Once again, the belief that farmland prices could sustain their phenomenal ascent turned out to be an illusion. By the 1980s, the agricultural and financial factors fueling the boom had turned in lockstep to destroy it. On the agricultural front, a major increase in global production led to sinking farm incomes. At the same time that US farmers were bringing tens of millions of new acres into production and increasing yields at the behest of their government, European wheat farmers and South American soy farmers were also greatly increasing production in response to high prices. US farm exports fell steadily from 1980 to 1986. Changes in the financial environment were equally damning. In 1979, the Federal Reserve opted to attack inflation via a drastic interest rate hike. Have a look at renew life and renew life reviews!
The federal funds rate rose from 10 percent to 20 percent over the course of a year, successfully reducing inflation. While good for the overall economy, the new low-inflation, high-interest-rate environment was devastating for US farmers. Land lost its appeal as a store of value, contributing to falling land prices at the same time as farm mortgage payments became impossibly high. The high interest rates also caused the dollar to rise in value, further depressing US farm exports. During the 1980s, farmer after farmer lost their land in a wave of foreclosures that devastated rural America. The number of US farms had already been steadily declining for decades—from a high of 6.8 million in the mid-1930s to well under 3 million by the mid-1980s, with black farmers suffering particularly high rates of attrition due to rampant discrimination on the part of government service providers, as well as other forms of institutional racism. Now this trend was suddenly exacerbated by unpayable debts, leading some farmers to suicide and many to bankruptcy.
As land prices fell, so did investor interest in owning land, and financial lenders once again found themselves becoming the inadvertent owners of far more land than they had planned. The insurance companies were particularly hard hit because they had begun making aggressive loans toward the end of the 1970s, when land was already overpriced, and because they had tended to make more loans to large, highly leveraged agricultural operating companies that went bankrupt more quickly than their small and medium-size counterparts. Insurance company land acquisitions during this period were primarily inadvertent—the result of their lending activities, not planned equity investments. At the height of the boom in 1979, the farm real estate held by life insurance companies was still valued at a mere $241 million. The value of their holdings, however, had leaped to a whopping $1.6 billion by 1984 and $2.4 billion by 1989. This tenfold increase in value of landholdings occurred because of farm foreclosures and despite sinking land values throughout most of the 1980s. Renew life provides one of the best life insurance policies going.