing extinction.

The current farm crisis is creating a nearly unbearable economic, emotional, and spiritual dislocation for hundreds of thousands of Americans with long-standing ties to the land and no other means of livelihood. And as the experience of Odenbolt, Iowa, indicates, the ripple effects of farm foreclosures are taking down banks, businesses, farm-related industries, and entire communities.

The accumulation of defaulted bank loans to farmers sends the ripples even further into the economy, shrinking the pool of investment capital. According to Wharton and Chase Econometrics forecasting, by 1989 the current rate of farm defaults will result in the loss of 800,000 jobs in construction, manufacturing, and retailing. That will add another one-half percentage point to the nation's already bloated unemployment rate.

While the farm crisis is creating an ever-widening circle of losers, from rural America to the industrial cities, there are some winners. One big winner is the farm-management industry, made up of companies that operate farms for institutional owners. According to the New York Times, the number of farms operated by those companies has risen by more than 40 percent during the farm crisis. Their acreage now comprises an area roughly the size of Colorado.

Originally the farm-management industry mostly served retired people who didn't want to sell their land. But today its customers include some of America's biggest banks and insurance companies who have "inherited" the land through foreclosure and other institutional investors taking advantage of crisis-induced low land prices. Food processing and distribution in the United States has long been an oligopoly controlled by a handful of corporations, Now the food-growing industry is taking the same route. Further evidence of corporate centralization of agriculture was recently provided when the Metropolitan Life Insurance Company, already the proud owner of 300 farms, bought out the nation's largest farm-management company, which runs 3,900 farms (including 200 of Metropolitan's) comprising more than a million acres in nine states.

THE CURRENT CRISIS in American agriculture is not the result of bad weather, bad luck, or bad management. It is instead the result of bad choices in U.S. agriculture policy, especially in the last 15 years.

Perhaps more than any other economic endeavor, farming is prone to drastic ups and downs that are literally as unpredictable as the weather. An exceptionally bountiful harvest can result in a food supply that far exceeds the demand, thus driving the price for a crop down so low that no quantity of sales will make ends meet. On the other hand, a year of flooding or drought can result in a yield so small that the highest prices won't help.

During the Great Depression of the 1930s, when as much as a third of the nation was unemployed, consumer demand for all products went down sharply for the simple reason that people were flat broke. With the reduction in demand came a severe drop in prices for everything, especially farm products. With low prices farmers couldn't keep up mortgage payments on their land, and bank foreclosures became commonplace. The only option farmers had in the face of low prices per bushel was to try and produce more bushels. But that in turn only drove prices even lower and continued the vicious cycle.

Eventually it became apparent that if the laws of the marketplace were allowed to operate unfettered, America would eventually have no farmers and no food. This situation was generating a great deal of social turmoil and rebellion throughout rural America. So finally, as part of the New Deal economic reforms, the Roosevelt administration instituted federal regulation of agriculture through price supports and supply controls.

Price supports mean that the federal government determines the standard price that is needed in order for farmers to meet a fair portion of their production costs. If in a given year the market price falls below that standard, the government either makes up the difference with direct payments to farmers or buys up a portion of that year's crop in order to reduce supply and drive up the price. The federal government also regulates the supply of various farm products by paying farmers to limit the number of acres they plant.

These policies result in the well-publicized phenomena of farmers being paid not to farm and caves in the Midwest being filled with government-owned surplus cheese or, during the Depression, the mass slaughter of baby pigs. These things seem absurd to most city folk, and the mass media capitalize on that perception. But while there have always been inequities in the application of government regulation, given the boom-or-bust nature of farming and the absolute necessity of a dependable food supply, the basic principles of price and supply controls are just good common sense.

IN THE YEARS SINCE World War II, U.S. agriculture policy has concentrated heavily on research and development in the area of farm efficiency. This has been done through direct work by the U.S. Department of Agriculture, subsidies to private industry, and state "land-grant" colleges (founded on property donated by the federal government to serve rural areas). These efforts have encouraged the mechanization of farming, the development of new plant and animal breeds, and the invention of fertilizers, pesticides, and other agricultural chemicals.

These publicly funded developments resulted in unprecedented per-acre yields on American farms. They also institutionalized the tendency toward concentration of land ownership, because the technologies required to compete in the new market were too expensive to be feasible on a small farm and created contemporary agribusiness.

Simply as a result of these technological economies of scale, the percentage of Americans living and working on farms has declined at a steady pace. The number of farms in the United States has dropped by about a million per decade since World War II. But today's exodus from the land is of an entirely different scale than that seen before. Since 1980 the U.S. farm population has declined at twice the annual rate of the 1970s. And the cause is not simply the evolutionary--for better or worse--march of progress.

In the early 1970s, a fundamental shift occurred in the direction of federal agriculture policy. The U.S. economy was weakened by Vietnam War-induced inflation and new international trade competition from its European and Japanese allies. Then came the 1973 Arab oil embargo and the consequent doubling of oil prices, which further exacerbated both inflation and the export-import imbalance.

At this time the decision was made to crank up U.S. grain production to the highest possible level. The old farm-policy emphasis on price maintenance was traded in for a policy that emphasized higher production, lower prices, and massive export sales. This had the advantage of redressing the international trade problem while simultaneously holding down domestic food prices in a time of inflation.

