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The sticks of SD | w1891 - 9/4/2015 07:50
Very good description. Bankruptcies and foreclosures did not start here until after the 1983 drought. Most farmed in 1984 but that was the end of it. What I was surprised was what the average price of corn was through those years. It was said though that if a farmer was debt free, most of the 1980's weren't all that that bad.
Edit:Not sure how much effect farm programs had on skewing price in those years
http://www.farmdoc.illinois.edu/manage/uspricehistory/us_price_hist...
1975 2.70
1976 2.49
1977 2.03
1978 2.10
1979 2.36
1980 2.70
1981 2.92
1982 2.37
1983 2.99
1984 3.05
1985 2.49
1986 1.96
1987 1.56
1988 2.27
1989 2.43
1990 2.40
Here is my take from living through the 70's and 80's. Locally land prices peaked at about $1800 per acre in 80-81. Profitability was quite good even with elevated land prices until input costs start going through the roof(seems like now eh?). Then comes the double wammy of decreasing crop prices, and increasing interest rates that took all profit from the equation. Farmers through the 70's increased land holdings (owned), and sucked in the hook line and sinker for new technologically superior farm equipment, seed, fertilizer, and any other place money could be spent. Anything sound familiar here?. Then the price of corn cratered along with crop size to create a perfect storm of lack of profit to pay for all that equipment and land purchased. Any one that is today over 50% financed in their farm operation is screwed, because even at that in 80's survival was meager unless the wife had a good job. My analysis of now is that we are at 82 coming into 83. We have had a few way over leveraged operators that have been cut, and some are surviving by mortgaging low cost farmland owned, but this next year will tell the tale. Better have your **** in order because banks are only loaning to people that are profitable, two years of losses and find a new profession. By 2017 blood will run on the streets or maybe Farm Credit will get a bail out again, and this time help the farmers, who knows. Anybody farming now is entering a time when the biggest question in your life will be: Do I want to do this again, and lose money, or should I fold. Locally land has peaked at $12,000 per acre, and we have enough late model large combines, 4 wheel drive tractors, and 24 row planters to farm 5-10 times what we farm now, so can you see what low interest rates has done for you. In the 80's it was an interest problem, these times will be marked as a principle amount problem. When all clears there are going to be some real interesting stories develop, such as the Stamp farm fiasco which developed while times were good. We have just had some of the best times in the last 100 years, comparable to 1910-1919, and you all know there is a lot of over investment to be flushed from the system. Unproductive capital will be flushed, and for the most part, just as in the 80's most farmers will remain because they didn't suck into the whole principle problem. The land will be farmed, either by a new generation of lean, hard working farmers, of maybe you all got that technology tested so large corporate interests can take over, running their equipment auto-steered by robots. Yep this is just the ranting of an old man that sees clouds on the horizon of farming. Get smart and get lean and mean, and you [might] survive. The most important part of my analysis is the 30 year commodity cycle.
82-superlarge crop in our area a sealing price $1.80 -A few of the "poor managers" sold out
83- PIK program because of the previous crop, drought, $2.80-Stablilized slightly because of Govt program, still more "poor managers" sold out
84-Very wet year with much flooding reducing crop $2.80- The start of farmers selling out in earnest with the price of land plumeting
85-more normal crop $2.10-only a few of the "poor managers left"
86-large crop $1.80- Price of land bottoms a about $400 per acre from a high of $1800, the only people left now are the well healed "good managers"
Edited by dirtfarmer007 9/4/2015 17:20
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Are the 80's really possible again??
