From Boom to Bust to Boom to ??

From Boom to Bust to Boom to ??

Paul LasleyPaul LasleyIowa State UniversityIowa State University

Causes of the farm crises

Flawed government policyFlawed government policy World expansion of grainWorld expansion of grain Overly optimistic projectionsOverly optimistic projections Favorable global weatherFavorable global weather Food self sufficientFood self sufficient Increased global competitionIncreased global competition

Need to make the distinction between “Farm Crisis” and “Long-term Chronic Problem”

This is a restructuring processThis is a restructuring processBroader than farmingBroader than farmingPainful—DifficultPainful—DifficultTransitions are hardTransitions are hard

Community Impacts of Economic Hardship in Farming

EconomicEconomicWhat does it mean for the financialWhat does it mean for the financialwell-being of the community?well-being of the community?

SocialSocialWhat does it mean for the social What does it mean for the social

fabricfabricof the community?of the community?

1. Cut back on living expenses

a.a. Eat out less, reduce entertainment Eat out less, reduce entertainment expenses, reduce discretionary spendingexpenses, reduce discretionary spending

b.b. Postpone buying things Postpone buying things (belt-(belt-tightening)tightening)

c.c. Cut back on other types of discretionary Cut back on other types of discretionary spending such as pledge or tithesspending such as pledge or tithes

2. Earn more money, attempt to generate more income

a.a. Work more hours, over-time hoursWork more hours, over-time hoursb.b. Take on more land, get biggerTake on more land, get biggerc.c. Take a second jobTake a second jobd.d. Spouse and children have jobsSpouse and children have jobse.e. Engage in illegal activities Engage in illegal activities (rob bank, peddle or (rob bank, peddle or

manufacture drugs, raise marijuana, bootleg, etc.)manufacture drugs, raise marijuana, bootleg, etc.)f.f. Gamble—”just one big hit,” slots, races, cards, Gamble—”just one big hit,” slots, races, cards,

lottery, etc.lottery, etc.

3. Dip into savings

a.a. Use emergency reservesUse emergency reserves

b.b. Use funds set aside for children’s Use funds set aside for children’s college fundcollege fund

c.c. Retirement funds or inheritanceRetirement funds or inheritance

4. Borrow and use credit

a.a. Second mortgagesSecond mortgages

b.b. Use of credit cardsUse of credit cards

c.c. Borrow against cash values of life Borrow against cash values of life insuranceinsurance

5. Withdraw from social activities

a.a. Can’t afford to participateCan’t afford to participate fees, dues, or admissionfees, dues, or admission can’t afford clothes that look nicecan’t afford clothes that look nice

b.b. Shame prevents one from participatingShame prevents one from participating

Social or Community Impacts Fewer farms translates to fewer farm familiesFewer farms translates to fewer farm families

consolidation of rural organizations and consolidation of rural organizations and institutions, e.g., schools and churchesinstitutions, e.g., schools and churches

revenue declines among businesses that serve the revenue declines among businesses that serve the needs of farm familiesneeds of farm families

Multiple job holdingMultiple job holding more part-time farmingmore part-time farming

less time for community activitiesless time for community activities

Number of Iowa Farms

211 208 206190

154

124 11597

1920 1930 1940 1954 1964 1974 1982 19920

50

100

150

200

250Thousands

Agricultural Census DataAgricultural Census Data

91

Percent Farm Population, 1940–1990

36

30

24

1813

9

2520

1410

52

1940 1950 1960 1970 1980 19900

10

20

30

40

50Percent

U.S. Iowa

Perceptions of Stress

Personal level of stressPersonal level of stress 5757Concern about stressConcern about stress 4545On a day-to-day basisOn a day-to-day basis 4444Among neighborsAmong neighbors 8181Within own familyWithin own family 5353

Over last 5 yearsOver last 5 years % Increase% Increase

Adjustments in Family Living

Shopping at discount storesShopping at discount stores 7171Switched to generic drugsSwitched to generic drugs 6161Buying more used merchandiseBuying more used merchandise 5252Avoiding name brandsAvoiding name brands 5151Cut back social activitiesCut back social activities 5151

% Yes% Yes

Adjustments in Family Living (continued)

Postponed household purchasePostponed household purchase 4747Cut back charitable contributionsCut back charitable contributions 4545Family member taken off-farm jobFamily member taken off-farm job 3737Used savings to meet expensesUsed savings to meet expenses 3636

% Yes% Yes

Adjustments in Family Living (continued)

Delayed retirementDelayed retirement 3333Working more over-timeWorking more over-time 2828Started home-based businessStarted home-based business 1212Expanded farmExpanded farm 2121Using more creditUsing more credit 2323Postponed medical carePostponed medical care 2121

% Yes% Yes

Is the current problem acommodity price problem

or a farm income problem?

