The ’80s Farm Crisis vs. the Coming Farm Crisis

My uncle Gerald was widely known as one of the best farmers in Victoria County, Ontario.  He had five men working for him and they said that he did the work of five men himself.  Gerald had a photographic memory and a knowledge of farming that few could rival.  In the late ‘70s he took on a lot of debt to aggressively grow and when the ‘80s farm crisis hit, he knew others would be in trouble but couldn’t imagine himself to be one of them.  He had been through the ups and downs of agriculture and thought it was just part of the game.  When other’s felt overwhelmed and got down on themselves, his philosophy was to work harder and everything would work out in the wash.

Gerald thought the markets would turn around.  They did, but not in time to save his farm.   

I was eight on a very hot day in July of 1983 and remember being stuck on the side of the road with a flat tire. My dad was on the way to his big brother’s auction sale with a tractor.  I forget what else he was selling that day, but I remember that Gerald needed to sell that tractor, a throw baler, and two wagons to make bank payments.  I remember Dad having me lie underneath the wagon for fear of me getting heat stroke and Dad cursing that he should be baling hay himself that day instead of dealing with Gerald’s problems.  Gerald eventually showed up (there were no cell phones to communicate) and Gerald was livid at my dad for the flat tire.  We eventually got to the sale, but the auction was over.  I don’t know if not getting to the auction on time and not being able to make bank payments was the start of his unravelling, but a year later Gerald declared bankruptcy.  Gerald hadn’t changed what he was doing, until it was too late and the cards were stacked against him.  

Not only did Gerald lose the farm, but he lost his wife through a divorce, he lost contact with his kids, and his siblings and family essentially disowned him for ruining the family name.  I had only seen Gerald a few times in the decade after, but he was basically a guy who lived out of his truck, splitting firewood for cottagers. He lost his self-worth and his identity as a farmer.  He did not take care of himself and he lost his health to diabetes.

After losing the farm, Gerald, one by one, lost everything that ever meant something to him.

In 1995, Dad started asking friends if they had seen his brother and as people shook their heads he began to get concerned.  A year later, without hearing of his whereabouts, I remember vividly driving to college and the newsman on our local country music station reported a body was found in the lake.  I don’t know why, but the hairs went up on the back of my neck and I knew it was Gerald. I immediately turned around.  

My instinct was right, but we had to use dental records to identify his body.  Which also meant we couldn't have a normal funeral for my uncle. I remember my dad Dad was tearing apart our house the day of the funeral trying to find something to show for his brother’s life.  Gerald’s ex-wife had burned all of his pictures and Dad was suddenly upset because he realized there wasn’t a single photo of Gerald, except him standing behind someone in a group photo at a family picnic.  My dad was in tears. With a big age gap, Gerald had essentially raised his little brother on the farm and taught him everything that he knew.  

I had remembered in the fence corner of my family’s farm, there was an old, ugly, Smurf-blue cattle truck that had “Gerald Junkin, Lumber and Cattle” painted on it.  I ripped it off its hinges, threw it in the back of the truck, and took my sobbing father into town.  The church was packed and everyone was shocked when Dad put the rusted-out door where a coffin should have been.  After working his butt off from dawn to dusk his whole life, that was all that was left of a man everyone in that church respected.  

It said everything that was wrong with that situation.  

When the toast hits the floor, it doesn’t always land butter side up.  Gerald was smart and extremely hard working.  Our family had founded the town of Bobcaygeon in Victoria County and he represented everything good the family was known for.  His only fault?  Thinking someone else might go broke, but it would never happen to him.  

Why am I telling you this story?  Because it could happen to you.   You must assume that it will. 

Hope for the best but prepare for the worst.

As farmers, we get out of bed each day of our lives and go out to feed cattle.  Telling a farmer that those cows won’t be in that barn within a year, is like telling a farmer that the sun won’t rise.  It’s a reality that is hard to comprehend.  

You may come from a respected family and have one of the most successful farms in your county.  But if your cost of production is higher than what the markets are paying you…you’ll bleed and eventually die.    

Every farm crisis is different, and we are experiencing circumstances that are plain bizarre.  The nation is going through a crisis that nobody could have imagined and if 30% of the workforce is standing in bread lines within two years (like predicted by many economists), there may not be the sympathy for farm subsidies. 

Without Trump’s subsidies over the past five years (crunch the numbers), could you have survived?   

Hopefully, commodity prices double next week.  But what happens if this is as good as it gets?  More importantly, if commodity prices have dropped by half in the past five years…we’ve got to ask ourselves, what happens if this downward trend continues.  Interest rates rise?  What happens if China continues to play games?  If crop prices went down by just another 10%, where will you be in 2023?  

I’d suggest you answer that last question right now. Assume today’s low commodity prices stick around for the next three years, run a three-year pro forma cashflow statement and ask yourself if you are still solvent in Dec 2023.  If not, you’ve got to do whatever you have to do today in order to still be solvent in 2023. Don’t be like my uncle Gerald and wait until it is too late. 

I’m not telling you this story out of disrespect to Gerald or my family.  Quite the opposite.  For the past decade, I’ve lived to save family farms to honor my uncle Gerald and good men like him.  I’m telling you this story so that your family doesn’t experience his fate. 

To survive this upcoming crisis, the first thing you have to assume is that you are the underdog and you must do everything you can to survive a worst-case scenario.  You need to rethink everything!  

You can be like Gerald and ignore reality.  You can just ignore the problem and just put your head down…working harder.  But trust me, you don’t want to find out the hard reality that Gerald learned.  

You want to face the facts, change your course of direction and still be farming in a decade.