The United States experienced a major

farm crisis A farm crisis is an American term for a time of agricultural recession, low crop prices and low farm incomes. The Interwar farm crisis was an extended period of depressed agricultural incomes from the end of the First to the start of the Second ...

during the 1980s. By the mid-1980s, the crisis had reached its peak. Land prices had fallen dramatically leading to record foreclosures. Farm debt for land and equipment purchases soared during the 1970s and early 1980s, doubling between 1978 and 1984. Other negative economic factors included high interest rates, high oil prices (

inflation In economics, inflation is an increase in the average price of goods and services in terms of money. This increase is measured using a price index, typically a consumer price index (CPI). When the general price level rises, each unit of curre ...

) and a strong dollar. Record production led to a fall in the price of commodities. Exports fell at the same time, due in part to the 1980

United States grain embargo against the Soviet Union The United States grain embargo against the Soviet Union was enacted by U.S. President Jimmy Carter in January 1980 in response to the Soviet Union's invasion of Afghanistan in December 1979. The embargo remained in effect until US President Ronal ...

. The

Farm Credit System The Farm Credit System (FCS) in the United States is a nationwide network of borrower-owned lending institutions and specialized service organizations. The Farm Credit System provides more than $373 billion (as of 2022) in loans, leases, and relat ...

experienced large losses, which were the first losses since the

Great Depression The Great Depression was a severe global economic downturn from 1929 to 1939. The period was characterized by high rates of unemployment and poverty, drastic reductions in industrial production and international trade, and widespread bank and ...

. The price of farmland was a significant factor. Credit availability and inflation had contributed to an increase in the price of farm land. Demand was further bolstered by high farm incomes and

capital gains Capital gain is an economic concept defined as the profit earned on the sale of an asset which has increased in value over the holding period. An asset may include tangible property, a car, a business, or intangible property such as shares. A ca ...

on farm real estate, when many farmers expanded their existing operations. The value of farmland increased so drastically that it attracted investment from

speculators In finance, speculation is the purchase of an asset (a commodity, goods, or real estate) with the hope that it will become more valuable in a brief amount of time. It can also refer to short sales in which the speculator hopes for a decline i ...

. Agricultural banks felt the impact of the crisis. There were 10 bank failures in 1981, only one of which was an agricultural bank. In 1985, the number rose to 62, of which agricultural banks accounted for over half.

References

{{history-stub Agricultural recessions