OT - 1980 Grain Embargo - Would Things Be Different Today???

My Wife and I were talking and somehow the 1980 grain embargo put in place by the US, the timing of it and the hardships of the ag industry of that time.

How did the embargo impact farmers, industrial giants like IH, JD, MF, Ford, White - the industry as a whole.

Had the embargo not have happened, would Harvester had made it and still be with us today as IH vs CaseIH? What about other tractor and implement manufacturers?

Was the effect devastating to the family farm - pushing many out of business and off the farm?

Would the rise of corporate farms and BTO's have come about - or were they here and/or on the way at the time?

Did the embargo create or accelerate the rise of global competition, such as in Brazil?

Did the embargo just accelerate the arrival of today's ag business landscape as we know it or could it have been avoided?

Just curious as to your thoughts of the embargo and it's fallout - especially those of you that lived through it.

Thanks!
Bill

It was a dark time,I remember that. If I remember right,the CBOT closed for a few days to stop the sell off. I think it hastened the end of White Farm Equipment for sure. They were already in bad shape and that was the last nail in the coffin. I was I the dairy business at the time,so I was slightly insulated from it,but I was doing some cash cropping too.

Big AG was coming or already here ,just one more nail in the coffin for the small farm , and many farm equipment companies. There have been no clear winners , but many losers.

"would Harvester had made it and still be with us today as IH vs CaseIH?"

The "CASE and "IH" that came together to form CIH are BOTH long gone.

Just be honest and call today's company "FIAT".

IH had a lot of problems that predated the embargo but the embargo plus the recession of the early 1980's eliminated any chance of a turnaround. The heavy truck business depressed at the same time as agriculture severely impacting IH's income. As others have said consolidation was going to happen regardless due in part to farm size increasing. The popular idea before Case came along was that Ford would buy IH but I have my doubts if that was going to happen. Ford was not doing well during the early 1980's but yet bought New Holland although at a much smaller cost than IH. The other predicted hookup that did not happen was Allis Chalmers buying New Holland. A lot of people then predicted that Case would just eliminate agricultural equipment plus tractors and focus on the industrial end.

I cant think of a more destructive thing for the American Farmer. The ones who were lucky enough to hold on....well a lot of their children left the farm and ain't coming back. This helped BTO get rolling. The embargo was aimed at the Russians in....wait for it....Afghanistan. Russians claimed they were fighting nnalert terrorists sound familiar? When the embargo didn't work, we boycotted the Olympics.....dumb

Don't forget there was also a huge drought that year too. I was working for the local J I Case dealer. We survived that summer by buying old 6 cylinder cars and trucks, taking out the motors and converting them to propane for irrigation power units. I can't remember how many we sold but it was about 1 a day maybe more. The impact wasn't fully felt around here until '83 when we had another extremely dry year.

Why don't we just call it CNH as you can purchase CNH stock on the NYSE.

Fine with me. However, the OP called it Case-IH, which is kind of misleading to those who don't know it is actually FIAT dba CIH.

There was a lot more than the grain embargo that affected companies like IH and the family farmer too. Lot of farmers had loans that rolled over every year. One year they were at 7.5% and the next year 19%. back then the fed decided that credit was bad and they raised interest rates to get people to stop borrowing. That meant they were not buying either. That includes tractors and implements too. Then there were new fed rules on things like dairy that would cost some old farmers a bunch. They tossed in the towel. A heck of a lot of farm kids in the 60's and 70's said the heck with this city living is the life for me! So the decision to quit was easy. Can't afford the mandated improvements plus all the kids left for a 5 day a week 8-5 job. Lot of small dairy operations here went under.

IH was in trouble before the embargo. That plus the embargo plus an ill timed strike were the end for them.

Rick

Ag prices run in a cycle and there is always something to blame when the prices drop but that's the way it always been, prices slowly build up to a peak and then drop very quickly
about a sure a thing as the Sun coming up in the East and setting in the West.But there are always some that say the famous words "Its different this time".

You are asking a complicated question. I would echo the others in that there were many factors. The 1980 grain embargo, if I'm not mistaken, was only against the Soviet Union. (Others need to confirm this detail). Nonetheless, they were a big customer at the time.

It was not unprecedented- Nixon had closed the ports to all grain exports early in the 70's to "curtail inflation."

Nixon's trade deal was at the beginning of "good times" in ag, and Carter's Grain Embargo at the end.

Since then, both parties have been wiser to foreign trade, and this has been good for ag. The bigger issue lately has been currency values- yes, other things too, but how much we export has a strong correlation with the value of the $. The recent commodities boom was fueled by a low $, willing customers in asia with strong economies, world-wide weather issues, ethanol becoming mainstream in the US, and a host of other things.

As for what caused the BTO's, it wasn't the embargo (that hurt everybody, big and small). It had more to do with farm policy, crop insurance, the want to spread fixed costs by some and the want to get out by others. It has been that way for a long time, and in a lot of different industries. There are currently only about 6 major railroads in North America, where in 1950 the number would have been closer to 100. Auto maker numbers have declined; oil companies, coal companies, retailers, etc. We are not alone- perhaps we are better off than many industries.

