The Economics of Agriculture

Any Iowa farmer could summarize farming this way, "There are good years, and there are bad years." Throughout the state's history, farmers have experienced highs and lows when it comes to their production success and the prices they get for their crops and livestock. It's a risky business. 

Early Ups and Downs

Pioneer farmers in the mid-1800s came to Iowa because they heard about the rich soil. At first they used everything that they raised. Within a few years they raised enough crops that they could sell what they didn't need. The Civil War (1861–1865) years briefly brought higher profits. But in the 1870s, the entire United States—including Iowa—was affected by an economic depression. Then 1894 and 1896 were drought years. 

World War I Brings Prosperity

In general the early years of the 20th century were times of prosperity for farm families. The height of agricultural prosperity came with the outbreak of World War I in 1914. Iowa farmers borrowed money to buy land and equipment as they increased production to help supply the war-torn countries and the troops with food. Iowa farmers grew more corn and oats and raised more hogs, horses and cattle during the war years.

When the war ended, agricultural prosperity ceased. Many farm owners, in debt for lands and equipment purchased during prosperous years, were unable to pay when loans came due. They lost their farms through bankruptcy. 

The Great Depression

Economic stress continued, worsened by the depression that enveloped the entire nation after 1929. For many years, it cost more to raise the crops than the farmers were paid when they sold them. Some relief came in 1933 with the change in national political leadership. Government became involved in agriculture as it never had been before. The government made loans to farmers, and bought surplus farm products. 

Another World War

World War II marked the beginning of economic change. Farms became fully mechanized as they once more geared up to supply food for American fighting forces and their allies. Prices for farm products increased with the demand. 

After the war ended in 1945 and as the country adjusted to peace, the farm economy was again affected. By 1953 Iowa 's economy was again in a recession, which meant low prices. Iowa farmers seemed caught in a contradictory situation. On one hand, new farm technology, the ever increasing use of farm chemicals, and greater efficiency had led to higher production. But on the other hand, these changes had produced greater and greater surpluses, which drove down the price at which they could sell their crops. 

A New Kind of Farmer

By the beginning of the 1960s, it was clear that Iowa farmers had been moving toward a stronger business orientation and greater specialization. This was reflected in the concentration on two crops—corn and soybeans. As a result of these changes, an agricultural official at Iowa State College said a "new farmer" had made an appearance in Iowa. He meant farming had changed and farmers were different than in the past. 

The 1970s were times of real prosperity although the number of farms continued to decline. At the same time, life on the farm became less and less distinct from town life. By 1970, in many ways, farm families lived much like town dwellers, enjoying the same modern homes and communication systems. 

Where Have All the Farmers Gone?

A decade later, however, the good times had vanished and Iowa farmers, as farmers elsewhere, entered into an almost decade long depression. Crisis hot lines and other programs were established to provide support for farm families. By 1992, one major effect of the severely restricted farm economy of the previous decade was the number of Iowa farms had dropped to 96,543. During the 1980s, more than 140,000 people had moved off Iowa farms.

Farm life continues to change in the 21st century. One thing that appears to remain unchanged is that Iowa is a leading agricultural state particularly in the production of corn, hogs and soybeans. The recent trends in biotechnology promise a continued place for Iowa as a leader in food and livestock production. 

Sources:

• The Iowa Heritage: A Guide for Teachers, Iowa PBS, Johnston, Iowa.
• Schwieder, Dorothy. Iowa: The Middle Land. Ames, Iowa: Iowa State Press, 1996.