Why This Farm Downturn Isn’t Another 1980s Crisis

It’s been a tough few years for farmers facing high input costs, low crop prices, and weaker farm income. Whenever the ag economy is in a prolonged downturn, it’s common to find someone asking if this is another 1980s farm crisis. At the Iowa Farm Bureau 2026 Economic Forum in Des Moines, economists said today’s pressures are real, but the situation is not the same as the ‘80s.

“We are in the third year of a multi-year downturn,” said Dr. Christopher Pudenz, economist with the Iowa Farm Bureau. “Things are very uncertain, and we don't know what the future looks like. It's not the 1980s, but uncertainty is at some of the highest levels perhaps you guys have seen in your careers.”

1980s farm crisis

The 1980s farm crisis was a devastating time for rural America. According to the American Farm Bureau, inflation climbed as high as 19%, land values dropped 7.3%, and the global economy slowed.

Together, those pressures made it difficult for farmers to repay debt. By the end of the decade, an estimated 300,000 farms defaulted on loans, and more banks failed than during the Great Depression.

40 Years of Perspective

Dr. Chad Hart, agricultural economist with Iowa State University, said a major factor that’s different between now and the 1980s is farmers aren’t carrying as much debt.

“Debt that's being collateralized on that agricultural land, that ag land is holding very strong. So, we're still seeing that value there. This is more of a cash flow problem,” Hart explained.

RELATED: Access to credit could get easier with this Small Business Administration initiative.  

Cash flow on the farm and ranch

Pudenz explained how that cash flow problem could turn into a solvency problem. “If you don't have enough money in your checking account year after year after year, eventually the wise thing to do is to tap into your retirement account,” Pudenz said, “And in farming, that looks like tapping into assets that could lead to a solvency issue. So, it could lead to more bankruptcies if you have this liquidity issue year after year after year.”

Farm economy in the early 21st century

Hart compared the situation to the weak farm economy producers faced 10 years ago. Back then he was asked the same question, “Is this the 1980s?”

But looking at the data, agriculture found ways to hold steady on financial ratios despite income being weak.

“When you look back to the 1980s,” Hart said. “I would argue it was because in the 1970s, the land market got sort of disengaged from the ag market itself. That land took off when ag was not having good incomes.”

Access to credit

After the 1980s, Congress created programs aimed at supporting farmer access to credit and helping distressed operations according to Dr. John Crespi, director of the Center for Agricultural and Rural Development. That way if a crisis ever came again, it wouldn’t be as devastating.

Crespi said, “Some of the farm policy tools that were created in that subsequent decade are now in place. So, both policy-wise and debt-to-asset-wise, farmers are in a better place.”

Rules were tightened and lawmakers made changes to lending approaches for farmers.

Hart said these were preventive measures designed to avoid another 1980s Farm Crisis. Additionally, farming saw significant changes in the last 40 years. 

Farmland capitalization

“It was a lot of sweat equity to build yourself in,” Hart said. “Now it's much more capitalized. But because it's much more capitalized, we're much more sensitive to whether that farmer gets into significant debt. That's why we spend a lot of time looking at that debt-to-asset ratio.”

Hart said farmers and lenders have become more active in making sure there is not a solvency issue. They want to control the cash flow before it becomes a problem. 

Crespi said there is still a wild card of uncertainty that comes into play. “And that's my fear for right now is that a lot of people are going, ‘I honestly don't know what I should be planting or raising right now.’”

The economists agreed overall there’s a difference between the conditions today and the 1980s. Farmers now tend to have stronger balance sheets as well as access to more tools and stronger safety net programs.

However, economists warned that factors can change, and advantages might erode if recovery takes too long.

Pudenz said it’s important to be cautious. “We're three years into this at this point. In a few more years, we could see more issues,” he warned

RELATED: This was the early projection for 2024 for farm income when the year began.