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The current farm downturn vs the 1920s and 1980s farm crises

Author

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  • Wendong Zhang
  • Kristine Tidgren

Abstract

Purpose - The purpose of this paper is to examine the current farm economic downturn and credit restructuring by comparing it with the 1920s and 1980s farm crises from both economic and regulatory perspectives. Design/methodology/approach - This paper closely compares critical economic and regulatory aspects of the current farm downturn with two previous farm crises in the 1920s and 1980s, and equally importantly, the golden eras that occurred before them. This study compares key aggregate statistics in land value, agricultural credit, lending regulations, and also evaluates the situations and impacts on individual farmer households by using three representative case studies. Findings - The authors argue that there are at least three economic and regulatory reasons why the current farm downturn is unlikely to slide into a sudden collapse of the agricultural markets: strong, real income; growth in the 2000s, historically low interest rates; and more prudent agricultural lending practices. The current farm downturn is more likely a liquidity and working capital problem, as opposed to a solvency and balance sheet problem for the overall agricultural sector. The authors argue that the trajectory of the current farm downturn will likely be a gradual, drawn-out one like that of the 1920s farm crisis, as opposed to a sudden collapse as in the 1980s farm crisis. Originality/value - The review provides empirical evidence for cautious optimism of the future trajectory of the current downturn, and argues that the current downturn is much more similar to the 1920s pattern than the 1980s crisis.

Suggested Citation

  • Wendong Zhang & Kristine Tidgren, 2018. "The current farm downturn vs the 1920s and 1980s farm crises," Agricultural Finance Review, Emerald Group Publishing Limited, vol. 78(4), pages 396-411, March.
  • Handle: RePEc:eme:afrpps:afr-08-2017-0075
    DOI: 10.1108/AFR-08-2017-0075
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    Citations

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    Cited by:

    1. Sant’Anna, Ana Claudia & Cowley, Cortney & Katchova, Ani L., 2021. "Examining the Relationship between Land Values and Credit Availability," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 53(2), pages 209-228, May.
    2. Albulena Basha & Wendong Zhang & Chad Hart, 2021. "The impacts of interest rate changes on US Midwest farmland values," Agricultural Finance Review, Emerald Group Publishing Limited, vol. 81(5), pages 746-766, February.
    3. , 2019. "Agricultural Cycles and Implications for the Near Term: Agricultural Symposium 2019," Economic Review, Federal Reserve Bank of Kansas City, issue Special I, pages 5-25, July.
    4. Shane Francis Conway & Maura Farrell & John McDonagh & Anne Kinsella & John R. Baker, 2022. "Farm Succession and Retirement across Continents and Cultures: A Focus on Ireland and Iowa," Center for Agricultural and Rural Development (CARD) Publications apr-winter-2022-4, Center for Agricultural and Rural Development (CARD) at Iowa State University.
    5. Oranuch Wongpiyabovorn & Chad Hart & John M. Crespi, 2022. "Fertilizer Markets: The Clash between Energy, Ag, Weather, Profits, and Policy," Center for Agricultural and Rural Development (CARD) Publications apr-winter-2022-1, Center for Agricultural and Rural Development (CARD) at Iowa State University.

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