1980S SERIES: Farm crisis unites a state
EDITOR'S NOTE: This is the fourth in a series of stories about the 1980s in the Mitchell area and the decade's impact on modern life. It was supposed to be a joke. "I think we should keep the grain and export the farmers," said President Ronald R...
EDITOR'S NOTE: This is the fourth in a series of stories about the 1980s in the Mitchell area and the decade's impact on modern life.
It was supposed to be a joke.
"I think we should keep the grain and export the farmers," said President Ronald Reagan.
He was speaking at the lighthearted Gridiron Club dinner in Washington, D.C., on March 23, 1985. The joke was part of an annual event with politicians and journalists, intended to poke fun at current issues and political leaders.
The farm community wasn't laughing.
Reagan's tongue-in-cheek remark came soon after his veto of an emergency farm credit bill and at the height of the 1980s farm debt crisis. Farmers and Farm Belt politicians were looking to Washington, D.C., for recognition of their issues but felt ignored.
A Madison-based farm group used Reagan's ill-timed comment to raise more than $10,000. The Lake County Farm Alliance (LCFA) created and sold a bumper sticker that read "Save the Farm. Export Reagan."
In the first week of sales, the group sold 6,500 stickers at $1 each. The money helped hard-hit local farmers with basic needs like groceries and school supplies.
Madison resident Bev (Strom) Mader, who ran a dairy farm with her then-husband Dan Strom, who has since died, and four children, was a central organizer and spokeswoman for the LCFA in 1985-86.
"We were hearing from all around us, not even just in South Dakota but in other states," Mader said. "There were times we would get 150 letters a day. Some of my farm neighbors would come over and we'd sit and read all the letters. It was a lot of work. It was overwhelming."
Many of the mail orders for stickers included long letters filled with intimate stories from farm families.
"I would not have wanted to share, publicly, the stories of what those farmers were going through. I don't think that's ever what they intended them to be," she said. "I never kept any of them."
Mader -- and her phone number -- was also central to the support hotline the Madison group developed.
"There were a lot of phone calls day and night from farmers in crisis that wanted to talk about what could be done, what can we do to help. Or, they just needed somebody on the other end to talk to, to figure out what they could do next."
The farm debt struggles became obvious in 1984, as Mader watched her neighbors try to absorb falling commodity prices and land values on top of higher interest rates. There wasn't much that could be done, she said.
"They were out there working as much as they ever did. But, financially they couldn't make ends meet. Crop prices weren't good. Interest rates were too high. Debts were too high. There wasn't a lot of help."
The farm frustrations that funneled into the LFCA's local efforts echoed sentiments heard across the Midwest in early 1985, including in Minnesota and Iowa, where farm rallies attracted up to 12,000 people. Months before Reagan's bad joke, plans were under way for a similar event in South Dakota.
The South Dakota Farm Alliance Rally on Feb. 12, 1985 -- 29 years ago this week -- brought a reported 6,000 people to Pierre and convinced the entire state Legislature to go to Washington, D.C., to lobby for the state's farm community.
500 fewer farms each year
One-quarter of the state's farmers and ranchers were in financial trouble, reported a November 1984 survey of lenders by South Dakota State University. An Iowa State University study further reported that 42 percent of producers in the farm states were saddled with worrisome debt.
For those struggling to keep up, the debt was a symptom of an economic maelstrom and a blow to their pride. In short, the 1980s were the bust to the 1970s' boom.
Prices sat at $3.30 per bushel on corn after 1983's drought and dropped to $2.52 per bushel during an oversupply in 1984, according to media reports. Soybeans were at $7.87 per bushel in 1983, then at $5.80 per bushel in 1984.
The fluctuating prices followed inflated land values of the late 1970s, which allowed farmers to leverage more debt, using land and machinery as collateral with a flood of credit on the market. Expectations were pinned on a continuing run of income, thanks in part to increased grain exports. Grain exports then fell by 20 percent in the early '80s due to the United States' changing relationship with the Soviet Union.
As prices dropped, interest rates rose, while land values and profit margins took a dive. With little equity, operating loans were hard to come by to put seed in the ground.
Off the farm, the United States was also in the midst of a heavy recession.