Making the Distinction BetweenPersonal Problems and Social Problems

When one farmer has financial problems, we When one farmer has financial problems, we can conclude that this is a personal problem.can conclude that this is a personal problem.

When an entire group or class of individuals When an entire group or class of individuals have financial problems, we should conclude have financial problems, we should conclude

that this is a social problem.that this is a social problem.

Witness the loss of 5 million farms since Witness the loss of 5 million farms since 1920 (6.8 million in 1920 to 1.9 million in 1920 (6.8 million in 1920 to 1.9 million in 1997). Rather than recognize the failure of1997). Rather than recognize the failure of

5 million farms as a social problem, policies 5 million farms as a social problem, policies were based upon the belief that this was a were based upon the belief that this was a

personal problem and sought ways to personal problem and sought ways to improve individual farm management skills.improve individual farm management skills.

Rather than recognize and address the deficiencies Rather than recognize and address the deficiencies in the structure, conduct, and performance of the in the structure, conduct, and performance of the

farm economy, agricultural economists adopted an farm economy, agricultural economists adopted an orientation that focused on individuals rather than orientation that focused on individuals rather than

group behavior (psychological approach).group behavior (psychological approach).

The prescription for the farm ills during the The prescription for the farm ills during the past 70 years was to emphasize individual past 70 years was to emphasize individual

adoption of new technology with little or no adoption of new technology with little or no regard to implications for farmers as a regard to implications for farmers as a

group.group.

Those who failed to accept this prescription were labeled as social deviants

LaggardsLaggards LudditesLuddites RomanticsRomantics RadicalsRadicals ConsumerismConsumerism Tree-huggersTree-huggers Environmental wackosEnvironmental wackos

Rather than emphasize what farmers as a Rather than emphasize what farmers as a group might do to raise prices and improve group might do to raise prices and improve

their collective situations, historic (traditional) their collective situations, historic (traditional) policies pushed individualistic approaches.policies pushed individualistic approaches.

And even worse, any attempt to address And even worse, any attempt to address farm problems through group or farm problems through group or

collective action were labeled socialistic.collective action were labeled socialistic.

It is rather ironic that group action that resulted It is rather ironic that group action that resulted in clearing land of trees, draining swamps, in clearing land of trees, draining swamps,

erecting barns, organizing rural schools, and erecting barns, organizing rural schools, and other group action were generally not defined other group action were generally not defined

as socialism, but when farmers sought to as socialism, but when farmers sought to organize themselves to achieve a better price, organize themselves to achieve a better price,

they were generally labeled as socialistic.they were generally labeled as socialistic.

Production CostsProduction Costs Commodity PricesCommodity Prices

Attempts to IncreaseAttempts to IncreaseFutures, Hedges, OptionsFutures, Hedges, Options

Cooperative ActionCooperative Action

Attempts to DecreaseAttempts to DecreaseSustainable FarmingSustainable Farming

IPM, ICM, BMPIPM, ICM, BMP

It is not possible to squeeze the cost of It is not possible to squeeze the cost of production enough to generate a profit production enough to generate a profit

With the glut of commodities, it is not With the glut of commodities, it is not possible for an individual or group to possible for an individual or group to significantly raise commodity prices significantly raise commodity prices

through traditional strategies…through traditional strategies…

During low prices—farm crisis:

Historically, farm policy has dealt with commodity Historically, farm policy has dealt with commodity prices rather than farm income. Based upon some prices rather than farm income. Based upon some

assumptions about the relationships between assumptions about the relationships between commodity prices and farm income.commodity prices and farm income.

Given the ineffectiveness of the commodityGiven the ineffectiveness of the commodityprice focus over the past 70 years, maybe it isprice focus over the past 70 years, maybe it is

time to shift focus to farm income.time to shift focus to farm income.

