I. 



THE ECONOMIC PROBLEMS OP AGRICULTURE IN MONTANA 



AN OVERVIEW 



The conditions of the Montana farm economy have 

 seriously deteriorated over the last five years. This 

 problem is evident in the increasing number of farm 

 failures, foreclosures, forced liquidations, and loan 

 delinquencies experienced by Montana farmers. 



The current problem is rooted in the economic 

 events of the 1970's.-^ During the 1970's, farmers in 

 Montana and the United States enjoyed rapidly expanding 

 export markets, high farm prices, low-to-negative 

 interest rates, and rising farmland values. Encouraged 

 by the U.S. Department of Agriculture and local 

 financial lenders, many farmers responded to this 

 situation by expanding their operations and, in doing 

 so, incurred substantial debt to finance the purchase of 

 new equipment and real estate. 



The expansion proceeded throughout the 1970 's. 

 Then, beginning in 1980 and 1981, the forces driving the 

 expansion reversed direction. The factors underlying 

 this reversal included a worldwide recession, an 

 overvalued U.S. dollar, an expansionary federal fiscal 

 policy, and a restrictive U.S. monetary policy. These 

 factors combined to dampen foreign demand for American 