"It was kind of a very destructive, stars-lined-up situation," said Wayne Williamson, vice president of ag banking at First Dakota National Bank in Yankton. In the 1980s, he was working in Yankton with Farm Credit Services of America.
"There were more sellers than buyers of the key assets to farming and ranching. Additionally, farmers had used up their working capital. They didn't have many options to replace the fact that their net income was down."
Jim Burg, a Wessington Springs farmer/rancher and state legislator from 1975 to 1986, also pointed to an influx of credit from the Farmers Home Administration (FmHA).
"FmHA got real aggressive in loaning money to farmers, more money than they probably should have had," Burg said. "A little bit like we had with the housing in this recession a few years ago. Those are the kind of things that led up to it."
Between 1978 and 1988, South Dakota had 500 fewer farms on average each year. In 1978, 40,000 farms were operating in the state. In 1988, there were 35,000. Statistics from the USDA report 31,000 farms today in South Dakota.
With fewer farms each year plugging into the local economies, the effects rippled through South Dakota's Main Streets.
Leland Swenson witnessed the rise and fall with South Dakota Farmers Union starting in 1971. He served as SDFU president from 1981 through '88 and is now state director of the Farm Service Agency in Colorado.
"This wasn't isolated to what its impact was on family farmers and ranchers. It affected their rural communities as well," Swenson said. "The economy struggled as a whole. It really started with agriculture."
Thousands rally in Pierre
If sentiments about the farm crisis in South Dakota could be condensed into one public moment, it would be the afternoon of Tuesday, Feb. 12, 1985.
Businesses and schools closed across the state. Thousands came by farm trucks, school buses, cars and chartered buses to send a message to state legislators and to Congress. They came to say: Help us save our farmers and ranchers.
The farm rally idea took root in a late night conversation during the 1985 legislative session between Swenson and other lobbyists.
"We began to develop the concept of having this farm rally. Go beyond the farm, reach out to rural communities to encourage people to come to Pierre, get the attention of the state Legislature and South Dakota's congressional delegation," Swenson said. "We began that plan, and it grew."
He believes the farm rally's nonpartisan, widespread message led to the support from across South Dakota. Smaller, local rallies were held, including meetings organized by the Lake County group.
Attendees to the state rally Feb. 12 packed into every open space possible at Riggs High School in Pierre. The slate of speakers included then-Gov. Bill Janklow, congressional delegates Rep. Tom Daschle and Sens. Jim Abnor and Larry Pressler, and leaders from South Dakota communities. Later, participants marched from the school to the Capitol steps.
"That street was packed with South Dakotans. Not just farmers and ranchers," Swenson said. "It was people from every rural community across the state of South Dakota who were participating, showing their support for South Dakota, for the economy of South Dakota, for every farmer and rancher and their community."
"What a day."
The main goal was to illustrate how the farm crisis was affecting South Dakota.
Swenson said farmers weren't looking for a financial handout from the government. They wanted a change in economic policies to support the farm economy. The Reagan administration was advocating a free market approach and a reduction in price supports, which was widely met with criticism in farm country.
"There was no agenda ... outside of trying to elevate the concern, the knowledge of what was happening to the South Dakota economy," Swenson said.
He felt the message carried across the spectrum, despite politics. Above all, the message carried to the Legislature, which ended up in Washington, D.C., two weeks later.
105 South Dakotans in Washington
"Send the South Dakota Legislature to Washington to straighten out Congress!"
Ron Larson, a dairy farmer from Hetland, issued that call to action on the call-in radio show "What's Up?" on KWAT-AM in Watertown in January 1985. Before the show was over, a fundraising effort had begun.
Legislators were mixed on the idea. Rep. Scott Heidepriem, of Miller, wanted to send a delegation of 10 while Sen. Burg and others wanted everyone to go. Other farm states were sending small delegations in late February, but South Dakota eventually made the leap to send the entire 105-member legislature.
"I remember in the Legislature everybody was thinking nothing would happen. The thought was, if they raise enough money to send the Legislature, then they would go," Burg said.
Through KWAT's Give A Buck campaign, $34,560 was raised, mostly in single dollar contributions toward the estimated $95,000 trip. This included two chartered planes for the legislators plus staff and reporters at about $720 each.