Maybe focus should be on developing a new Maybe focus should be on developing a new food system rather than trying to preserve an food system rather than trying to preserve an obsolete and antiquated commodity system.obsolete and antiquated commodity system.

Characteristics of the Old Commodity System

Production of homogenous bulk commoditiesProduction of homogenous bulk commodities Standardized production systemsStandardized production systems Focus on volume, scale, size, and efficiencyFocus on volume, scale, size, and efficiency Large scale production, transportation and processingLarge scale production, transportation and processing Impersonal and indifferent to individual needs and Impersonal and indifferent to individual needs and

nichesniches Food viewed as fuelFood viewed as fuel

Sharp distinction between producers and consumersSharp distinction between producers and consumers Product was produced and then sold through some Product was produced and then sold through some

market structure that may or may not be regulated market structure that may or may not be regulated and fair to all partiesand fair to all parties

Buyers and sellers are adversaries—each looking Buyers and sellers are adversaries—each looking out for their best interestsout for their best interests

Focus was on individual whether it be a person, Focus was on individual whether it be a person, farm, or firmfarm, or firm

Emerging Characteristics of a Food System

Designer commodities, crops grown for specific Designer commodities, crops grown for specific end usesend uses

Explosion of new crops and products resulting Explosion of new crops and products resulting from biotechnologyfrom biotechnology

Emphasis on batches, small nichesEmphasis on batches, small niches Focus on food safety and qualityFocus on food safety and quality Food shopping and eating as a social experienceFood shopping and eating as a social experience

Linkages between producers and consumersLinkages between producers and consumers Crops grown under contract to meet Crops grown under contract to meet

expectations of buyerexpectations of buyer Product is specified, terms negotiated, produce Product is specified, terms negotiated, produce

is grown, and then deliveredis grown, and then delivered Buyers and sellers are partnersBuyers and sellers are partners Focus on group, network, coalitionFocus on group, network, coalition

Why are transitions hard?

Social and economic change are not neutral Social and economic change are not neutral processesprocessesThey produce gains for some and losses for They produce gains for some and losses for

othersothersHow to cope with lossesHow to cope with losses

Loss

Decline in financial securityDecline in financial security Loss of statusLoss of status Stigma/LabelingStigma/Labeling Separation/IdentitySeparation/Identity Feelings of unfairnessFeelings of unfairness Guilt—self-blameGuilt—self-blame Feeling of inadequacyFeeling of inadequacy

What can social workers, mental health counselors, and other “caring” individuals do to “soften” the sense of loss, hurt and grief?

Presence is critical—Presence is critical—not alonenot alone Offering hope—Offering hope—there will be another daythere will be another day Keeping losses in perspectiveKeeping losses in perspective Balance is importantBalance is important

What Services Are Needed?

Short RunShort Run1.1. Income assistanceIncome assistance

a.a. Job placementJob placementb.b. Transfer paymentsTransfer paymentsc.c. Insurance—especially medical Insurance—especially medical

carecare

2.2. Family budgeting/financial managementFamily budgeting/financial management

3.3. Develop responsive networksDevelop responsive networksa.a. Need to be able to identify those in Need to be able to identify those in

greatest greatest need (targeting)need (targeting)

b.b. Remove or reduce stigma associated Remove or reduce stigma associated withwith

asking for helpasking for helpc.c. Need to guard against callousnessNeed to guard against callousness

d.d. Need to become “proactive,” shouldn’t Need to become “proactive,” shouldn’t justjust

wait on clients to “appear”wait on clients to “appear”e.e. Need to develop expertise in directingNeed to develop expertise in directing

clients to resourcesclients to resourcesf.f. Referral networks are keyReferral networks are key

Longer RunLonger Run1.1. Return to community development focusReturn to community development focus

2.2. Social capital (building caring Social capital (building caring communities)communities)

3.3. Strengthening the art of neighboringStrengthening the art of neighboring

4.4. Place focus on people, not productionPlace focus on people, not production

5.5. Emphasize the values of cooperation and Emphasize the values of cooperation and community rather than competition and community rather than competition and individualindividual

6.6. Need to broaden understanding of how Need to broaden understanding of how global conditions impact local situations—global conditions impact local situations—policy perspectivepolicy perspective