The backbone of America’s rural economy is the farm. The proposed defunding of the United States Agency for International Development (USAID) could accelerate an agricultural downturn that many farmers are already struggling to survive. While USAID’s primary mission is international humanitarian aid, its role as a major buyer of U.S. agricultural commodities provides a crucial buffer against market volatility. Without this safety net, many American farms could face further hardship if not bankruptcy.
The farm economy is already fragile. Farm incomes have fallen, production costs have soared, and interest rates have made borrowing a challenge. Removing USAID as a guaranteed buyer will only intensify these pressures—potentially lowering commodity prices, driving land values down, and pushing some farms into insolvency.
Although not yet at the level of the 1980s farm crisis, there are, alarming parallels are developing. The 1980s Farm Crisis showed how swiftly financial pressures can push farms to the brink. If USAID funding is slashed, we could see a farm recession worse than any in recent memory.
1980s Farm Crisis vs. Current Farming Climate: Key Metrics
Factor | 1980s Farm Crisis | Current Farming Climate (2020s) |
Inflation/Interest Rates | Inflation peaked at 14.8% (1980); interest rates exceeded 18%. | Inflation peaked at 9.1% (2022); interest rates above 7% (2024). |
Debt Levels | Farm debt-to-asset ratio peaked at 22% in 1985, leading to mass bankruptcies. | Farm debt-to-asset ratio at 14.5% in 2023, highest since the 1980s. |
Commodity Prices | Wheat, corn, and soybean prices dropped by over 50% from 1979 to 1986. | Corn and wheat prices down ~30% from 2022 peaks; price volatility remains high. |
Land Values | Farmland values fell by over 60% in some Midwestern states. | No widespread collapse yet, but land values have slowed or declined in some regions. |
Exports/Global Demand | Strong dollar reduced export competitiveness; grain embargo on the Soviet Union. | Trade tensions with China and shifting global demand create export instability. |
Farm Input Costs | Fertilizer, fuel, and equipment costs surged, squeezing farm margins. | Fertilizer and fuel costs remain elevated; drought impacts input efficiency. |
Government Policies | Limited government support; emergency farm bills introduced but insufficient. | Subsidies like ARC and PLC provide some relief; uncertainty over future farm bills. |
Farmer Sentiment | Farmer suicide rates increased; widespread foreclosures and auctions. | Farmer sentiment near decade lows; rising concerns over consolidation and debt. |
1. Commodity Prices: A Freefall Without a Safety Net
USAID has been a critical buyer of American grain, pulses (ex: lentils, peas) , and oilseeds for decades. By purchasing surplus crops for food aid programs, it has helped stabilize prices and ensured farmers could sell their harvests at sustainable rates. If USAID disappears, where will those crops go?
With no clear alternative market, the surplus will flood domestic grain bins, overwhelming already-weakened commodity prices. Lower prices mean lower revenues, and lower revenues mean disaster for farmers already operating on razor-thin margins.
Historically, when major buyers leave the market, prices plummet. The wheat embargo of 1980 triggered a multi-year collapse in grain prices, leading to widespread farm failures. Without USAID, we could see a similar impact in sorghum, wheat, and pulses.
For many small farms, a 5-10% drop in crop prices could erase all profitability, leaving no room to cover rising costs of equipment, seed, fertilizer, and loan payments.
2. Land Values: The Deterioration of Farm Equity
The value of farmland is directly tied to farm income. When farmers make less money, their land is worth less.
Right now, farmers are already seeing the effects of higher interest rates, which make financing nearly difficult. A downturn in commodity prices could accelerate land devaluation, forcing many farmers to sell just to stay afloat.
Here’s why that matters:
• Farmers use their land as collateral for operating loans. If land values fall, banks will tighten credit, making it harder for farmers to borrow money to plant next season.
• Lower land values increase debt burdens. Farmers who bought land at higher prices in recent years could suddenly owe more than their land is worth, leading to foreclosures—just like in the 1980s.
• Land sales flood the market, further depressing prices. A cycle of forced sales could drive down values by double digits in the hardest-hit regions.
For farm owners counting on land equity for retirement or succession planning, this can be catastrophic. If USAID cuts trigger lower commodity prices, land values will likely follow.
3. Farm Closures: The Erosion of the Family Farm
If farm incomes drop, farm failures will rise.
In the past two years, the number of farms in financial distress has already climbed. Many farmers are operating at a loss, relying on credit stay afloat.
History tells us what happens when government support for agriculture is suddenly removed:
• The Great Depression wiped out a generation of farmers when prices fell below break-even levels.
• The 1980s Farm Crisis saw farm bankruptcies surge over 200% in five years, as debt, inflation, and falling land values crushed farm families.
• The 2018-2019 trade war saw a record spike in emergency government aid to offset collapsing farm exports.
Many farmers today are in no better shape than in those past crises. Many are carrying high debt loads, facing rising costs, and dealing with climate-related challenges. A major loss of market demand from USAID could be yet another straw on an already weakened back.
4. The Economic Fallout: Jobs, Rural Communities, and Tax Revenues
The damage won’t stop at the farm gate. A farm recession means job losses, business closures, and declining tax revenues that will hit every rural town in America.
When farms go under, rural economies suffer.
• Equipment dealers, seed companies, grain elevators, and trucking firms will lose business as demand drops.
• Farm workers and seasonal laborers will see hours cut or jobs eliminated.
• Property tax revenues will decline as land values decline, forcing rural schools and public services to make painful budget cuts.
Agriculture supports millions of jobs, both directly and indirectly. If USAID cuts lead to farm failures, entire rural economies will suffer.
5. What Can Be Done?
Farmers cannot afford to wait and see what happens. If USAID is defunded, the consequences will be swift and significant.
What policymakers must consider:
Stabilizing export markets – If USAID funding is cut, alternative trade deals and domestic demand programs must be in place to prevent price collapses.
Strengthening safety net programs – Expanded crop insurance and emergency relief must be considered to prevent mass farm closures.
Preventing a land crisis – Financial assistance to offset falling land values could help farmers avoid liquidation and maintain credit access.
Conclusion: The Next Farm Crisis Is Knocking at the Door
Defunding USAID is not just a budget cut—it’s a direct challenge to the financial stability of American agriculture. Farmers benefit from predictable markets, fair prices, and stability. Without USAID, the farm economy faces significant challenges leading to a potential downturn that could rival other historical declines.
Farmers and agricultural advocates should act now to seek alternatives.