Anatomy of an American Agricultural Credit Crisis

In the early eighties, the unthinkable began to happen to the farm sector and its financial institutions. The outlook for commodity prices and farm income worsened abruptly as an export boom collapsed with little warning. Most farmers had just experienced their most prosperous decade ever and were relying heavily on credit to continue the rapid growth of their income and wealth. As it became increasingly hard for farmers to repay their debts, the financial trouble spread to financial intermediaries with significant involvement in farm lending: commercial banks, some of the larger life insurance companies, and the Farm Credit System. It turned out that the downward spiral of the farm credit crisis had reached bottom in 1986, as judged from farm loan delinquency rates and farmland prices. A remarkable recovery ensued, based in large part on huge government income payments to farmers and further aided by the restoration of order to the operations and viability of the Farm Credit System. The story of these tumultuous years of boom and bust is vividly presented in this book, by analysts and administrators who were immersed in the unfolding events and engaged in studying, devising, or administering governmental policies and actions.