Agricultural Programs Adjustment Act
of 1984
Legislation that froze target price increases provided for in
the 1981 act; authorized paid land diversions for upland cotton, rice, and feed; and provided a wheat payment-in-kind
(PIK) program for 1984.
Signed into law on April 10, 1984, this overhaul of the federal crop program sparked controversy between the administration of President Ronald Reagan and members of
Congress from the farm belt. With Reagan’s approval, Senator
Robert Dole (R-Kansas) and budget director David A.
Stockman negotiated in private sessions to lessen federal
spending by freezing target prices. However, farm groups lobbied for more aid to help with the recovery from the previous
year’s drought. With the exception of certain wheat interests,
no one felt satisfied with the bill.
The act froze target prices so that the federal government
paid farmers the difference if crop market prices dropped
below a certain level (for example, $4.38 per bushel for
wheat) over the next two years. It also maintained 1985 target levels for corn, cotton, and rice and authorized an acreage
reduction program in which wheat farmers would take 20
percent of their land out of production to qualify for farm
program benefits such as loans and price supports. A wheat
farmer could receive compensation if he or she retired another 10 percent of his or her land. A farmer could set aside
up to 20 percent more land and receive surplus wheat certificates (PIKs) at a rate of 85 percent of the expected yield. The
hope was that this would lessen the nation’s wheat surplus
and increase prices well above target prices.
The law also stipulated that lenders value farm assets
used as collateral for emergency disaster at their value prior
to the disaster. Direct loans for economic emergencies such
as drought, flooding, or falling land values increased by
$250 million in 1984, providing farmers with $600 million
in total loans ($310 million for direct loans and $290 for
guaranteed loans). The secretary of agriculture made emergency loans available to farmers in counties touched by disaster. The ceiling on Farmers Home Administration (FmHA)
farm operating loans increased from $200,000 to $400,000.
Finally, the act required the lowering of the interest rate for
the balance of rescheduled FmHA loans and the extension
of the time period for repayment from 7 to 15 years. As
awareness of the 1980s farm crisis deepened, subsequent
legislation changed many components of the law and
destroyed President Reagan’s notion of withdrawing federal
support of agriculture.