The trip was a first of its kind, for any state.
Burg served as Senate assistant minority leader with Sen. Jim McKellips, a banker from Alcester. Burg was also on the ag committee of the National Conference of State Legislators and set to meet with Secretary John Block of the U.S. Department of Agriculture at the end of February, the same time as the legislative trip.
The trip put Burg -- and South Dakota -- in the national media spotlight. He and Gov. Janklow were guests on television's "Nightline" with hosts Ted Koppel and George Will.
Burg was raised on the farm and took over the family's operation with his brother in 1974. His farm background put him ahead of McKellips to be on the show with Janklow.
"Now, my generation, we're running the farm and we're wondering if we're going to be able to hang on to it," he told the "Nightline" staffers. He said bankers worried about the risk to lend money to the farmers; farmers worried about obtaining enough credit raise livestock and put seed in the ground.
"I have to say, it was probably the biggest thing to happen to me in my political career to be on 'Nightline' during that crisis," Burg said.
He believes Koppel and Will expected a sob story about South Dakota farmers.
Burg explained to the hosts, "We're not just losing our farmers. We're losing our banks ... our churches ... our schools ... our hospitals, because nobody's able to pay those bills," he said. "Those of us who may survive don't want to live in communities where we don't have those services for our families."
The historic trip aimed to alleviate a disconnect between national policies and the farmland economy. It also captured media attention for South Dakota.
"The reporters were everywhere. They covered the whole thing. It was quite an episode," Burg said.
Reporters from broadcast news, including CNN, and large metro newspapers, like the Washington Post and the New York Times, covered the legislators' assembly on Capitol Hill.
"I personally believe it did some good," Burg said. "When those things happen, there's some attitude changes. Some relaxing of opposition to certain programs that might help people."
Lessons learned 'help us now'
Swenson, with the South Dakota Farmers Union, said discussions initially struggled to move forward, but he thinks the events helped shift beliefs that farmers only wanted a handout.
"Farmers and ranchers were used to paying the bills," Swenson said.
Instead, they wanted to see changes in federal policies.
Specifically, the Farmers Union lobbied for a moratorium on farm foreclosures, restructuring of farm debt, increases to commodity loan rates and target prices, a soil conservation program and tax reform to aid family farmers over corporate agriculture.
"There was reform within the farm credit system," Swenson said. "Changes occurred. It wasn't able to save every farmer or rancher, and we knew that going in, but it made changes so many could continue their operations."
The Conservation Reserve Program (CRP), part of the 1985 farm bill, was another one of those changes.
Larry Janssen, an economics professor at South Dakota State University, said CRP was developed to take highly erodible land out of service and offer supply control on commodities.
"They decided, for several years, if they wanted commodity prices to increase, they needed a long term supply control instrument," he said. "CRP was that."
In the mid-1990s, CRP expanded to include wetlands criteria and saw enrollment peak at 1.8 million acres, or roughly 8 percent of the state's crop land. Enrollment has since dropped, for various reasons.
A 2007 study that Janssen supported found one-third of producers who were opting out of CRP were putting the land back into production or managing it differently than CRP allows. Another third would have re-enrolled if rates were higher.
Prices for land and commodities have remained strong over the last five years, as they did before the '80s bust.
Will another bust hit today? From a banker's perspective, Williamson says it's not likely.
He said many producers are using cash-on-hand to fund expansion to avoid overextending on credit. Plus, those in the farm business better understand the boom/bust cycle that can happen.
"I think bankers are more attuned to that now. They understand that these kind of things can happen and how to make the best of them," Williamson said. "Banks that are serious about being ag lenders know about the cyclical nature of income, asset value and profitability. Those lessons learned in the '80s help us now."
Neither Williamson nor Swenson expect major swings in the ag marketplace today like 30 years ago, even though corn prices saw an unexpected drop with the record production from the 2013 harvest. More safety nets and better policies exist today than 30 years ago, Swenson said, and producers operate more conservatively.
"We should take pride in not only what we changed at that time but how we recognize the 1980s as we look at challenges that we face today," he said. "Initiatives have come out of the 1980s, because people have recognized we don't want to go through the 1980s again."