I make my living farming. Our paycheck comes from the sale of milk, cows, calves, corn, soy, wheat, and we have added a value added product- cheese. I am disappointed that most major candidates for president today (both sides!) seem bent on trade disruption. That scares me. We do not need to repeat the 1980s. Or the 1930s.

Thank you for asking a hard question!

I think to an extent we are heading toward those times again. Future candidates across party lines seem to have forgotten where their food came from.

I was talking with a former IH dealer and he told me that IH had a powershift ready in 76 for the 86 series tractors but didn't have the funds to put it in action. That tells you their struggles back that far.

During the 80's what kept us afloat was putting our grain into our hogs. Finishing hogs was gold then and kept us going and we didn't have and debt other than the car.

I'm in the hog game and am adding to the cattle I already have (100 head). Diversifying will be king again. 1000 acres of row crop isn't the asset it used to be.

in my opinion the union strike the year before the embargo was what stared IHs decline. we had ih tractors and with the exception of the blower chopper picker and plow every thing else was kewanne gehl or new holland. one of IHs warehouses in illinois was union and i remember cringing every time the parts man said something had to come from there. i brought the picker home from the other farm that summer and barely had it ready by harvest it sat in the shed all summer waiting for parts. a few years later my dads farm was chosen by the local cannery for trials of the first selfpropeled pea combines. i was talking with one of the company reps about engines he told me that they wanted IH engines but with the stike they couldnt get any so they used deere instead . i think a lot of farmers switched for the same reason.

The unions also broke Allis Chalmers.

It really was not much of an embargo, there was an exclusion for 8 million tons previously guaranteed from an earlier treaty. The embargo only lasted from Jan. 1980 until April 1981, 1979 and 1980 had record numbers of cattle on feed and record cattle prices, feedlots took the extra grain but when the cattle market slipped in 1981 grain prices crashed. The US may have lost market share with the Soviets during the embargo but actual grain prices did not fall until the harvest season after the embargo was lifted. What is really interesting to me is the fact that Jimma, the sunday school teacher president, is the only president in modern times who was willing to use food as a weapon which is exactly what we should be doing to squeeze the arabs. Saudi Arabia uses ''market share'' as an excuse to manipulate the oil markets, we will soon see $150.00 oil as a result of the latest artificial flooding of the market but this time when US producers step in and fill the gap and drive the price back down to a reasonable level there will be agreements in place to prevent the current type of crash that has the industry on its knees, we will then have a steady supply of affordable energy, then the goat smellers and desert dwellers can eat sand sandwiches.

(quoted from post at 18:18:55 04/17/16) I think to an extent we are heading toward those times again. Future candidates across party lines seem to have forgotten where their food came from.

I was talking with a former IH dealer and he told me that IH had a powershift ready in 76 for the 86 series tractors but didn't have the funds to put it in action. That tells you their struggles back that far.

During the 80's what kept us afloat was putting our grain into our hogs. Finishing hogs was gold then and kept us going and we didn't have and debt other than the car.

I'm in the hog game and am adding to the cattle I already have (100 head). Diversifying will be king again. 1000 acres of row crop isn't the asset it used to be.

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Another thing is that IH was in the truck biz. The trucking biz was deregulated, and the demand for trucks went down.

(quoted from post at 19:50:11 04/17/16) It really was not much of an embargo, there was an exclusion for 8 million tons previously guaranteed from an earlier treaty. The embargo only lasted from Jan. 1980 until April 1981, 1979 and 1980 had record numbers of cattle on feed and record cattle prices, feedlots took the extra grain but when the cattle market slipped in 1981 grain prices crashed. The US may have lost market share with the Soviets during the embargo but actual grain prices did not fall until the harvest season after the embargo was lifted. What is really interesting to me is the fact that Jimma, the sunday school teacher president, is the only president in modern times who was willing to use food as a weapon which is exactly what we should be doing to squeeze the arabs. Saudi Arabia uses ''market share'' as an excuse to manipulate the oil markets, we will soon see $150.00 oil as a result of the latest artificial flooding of the market but this time when US producers step in and fill the gap and drive the price back down to a reasonable level there will be agreements in place to prevent the current type of crash that has the industry on its knees, we will then have a steady supply of affordable energy, then the goat smellers and desert dwellers can eat sand sandwiches.

Click to expand...

Won't work now. The US only grows about 45/46% of the world food today. Not like back in the 80's when we produced 70%. Now they can just source it from elsewhere.

Rick

Being it was the second grain embargo in less than 20 years, the rest of the world stood up and noticed, the USA uses food as a weapon/ for political gain.

Brazil was soon developed by outside investors to be the new soybean source for the world, and the USA was avoided as a grain source when possible. Part of that was ecconomics of the world, but part of it was no one wanted to rely upon the USA as their only source of food ever again.

Paul

Cummins tried to by white truck division at the time and the government said it was create a monopoly so the deal fell thru. Internationals truck division was getting cummins engines and were paying after the truck sold.

Had IH played it right the strike was the best thing that could have happened to them. Instead they caved and immediately went to full production and put out a massive amount of equipment that sat on dealers lots for years. They could have gone into the "farm crisis" with very small inventories and an already reduced work force. Instead with massive inventories and paying 20%+ interest as the equipment sat unsold they did the exact opposite of what would have worked.