Earlier tonight I caught a story on KIMT TV in Mason City, Iowa, about how the weather is delaying planting [1]. Reporter Michael Benning interviewed a farmer, James Thomas, of Rockwell, Iowa. What caught my ear came toward the end:
However if the weather does cooperate, farmers are set to have a very good year. The price for corn has increased from less than $2.00 to nearly $6.00 per bushel in the last few years. Soy beans have jumped from nearly $6.00 to more than $13.00 per bushel.
"Everybody feels good now, because it's fun to sell grain at high prices," said Thomas.
That's also driven Iowa land values up in by 2/3 in five years. Thomas says it almost seems too good to be true.
"In the back of your mind, you're wondering if it's gonna crash.”
Some economists believe there's a reason to be concerned too. They say the farming economy is eerily similar to the year’s right before it crashed in 1980's.
"It was hard on everybody, and very stressful," said Thomas.
Benning didn't identify "some economists" or offer any quotes to back up the claim. So I went looking for a news story to see if I could find some evidence. A Yahoo! search of "farm crisis 1980's" in their "news" category turned up another story in this TV market that also ran tonight. It aired on KTTC in Rochester, MN. (FYI, this market is spread over Mason City, Rochester, and Austin, MN.)
Reporter Meghan Sparks [2] spoke to a local community college instructor:
Dan Miller is an instructor at Riverland Community College [in Austin] and has been farming dairy heifers and angus beef in Spring Valley for about 15 years but With such high feed prices he has had to switch to corn gluten to save money. These record highs have led to high land prices, increasing debt and a reliance on government subsidies for ethanol production. Some worry if ethanol demand declines we could see a financial crisis reminiscent of the 1980's farm economy collapse.
Dan Miller says, "There are some similarities between that period and what we're currently experiencing so it's not impossible."
But as long as demand remains the same, farmers have little to fear.
Coincidence? These reporters were not pursuing the same story. KIMT was mainly talking about the weather, and KTTC was discussing the overdue farm bill, and yet both stories touched on the possibility of another 80's style farm crisis. This bears watching.