From Boom to Bust to Boom to ??

From Boom to Bust to Boom to ?? Paul LasleyIowa State University

Causes of the farm crises • Flawed government policy • World expansion of grain • Overly optimistic projections • Favorable global weather • Food self sufficient • Increased global competition

Need to make the distinction between “Farm Crisis” and “Long-term Chronic Problem” • This is a restructuring process • Broader than farming • Painful—Difficult • Transitions are hard

Community Impacts of Economic Hardship in Farming • EconomicWhat does it mean for the financial well-being of the community? • SocialWhat does it mean for the social fabric of the community?

1. Cut back on living expenses a. Eat out less, reduce entertainment expenses, reduce discretionary spending b. Postpone buying things (belt-tightening) c. Cut back on other types of discretionary spending such as pledge or tithes

2. Earn more money, attempt to generate more income a. Work more hours, over-time hours b. Take on more land, get bigger c. Take a second job d. Spouse and children have jobs e. Engage in illegal activities (rob bank, peddle or manufacture drugs, raise marijuana, bootleg, etc.) f. Gamble—”just one big hit,” slots, races, cards, lottery, etc.

3. Dip into savings a. Use emergency reserves b. Use funds set aside for children’s college fund c. Retirement funds or inheritance

4. Borrow and use credit a. Second mortgages b. Use of credit cards c. Borrow against cash values of life insurance

5. Withdraw from social activities a. Can’t afford to participate fees, dues, or admission can’t afford clothes that look nice b. Shame prevents one from participating

Social or Community Impacts • Fewer farms translates to fewer farm families • consolidation of rural organizations and institutions, e.g., schools and churches • revenue declines among businesses that serve the needs of farm families • Multiple job holding • more part-time farming • less time for community activities

Number of Iowa Farms Thousands 250 211 208 206 190 200 154 150 124 115 97 100 91 50 0 1920 1930 1940 1954 1964 1974 1982 1992 Agricultural Census Data

Percent Farm Population, 1940–1990 Percent 50 40 36 30 30 25 24 20 18 20 14 13 10 9 10 5 2 0 1940 1950 1960 1970 1980 1990 U.S. Iowa

Over last 5 years % Increase Perceptions of Stress Personal level of stress 57 Concern about stress 45 On a day-to-day basis 44 Among neighbors 81 Within own family 53

Adjustments in Family Living % Yes Shopping at discount stores 71 Switched to generic drugs 61 Buying more used merchandise 52 Avoiding name brands 51 Cut back social activities 51

Adjustments in Family Living (continued) % Yes Postponed household purchase 47 Cut back charitable contributions 45 Family member taken off-farm job 37 Used savings to meet expenses 36

Adjustments in Family Living (continued) % Yes Delayed retirement 33 Working more over-time 28 Started home-based business 12 Expanded farm 21 Using more credit 23 Postponed medical care 21

Is the current problem acommodity price problemor a farm income problem?

Making the Distinction BetweenPersonal Problems and Social Problems When one farmer has financial problems, we can conclude that this is a personal problem. When an entire group or class of individuals have financial problems, we should conclude that this is a social problem.

Witness the loss of 5 million farms since 1920 (6.8 million in 1920 to 1.9 million in 1997). Rather than recognize the failure of5 million farms as a social problem, policies were based upon the belief that this was a personal problem and sought ways to improve individual farm management skills.

Rather than recognize and address the deficiencies in the structure, conduct, and performance of the farm economy, agricultural economists adopted an orientation that focused on individuals rather than group behavior (psychological approach).

The prescription for the farm ills during the past 70 years was to emphasize individual adoption of new technology with little or no regard to implications for farmers as a group.

Those who failed to accept this prescription were labeled as social deviants • Laggards • Luddites • Romantics • Radicals • Consumerism • Tree-huggers • Environmental wackos

Rather than emphasize what farmers as a group might do to raise prices and improve their collective situations, historic (traditional) policies pushed individualistic approaches.

And even worse, any attempt to address farm problems through group or collective action were labeled socialistic.

It is rather ironic that group action that resulted in clearing land of trees, draining swamps, erecting barns, organizing rural schools, and other group action were generally not defined as socialism, but when farmers sought to organize themselves to achieve a better price, they were generally labeled as socialistic.

Production Costs Commodity Prices Attempts to DecreaseSustainable FarmingIPM, ICM, BMP Attempts to IncreaseFutures, Hedges, OptionsCooperative Action

During low prices—farm crisis: It is not possible to squeeze the cost of production enough to generate a profit With the glut of commodities, it is not possible for an individual or group to significantly raise commodity prices through traditional strategies…

Historically, farm policy has dealt with commodity prices rather than farm income. Based upon some assumptions about the relationships between commodity prices and farm income. Given the ineffectiveness of the commodityprice focus over the past 70 years, maybe it istime to shift focus to farm income.

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

Characteristics of the Old Commodity System • Production of homogenous bulk commodities • Standardized production systems • Focus on volume, scale, size, and efficiency • Large scale production, transportation and processing • Impersonal and indifferent to individual needs and niches • Food viewed as fuel

Sharp distinction between producers and consumers • Product was produced and then sold through some market structure that may or may not be regulated and fair to all parties • Buyers and sellers are adversaries—each looking out for their best interests • Focus was on individual whether it be a person, farm, or firm

Emerging Characteristics of a Food System • Designer commodities, crops grown for specific end uses • Explosion of new crops and products resulting from biotechnology • Emphasis on batches, small niches • Focus on food safety and quality • Food shopping and eating as a social experience

Linkages between producers and consumers • Crops grown under contract to meet expectations of buyer • Product is specified, terms negotiated, produce is grown, and then delivered • Buyers and sellers are partners • Focus on group, network, coalition

Why are transitions hard? • Social and economic change are not neutral processes • They produce gains for some and losses for others • How to cope with losses

Loss • Decline in financial security • Loss of status • Stigma/Labeling • Separation/Identity • Feelings of unfairness • Guilt—self-blame • Feeling 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—not alone • Offering hope—there will be another day • Keeping losses in perspective • Balance is important

What Services Are Needed? Short Run 1. Income assistance a. Job placement b. Transfer payments c. Insurance—especially medical care

2. Family budgeting/financial management 3. Develop responsive networks a. Need to be able to identify those in greatest need (targeting) b. Remove or reduce stigma associated with asking for help c. Need to guard against callousness

d. Need to become “proactive,” shouldn’t just wait on clients to “appear” e. Need to develop expertise in directing clients to resources f. Referral networks are key

Longer Run 1. Return to community development focus 2. Social capital (building caring communities) 3. Strengthening the art of neighboring 4. Place focus on people, not production

5. Emphasize the values of cooperation and community rather than competition and individual 6. Need to broaden understanding of how global conditions impact local situations—policy perspective

From Boom to Bust to Boom to ??