This is a cyclical phenomenon in the swine industry. The low crop prices are a result of consecutive years of high yields coupled with slow export demand due to the Asian crisis. The next drought in the corn belt will bring an end to low crop prices. There were limited options available for managing financial risk during the last farm crisis. The use of crop insurance and futures contracts was much lower than it is in the 1990s.
Today there are many more alternatives available on crop insurance.
Also, options on futures contracts were not available until 1985 and have not been widely used until just recently. Lender Reaction Lenders were quick to react with threats of foreclosure during the 1980s farm crisis. From their perspective, the problem and the solution were obvious. The problem was that farmers could not service their debt load. Since the extremely high interest rates were causing the debt load to grow rapidly and were also causing the farmer's asset values to decline, the solution was to sell assets to pay down debt, the sooner the better.