Tighter profit margins, higher supply costs, and rising interest rates have drawn comparisons to the farming crisis of the 1980s. While the decade brought significant challenges, it also led to changes that helped move the industry forward. Pamela Riney-Kehrberg, a history professor at Iowa State University, says the lessons of that era are evident in conversations today about future planning.
“The 1980s crisis really emphasized the importance of planning, and I’m hearing everybody talk about planning, about putting pencil to paper- -there was a whole lot less of that in that era,” says Riney-Kehrberg. There was “more flying by the seat of one’s pants, which, when things go wrong- and go wrong badly- does not work. It’s never one thing that causes trouble.”
She added that when interest rates reached 24 percent, the impact was felt not only in farmland values but also throughout the rural banking system.
“If you have money, that’s lovely. If you have debt, it’s horrible, and so that was one of the issues that really caused tremendous trouble during that decade and all of the ripple effects from those incredible interest rates,” says Riney-Kehrberg.
Farmers who had cash available during the crisis were able to make investments that helped their operations survive and continue into today. Now, as the industry faces continued consolidation due to technology advancements, it’s another factor farmers have to consider, says Illinois Extension Farm Management Specialist Kevin Brooks.
“The phrase “cash is king” comes along, but also during uncertain times, those are terrific times for opportunities if you have the cash to make investments that pay off. Some of the farms that are around today actually did, and they came out of the 1980’s in pretty good shape and were able to expand during that time,” says Brooks. “We talk about consolidation- there is fear that there’s going to be consolidation. With AI, you have improvements, you have faster decision-making, maybe better decision-making, which is less costly.”
While today’s challenges may look different from those of the 1980s, the lessons from that decade remain relevant. Planning ahead, managing debt, and maintaining financial flexibility could help farmers navigate whatever comes next.