The early and mid-70s were also a time of newly heightened awareness about world hunger, and much of the public rhetoric around the high-export policy was cast in terms of America's responsibility to "feed the world." The U.S. role as "farmer for the world" was also considered a valuable counterweight to the new leverage of the oil-producing states. The desert-bound Saudis would need our grain at least as much as we needed their oil. And Soviet grain shortages in this period made U.S. wheat sales an important bargaining chip in the superpower relationship. It became politically fashionable to regard U.S. grain production as an instrument of national security or, in the less polite formulation, a weapon.

For the American farmer, especially in the Midwestern grainbelt, the new food policy meant new incentives for expansion. Government policies encouraged farmers to plant their land from fence row to fence row. Banks were flooded with Middle Eastern petrodollars in search of investment opportunities. Interest rates were low, and the banks actively encouraged farmers to take out loans to buy more land and equipment to enlarge their operations and produce still more.

Demand for farm land increased as a result of these changes, and the new levels of land productivity drove the price of farm land sky-high. In turn the increased value of their landholdings (a farmer's primary loan collateral) allowed farmers to borrow even more, expand more, and produce more. Farmers' total indebtedness grew by leaps and bounds. No one worried about it, though, because America was the bread-basket of the world and there was nothing but clear skies ahead.

But the clouds soon appeared. In 1981 the Reagan administration came into power and induced a crippling recession as the final solution to the domestic inflation problem. The U.S. recession inevitably became a global recession. The market for U.S. grain exports, already reduced by President Carter's grain embargo, now declined further because other countries, particularly those in the Third World, simply could not afford to buy them at any price. Also other countries, especially in Europe and Latin America, had increased their food production to the point that they no longer needed U.S. grain. Some of them, in fact, had begun to compete with the United States on the world market.

The Reagan administration's policies of high military spending deficits and a tight money supply also combined to drive up the interest rates on farm loans, as did bank deregulation. At the same time, the farm recession drove down the value of the land, making it more difficult for farmers to get the loans they needed for seeds and supplies from year to year. Suddenly many farmers found themselves with an enormous debt load, taken on at the encouragement of the banks and the federal government a few years before, and no way to pay it. Before long the current tidal wave of foreclosures began.

THE REAGAN ADMINISTRATION'S response to the farmers' plight has ranged from apathy to insult. One administration official said that we just have "too many farmers." The president himself suggested that instead of exporting grain perhaps we should export some of the farmers. And the policies have been no kinder than the rhetoric. The Reagan agenda for U.S. agriculture is to phase out the system of supports and controls and let the forces of the market run free. So far Congress has kept that agenda from being carried through to its conclusion. But the farm bill that did come out of Congress last year represented a continuation of the export-oriented, low-price policy that helped create the farm crisis in the first place.

During the last year and a half, the grassroots farmers' organizations that have sprung up throughout the country came to a consensus around a farm bill proposal that was introduced in 1985 by Sen. Tom Harkin (D-Iowa). This proposal would have set a higher price for farm products and enacted strong production controls. Prices and production quotas would have been set not by distant Washington bureaucrats but by the farmers themselves in a direct referendum. This approach to farm policy is based on the understanding that the drop in export sales and prices represents a fundamental shift in the global market that will not be reversed any time soon.

At first it seems confusing that a policy calling for higher food prices and less food production could be considered just and progressive, especially in a world filled with hungry people. But if U.S. overproduction translated directly into food for the hungry, there would be no starvation in Africa. The fact is that very, very little of the U.S. grain surplus is actually given away to poor countries.

Advocates of higher food prices also make the point that dependence on U.S. exports is not really in the best interest of the poorer countries. Their interest lies in attaining food self-sufficiency. U.S. exports actually hinder that goal by setting low food prices that drive local farmers out of business.

Also farm activists argue that production must be scaled down for ecological reasons. They say that America's land is in danger of being worn out and eroded by the current levels of overproduction and the heavy use of chemicals that it requires.

DESPITE THE DEFEAT in Congress last year, grassroots farm organizations are still building support for their policy proposal. Meanwhile much effort is focused on the more immediate issue of stemming the tide of farm loss through campaigns for a moratorium on foreclosures and sometimes through direct action at the point of foreclosure. One group of Iowa activists has begun circulating a proposal for a new Homestead Act that would allow bankrupted farm families to keep their residence plus 40 acres of their land. The idea is to allow farm families to maintain a toe-hold on their land with the hope that they can eventually work it again, if only as renters.

Ultimately, the crisis that is destroying family farms raises serious questions about the social and economic direction America will take in the rest of this century. The economics of the marketplace are increasingly replacing all notions of the common good in areas ranging from banking and telephone service to newspapers and other mass media. The farm crisis is symptomatic of that trend. Little room exists in U.S. political debate for the idea that decentralized ownership and control of land and the institution of family farming might have an intrinsic social and moral value that outweighs the demands of the market.

Such a narrow approach to public life will inevitably leave behind staggering human damage. Right now the damage is most visible in black and Hispanic inner-city communities without jobs or hope, in the abandoned industrial towns of the Northeast and upper Midwest, and in the farm belt. But it won't stop there. If farm families can be declared dispensable, so can we all.

Danny Duncan Collum is a Sojourners contributing editor.