Farm Finance

April 11, 1986

Report Outline
Spring Credit Crunch
Effects of Farm Bill
Reshaping Agriculture
Special Focus

Spring Credit Crunch

Planting Time Yields Stress, Foreclosures

Oklahoma wheat farmer Ron Voth mocks the bankers, bureaucrats and politicians presiding over the worst farm credit crunch since the Depression: “The people in high-backed swivel chairs call it a necessary time of adjustment for over-investment.” Voth, president of the Oklahoma Wheat Growers Association, calls it a disaster. As spring planting advances northward across the nation's agricultural heartland, he and many other farmers expect a bitter harvest of failure and foreclosures.

Agricultural economists predict that 5 to 10 percent of the Midwestern farmers won't get the credit necessary to seed a new crop. The Farmers Home Administration (FmHA), lender to those rejected elsewhere, sent out 65,000 delinquency notices in February, marking the end of a two-year, court-imposed moratorium on efforts to seize property from farmers in arrears. Also in jeopardy are 125,000 other farmers indebted to commercial banks, production credit associations and land banks, according to the American Farm Bureau Federation. “Six months ago I was convinced we were bottoming out on this [credit crisis],” said Steve Tomac, a farmer and executive director of the North Dakota Wheat Growers Association. “After talking with lenders, I'm convinced we've got two or three years of hard times yet.”

The financial stress felt by farmers has begun to take a toll on farm lenders. Total farm debt at the end of 1985 topped $198 billion, roughly equal to the entire foreign debt of Mexico and Brazil combined. Farmers' ability to cope with that debt has been hampered by mountains of price-depressing surplus crops, falling exports and shrinking farm land values. Bad debts climbed sharply last year, threatening the stability of many lenders.

ISSUE TRACKER for Related Reports
Farm Loans and Subsidies
May 17, 2002  Farm Subsidies
Apr. 11, 1986  Farm Finance
Sep. 03, 1941  Government Payments to Farmers
May 27, 1940  Government Farm Loans
Dec. 12, 1936  Government Aid to Farm Tenants
Mar. 20, 1935  Farm Tenancy in the United States
Dec. 08, 1932  Plans for Crop Surplus Control and Farm Mortgage Relief
Jul. 25, 1932  The Burden of Farm Mortgage Debt
Mar. 20, 1929  Plans of Farm Relief
Apr. 21, 1928  The Economic Position of the Farmer
Oct. 20, 1927  The Federal Farm Loan System
May 03, 1926  Congress and the Farm Problem
May 21, 1924  Agricultural Distress and Proposed Relief Measures
Economic Development
Farm Loans, Insurance, and Subsidies
Farm Produce and Commodities