Most of my clients were small and mid-sized farmers who had borrowed from the Farmers Home Administration (FmHA), a lending agency of the US Department of Agriculture. In 1981, under the direction of Reagan’s budget director, David Stockman, FmHA began an aggressive campaign of “reducing delinquencies” that was ostensibly aimed at reducing the federal deficit. In order to meet delinquency reduction goals (“quotas”) set in Washington, FmHA bureaucrats in small county seats throughout the country began to shut down and force out thousands of farmers who were behind on their loan payments. In 1978, Congress said farmers had the right to apply to FmHA for a deferral of payments if they were behind due to circumstances beyond their control, but FmHA simply ignored the deferral law.
My clients in North Dakota received notices that their loans had been “accelerated”—that the debt they thought they had decades to repay had to be paid in full in 15 or 30 days. They were told they had to pick one of two options: “voluntarily liquidate” or “be shut down.” If they didn’t quit “voluntarily,” FmHA used ruthless methods to starve them out. FmHA seized all of the farmers’ income from sales of crops and milk and emptied supervised bank accounts, leaving nothing for living expenses for the farmers or feed for their livestock.
It took agriculture economists years to acknowledge the ‘80s farm crisis.
The advocates on the ground recognized how bad it was long before the economists collected and analyzed the data that “proved” that hundreds of thousands of farmers were sinking.