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Got mine last week. Interesting story about all of IH's financial maneuvering in the early 1980s by Bob West. Couldn't imagine being on IH's financial team at that time, juggling all the balls in the air at that time. It would be a full-time job just to keep track of it all. And to think that in 1979 , IH looked like it was headed in the right direction making record profits. What a difference a few years make. 

One other thing that isn't mentioned in the article that really hurt IH in 1983 was the PIK program by the US government. Nobody bought any machinery that year as the US was trying to eliminate excess grain stocks by paying farmers to take land out of production. Hard to make money as an agricultural machinery company when something like that occurs...in addition to paying high interest rates on borrowed $$$. That was pretty much the year that you knew IH was not going to be able to fully survive as a company the way it was before all of its financial problems came to a head. You knew something was going to happen...and it wasn't going to be good for IH. It wasn't any better for most of IH's competitors at the time, either. 

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3 hours ago, SDman said:

Got mine last week. Interesting story about all of IH's financial maneuvering in the early 1980s by Bob West. Couldn't imagine being on IH's financial team at that time, juggling all the balls in the air at that time. It would be a full-time job just to keep track of it all. And to think that in 1979 , IH looked like it was headed in the right direction making record profits. What a difference a few years make. 

One other thing that isn't mentioned in the article that really hurt IH in 1983 was the PIK program by the US government. Nobody bought any machinery that year as the US was trying to eliminate excess grain stocks by paying farmers to take land out of production. Hard to make money as an agricultural machinery company when something like that occurs...in addition to paying high interest rates on borrowed $$$. That was pretty much the year that you knew IH was not going to be able to fully survive as a company the way it was before all of its financial problems came to a head. You knew something was going to happen...and it wasn't going to be good for IH. It wasn't any better for most of IH's competitors at the time, either. 

Is that the Payment In Kind program or something else? I thought PIK happened back in the 60s.

 

Mike

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PIK Was payment in kind. I did not start farming until 1978 and I got payed with the PIK after I had more landlords to explain it to so the 80's. That was the days of allotments, and set aside  acres. CRP was the land retirement program (Conservation Reserve Program)that put the hurt to businesses that sold inputs to farmer.  It started in 1985, and another round of sign ups now or real soon.. 

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Geez I could use it. Stupid rotten day, mad at the world, and would like to just read it

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Yes, the PIK program was "Payment In Kind". Now, I was barely a teenager when all that stuff came out and hopefully somebody a little older than me can chime in here with better answers than I've got about PIK.

What I recall about PIK was that the gvmt. paid farmers in grain certificates, not just necessarily a cash payment direct to the farmer. These were called PIK certificates, and were redeemable at many ag-oriented businesses. IH, Deere, all the major machinery companies, had programs that allowed the farmer to redeem these certificates towards the purchase of machinery items. There for awhile, PIK certificates were being redeemed at more than face value....seems like somebody was always advertising they were looking for PIK certificates. Seemed like that program was big in 1983-84, and maybe in 1985 and then faded into obscurity after that. IIRC, the 1985 Farm Bill changed all of that.

Set Aside Program. About that same time, the government was paying farmers to "set aside" or "idle" a certain percentage of farmground in efforts to shrink the grain surplus. Seems like it was 10/15/20% of total farmground was to be set aside, depending on how much grain surplus there was from the year before. In our area, all that ground just got turned into summerfallow, and then would be planted to winter wheat that fall. That next year would see winter wheat yields that were nearly doubled because of the ground being fallowed the year before....almost seemed counterproductive to me. Good, bad, or otherwise, the set aside program allowed me to put a lot of hours on IH 86 series tractors back in those days pulling a chisel plow across bare fields trying to keep the field bare for the summer so it was ready for planting winter wheat that fall. Dad had a 1086 that I ran for many hours doing this, the neighbor we helped had a 1586 that I spent time in as well doing summerfallow. Lots of long days operating an air-conditioned cab with a good radio...those were good times to be a teenager.

CRP. Like ray54 said, the government came up with this program to put a lot of poorer farmground back into grass to help eliminate the grain surplus of the 1980s. Around here that program was highly controversial. First off, there were situations where two farmers had identical fields across the road from each other...one field would qualify, the other didn't qualify. I seen a situation where a farmer put his entire farm into CRP, and then he rented the neighbor's farm across the road for crop production. CRP also prevented a lot of young potential farmers from entering agriculture as there was no way they could compete against what the government was paying per acre for CRP. But I think the biggest unforeseen circumstance to come about with CRP is that many small towns in the Upper Midwest lost a lot of small business due to CRP. Once the farmer got his grass established in CRP, he no longer needed the grain elevator, the implement dealership, the seed/fertilizer dealers, repair shops, etc. in his small town anymore. That snowballed into car dealerships, grocery stores, gas stations, and other supporting businesses to close their doors as well. Just like most government programs, the Farm Program usually creates as many problems as it was intended to fix.

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We were big alfalfa producers anyway. I guess PIK basically paid us to establish new fields provided you didn't harvest the hay the first year.

 

The Legend of the PIK Acres Woodstock

There was a farm family near Rock Valley, Iowa, who had some teenage sons. The parents went away for a few days. The boys cut some PIK acres and baled it while it was still wet and hosted a large rock concert in the field. They powered the stage's sound system with a tractor and generator. They broke even on the venture. The USDA did get after them about harvesting the PIK acres. I don't know why they didn't just let the hay lay.

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I can only hope....the last two have each been a few weeks late. 

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Today it arrived , first class

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