2022 marks 80 years since Henry “Buck” Stalcup began this business in Storm Lake. Five years ago, we included a 3-part series on the history of the company. Rather than recreate that, we thought a quick review of agriculture’s progress might be interesting.
1942, of course, marked the first full year of the United States’ involvement in the Second World War. War manufacturing had already been underway supplying Europe with material. We think we have supply chain issues today. The war years were a time when raw materials were diverted to the war effort. Everyday items such as steel, rubber for tires, food, gasoline, and most every other item was rationed in favor of the war effort. Even star athletes and entertainers interrupted their careers to contribute to an Allied victory.
Corn prices averaged about 65 cents per bushel from 1920- 1940. Nearly every farm included dairy cows, beef cattle, farrow-to-finish hogs (twice a year), chickens, horses (for power), and perhaps some sheep and other poultry. Oats were threshed and corn was still picked by hand. Going to town as a family was a weekly occurrence. Iowa farmland was worth $100 to $150 per acre in the early ‘40’s.
Post-war was a time of prosperity and growth for rural Iowa. Corn prices averaged about $1.50 from 1946-1955. The baby boom was underway and school buses filled with young faces. This continued through the Korean War in the early 50’s. By the mid-50’s, the interstate highway system was introduced and completed over the next two decades. Where would we be without it? By the early 60’s, school consolidation was underway as most small-town school systems became twotown districts. Country schools pretty well disappeared by the early 60’s.
Tractors became commonplace on farms after WWII. How many farms included a Farmall M and H, or a few “Johnny Poppers”? Farming included moldboard plowing, disking, harrowing, planting with a two-row planter, hoeing, and cultivating several times, including “lay-by”. New cars cost $1,500. The Sioux City Stockyards was a common destination, whether selling livestock or just looking. What a beehive of activity that was! The “smell of money” was not a problem for downtown store owners. Local sale barns were found in every county. Land values during the 1950’s was $200 to $300 per acre.
By the late ‘60’s, tractors were approaching 100 horsepower. They even came with cabs and were well-lighted. Fendermounted radios were a real distraction when Junior raked hay but were needed for Dad to catch the markets. Farmers added “the other place” as they could handle more acres efficiently. Two-row equipment had given way to four and six rows. Corn pickers mounted on tractors and pull-type combines were replaced by self-propelled combines which could harvest multiple crops. Oats were being replaced by soybeans as the need for oats and straw decreased and demand for soybeans increased.
The 1970’s came in like a lamb and out like a lion! Corn prices in 1970 were still in that $1.00 to $1.25 range. Farms included a mix of livestock and crops. By 1974, we’d seen $3.00 and even $4.00 corn with “beans in the teens” for the first time (no one had any left to sell!). 4-wheel drive pickups become popular as farmers could now afford both the pick-up and the gas at 8-10 mpg. Anhydrous ammonia got expensive at $200 per ton!
Hay was still baled in small squares with a crew to put it on the rack and in the barn. Labor was worth $1.00 per hour. By the late ‘70’s, as inflation roared along, farm labor rose to $3 or $3.50 per hour but square balers were replaced by round balers, in part due to those high labor costs.
Land that cost $400 to $500 per acre in the early 70’s became worth $1,500 to $2,500 per acre by the end of the decade, even $3,000 or more in some cases. Inflation raged, spurred by the oil embargo in 1973. The 55-mph speed limit was introduced to save gas. Imported cars that could get 25 mpg suddenly put Detroit in a bad way. Farmers enjoyed their greatest prosperity since the 1910’s (the “parity” era). We tend to forget that interest rates were increased from 4½% in early 1972 to 10% by August 1973 and remained in the 7-9% range during the mid and late ‘70’s. President Nixon referred to economics as “that dismal science”
The 1980’s need no introduction. Hard times did not occur equally for all. Some were suffering by 1980 while others didn’t feel the pain for a few more years. The combined impact of Fed Chairman Volcker’s vow to kill inflation once and for all through high interest rates, plus President Carter’s embargo of grain sales to Russia in January 1980, are given the most press for instigating the Farm Crisis of the 1980’s. Prime rate exceeded 20% in 1980 and 1981, peaking at 21.5% for two weeks in December 1980.
