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By the time Congress got involved in the mid to late 1980s many felt it was too little
too late. By then the damage was largely done. Still, Washington's response brought about
some of the most profound policy reforms the agricultural sector had ever seen.
John Block: I was absolutely in tune with President Reagan's agenda and he wanted less
government and less taxes and I supported that and I was willing to make cuts in farm
programs sometimes, in food programs. President Ronald Reagan: We're doing a great
deal to help farmers but I have pleaded and warned repeatedly that just as your families
don't have a blank check for whatever your needs may be neither can government, and that
means taxpayers, bail out every farmer hopelessly in debt or every bank which made imprudent
or speculative loans and bet on higher inflation. Senator Tom Daschle: So you had a philosophical
chasm really between those who believed the government's role should be limited if not
completely non-existent and those who really felt that at times like this you needed the
government to create the kind of stability and the kind of certainty and the kind of
framework necessary for survival. That clash occurred in public policy debates for months
and months. Some key pieces of legislation from the 1980s
included the Food Security Act, more commonly known as the 1985 Farm Bill. It allowed for
lower commodity price income supports and created several conservation programs. Then
in 1986, Congress introduced Chapter 12 Bankruptcy. Senator Charles Grassley: For the same reason
that if you had to have a special law for farm bankruptcies in the 1930s I thought it
was legitimate to have a special law for farm bankruptcies during the 1980s. And I think
it did serve and now it is a permanent part of the tax code.
And in 1987 the Agriculture Credit Act authorized a $4 billion financial assistance package
for financially vulnerable institutions of the Farm Credit System.
Senator Tom Harkin: Basically what we did, it's simple, simple language. As we said to
the farmers with all this debt and they were paying these high interest rates leftover
from the early 80s and the late 70s, come in, we're going to restructure it, we'll buy
back your loans, those debts, we'll stretch it out over 20 years and we'll give you a
lower interest rate. Basically that's what happened, we just restructured all those loans.
And then we gave the Farm Credit System enough money to be able to do that. And that stopped
the bleeding. Of course by that time a lot of people said it was too late for them because
a lot of them had already been thrown out of agriculture. So we did lose a lot. I wish
we could have done it earlier. But the forces just weren't all lined up to do that.
While President Ronald Reagan said he wanted to bring a market oriented approach to farm
policy, his administration ended up expanding federal involvement in American agriculture.
In fact, Reagan's farm programs cost more than the combined farm expenditures of every
president from Franklin Roosevelt to Jimmy Carter.