The 1980's farming bubble taught some hard truths. Did they stick?

[moh malekpour]

http://www.csmonitor.com/Money/2009/1215/What-do-we-really-learn-from-a-crisis

Doug Harford drives his combine as he harvests corn on his farm in Mazon, Ill. Mr. Harford is one of a generation of farmers who learned a conservative economic approach from the disastrous farming bubble of the 1980s.

 

[Terrel L. Shields]

Recall it well. FSA let people cheat them about as often as they cheated FSA. Farm Credit did a fannie mae and tried to go belly up. I remember an old farmer in a coffee shop in 1980 had a check for $1000 per acre ($160,000 for a ¼ section) from an oil company. He was conniving how to spend it so as to avoid taxes. New combine and tractor plus a pickup (got a 10% Jimmy Carter tax credit to boot) Was going to build a grain silo so he could wait out low prices storing it on his own property...and yep, was gonna have to spend $5000 on the kitchen to keep momma happy.
Best I can tell, he blew every bit of it. Bad prices for crops, wore out the equipment, and the farm was worth about ½ what he borrowed against it.
Yep. Didn't have to worry about them taxes no more. nor the money.
He could have paid some debt, put more than ½ in savings, paid the tax. At the same time, a 5 yr. CD was paying about 12% interest or more. He could have put the $80,000 in that, and at maturity pulled out almost exactly what the original check was for. Incredibly when interest rates were the highest, people borrowed the most and saved the least.

 

[murray stroupe]

Re

Not near as many dairy farms as there used to be;
in Tennessee.Still plenty of cattle & row crop land.Notably less farms for sale than houses, or businesses here.

Remember talking to a county agent years ago. He said , you know people always told me I could not go wrong in land[farmland]. But he finally bought at around the peak in prices in the 1980's.

 

[Terrel L. Shields]

H. L. Hunt, the renown oil man, once was confronted by a drunk at a party and asked how it felt to be the biggest gambler in the world. Hunt rebuffed the fellow with a quick, "I'm no gambler." statement and went elsewhere. His son, overhearing the conversation, asked his dad, "Isn't the oil business a gamble?" H. L. looked at him and said, "I've never made a bet where if everything went wrong and i lost it all, I couldn't keep right on going."
Risk, (gambling) is about managing. If you bet things you don't have or things you cannot afford to lose, you are a complusive gambler. People who had $100,000 incomes who bought 3 or 4 houses as "investments" with borrowed money were fools.