In truth, lending and borrowing practices during the good times of the ‘70’s placed many farmers into over-extended positions once high interest rates and declining asset values took effect on balance sheets during the early to mid-80’s. Uncollectable accounts receivables put many on Main Street out of business. John Deere geared itself toward “one dealer per county” during the ‘80’s. Growth opportunities existed for those in strong financial positions as land values plummeted to the point where a farm would cash flow over 20 years with no money down. When you think about it, how could land values drop any further than that? Iowa farmland sold for $500 to $1,200 per acre by the mid-‘80’s.
Livestock profits in the later ‘80’s helped many farmers recover from the depths of those times. Once land bottomed in 1986 at less than $800 per acre (ISU survey) it recovered to $1,200 by 1990. Sounds cheap, but a 50% recovery in a few years is pretty impressive. The 1990’s saw another round of school sharing arrangements and consolidations as youth moved to greener pastures and farms became larger and less diversified. The hog sector in particular transformed from owner-operated farrow-to-finish or pig finisher operations to large integrated contract confinement operations through this decade. The 1996 USDA Farm Bill introduced “Freedom to Farm”, which eliminated set-aside acres and allowed farmers to plant corn and soybeans to market signals rather than limited to government-assigned base acres.
By 2002, Iowa land values recovered to more than $2,000 per acre. Corn prices languished around $2.00 per bushel (mostly $1.50 to $2.50) but yields kept rising, pushing revenues higher. Government price support payments played a large role in keeping grain farmers afloat during this period. The US corn yield first exceeded 100 bushels per acre in 1978. By 2004, a national yield of 160.3 was posted, shattering the previous record. Average corn price was $2.06 per bushel that year.
Ethanol was the great hope of corn farmers going back to the ‘80’s. By the mid-2000’s, construction of ethanol plants was underway with many more planned. President Bush declared America was “addicted to oil” in his 2006 State of the Union speech and promoted ethanol as part of the solution. By 2007, Iowa farmers were selling corn for $4.00 per bushel instead of $2.00 just two years prior. The “Ethanol Era” was underway. $7 corn was first achieved in July 2008 but fell under $3.00 by December as the global financial crises unfolded. Iowa’s average land value exceeded $3,000 per acre for the first time in 2006 and unbelievably exceeded $5,000 by 2010. Land values dropped only slightly during the financial crisis. National average corn yields were now in the 150’s. Cattle feeding returned to ethanol areas as the synergy of corn, distiller’s grains, and manure makes a powerful and efficient circle of life.
Ethanol demand plus below-average crops in 2010-2011 was followed by a mega-drought in 2012. $8 corn was first seen, with soybeans in the upper $17’s. Optimism abounded along with very low interest rates. Prime rate dropped from 8.25% in June 2006 to 3.25% in December 2008 as low rates were used to stabilize the economy. No change in the prime rate occurred until late 2015, the longest stretch of unchanged rates in 75 years. Land values topped in 2013, then dropped back by 15-20% and held steady until late 2020. Good land mostly sold for $8,000 to $10,000 per acre during this time. Corn yields trended upward into the mid-170’s per acre. Locally, Iowans began to take 200 bushels per acre for granted, and now shoot for 250 and even 300 bushel per acre averages. Soybeans had grown from 45 bushel per acre expectations to 60’s and 70’s per acre.
Today, we enjoy Confucius’ dream, “living in interesting times”. Land values are nearly double from two years ago, interest rates are rising, we are again experiencing very high corn and soybean prices coupled with record-high production costs. We live a lifestyle that our grandparents or great-grandparents could have only dreamed of. Are we better off? You may debate that on your own!
