The U.S. farm financial crisis of the 1980s

The years 1981 through 1986 were a defining period for agriculture in the United States. During this time the farm sector experienced its worst financial crisis since the Great Depression of the 1930s. The resulting turmoil cost many farm families their vocations, lifestyles, and accumulated wealth. While farm families were the hardest hit, impacts were felt throughout rural communities. Also affected were those economic sectors that support production agriculture, such as manufacturing and marketing of agricultural inputs, and most notably, agricultural finance. The seeds of the 1980s farm crisis were sown principally during the 1970s. During the early 1970s, institutional change and socioeconomic influences created a boom atmosphere in agriculture that speculative activity fueled further. By the late 1970s, the boom began to show signs of vulnerability. In 1979, the Federal Reserve adopted monetary policy changes that had tremendous and largely unforseen ramifications for all sectors of the nation's economy. The impact on agriculture was particularly severe. This article examines the boom and bust cycle of American agriculture in the 1970s and 1980s. A principal theme is the integration of the U.S. agricultural sector into larger national and global economic systems and this sector's subsequent vulnerability to outside economic and political influences. Subthemes focus on the status of contemporary economic theory and why, at the time of this crisis, so few agricultural economists recognized the sector's vulnerability.