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Iowa Farmers Squeezed by Belt Tightening

December 9, 2009 at 12:00 AM EDT
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In part three of his Patchwork Nation series, Ray Suarez travels to Sioux Center, Iowa, to look at how the recession has hit agricultural centers known as "tractor country."

GWEN IFILL: Now: Patchwork Nation, our on-air and online collaboration with The Christian Science Monitor.

Ray Suarez has been traveling the country, examining how recession and recovery are playing out in different communities from coast to coast.

Tonight, he takes us to tractor country, the agricultural community of Sioux Center in northwest Iowa.

RAY SUAREZ: Every fall, a thick blanket of corn and soybeans covers this rolling farmland in Sioux County, Iowa. In a normal year, it would all be harvested by mid-November and on its way somewhere, but an unusually wet fall has put farmers like Randy Vander Schaff and his son Nate behind schedule.

So, they worked overtime to get their crop out of the field before today’s ferocious snow. Until recently, grain farmers had been riding out the global recession pretty well, but the price of corn has plunged 46 percent in the past year, so they’re bracing for hard times.

John Hansen is grain manager at the local Farmers Cooperative Society.

JOHN HANSEN, Farmers Cooperative Society: This community is fairly optimistic. You may find people in different parts of the country a little bit more pessimistic, but people here are pretty much, will hunker down, as they say out here in the West, and get through the tough times. So, when the good times are there, things are a lot better.

RAY SUAREZ: It hasn’t hurt that corn prices reached record highs in the preceding two years, due in part to government subsidies and high global demand for grains and ethanol.

Good years allowed many farmers to save up. And that’s important in a county where 97 percent of the land is used for agriculture, and in a state where one in six jobs is tied to that industry.

Through 2008 and into 2009, as the recession deepened and the rest of the economy continued to shed jobs at a breathtaking rate, employment remained pretty stable in tractor country. Even now, here in Sioux Center, Iowa, unemployment runs about half the national average.

A drive through neighborhoods surrounding the small downtown reveal a prosperous community. Homes are well-kept. There are virtually no for-sale signs. The real estate bubble that brought down local economies across the country didn’t inflate in tractor country. And amenities, like a new golf course and a football field, are surprisingly posh for a population of 6,700.

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The city recently spent $9 million building a 60,000-square-foot all-season recreation center. Mayor Dennis Walstra and City Manager Paul Clousing say that, while other communities around the country are struggling with budget deficits, Sioux Center is in good shape.

DENNIS WALSTRA, mayor, Sioux Center, Iowa: We’re real fortunate in this community to — to have had the cash to — to do a lot of things that other communities can’t do. We have always believed what our mother says. You have got to put a little bit away for a rainy day. And we have been able to do that.

RAY SUAREZ: Walstra says a quiet generosity helps people through bad times.

DENNIS WALSTRA: Because the community is so close-knit, everybody knows everybody, say, well, yes, we can use you maybe for 20 hours a week or 30 hours a week in this job.

RAY SUAREZ: But a once homogeneous population, dominated by Dutch Americans, is changing. Mexican immigrants do more of the day-to-day work on farms and in meatpacking plants. Still, Sioux Center is similar to other agricultural communities, says Dante Chinni, director of the Patchwork Nation project.

DANTE CHINNI, project director, Patchwork Nation: These places in general kind of — they live in a different world than the rest of us. The economies kind of function differently. They don’t get the big boom, but they also don’t get the big crash.

But, you know, they have — so, they have ridden this out while the rest of the country has really been taking a dive. The question is, how long can they hold on, you know? You know, when the trough is like this for a little bit, maybe they’re OK. If it stays down there, eventually, even the steady line that they’re on at some point has to take a dip.

RAY SUAREZ: One sign of that dip is already showing up at the weekly tristate livestock auction. Dairy farmers are culling their herds, providing a steady stream of what these bidders come looking for: cheap meat.

But, in an agricultural economy, one person’s gain is another’s loss. Relatively high prices for grain, used mainly for livestock feed, combined with a lower consumer demand for expensive dairy products, have put the squeeze on dairy farmers like Darin Dykstra.

DARIN DYKSTRA, Dykstra Dairy: We have built up a cushion, but it’s amazing how fast you can see money go out the door, you know. I mean, you can make money fast, but it seems like you can lose it even faster.

RAY SUAREZ: A third-generation dairy farmer, Dykstra says this year has been tough, but, instead of selling off some cows, he’s cutting back on lots of little things.

DARIN DYKSTRA: Like, one of the things that I did different, like with my vitamin/mineral package was take some of the ingredients out that we thought with the nutritionist saying, you know what, we can probably take this out. You don’t look at these things all the time when things are good, but when things get bad, you look at every little detail.

And just tweaking the little things is going to save you hopefully thousands of dollars that are going to keep you in business that much longer.

RAY SUAREZ: Small hog farmers, working even closer to the margins, like Mike Schouten, have had the toughest time.

MIKE SCHOUTEN: Americans aren’t buying the cuts of meat like they used to, you know, because of the financial problems our country’s going through. And other countries aren’t importing our products like they used to because of the worldwide recession that’s going on.

RAY SUAREZ: And the arrival of a new disease popularly called swine flu has hurt business as well.

MIKE SCHOUTEN: People have the perception that by eating pork they’re going to get the flu. And that’s not the case at all. So, this flu scare has definitely had a major financial impact on the swine industry.

RAY SUAREZ: So, after 11 years of hog farming, Schouten is calling it quits.

MIKE SCHOUTEN: I thought I could weather the storm, but I have had enough, you know? I have done enough bleeding, that I want to quit before I’m bled out.

RAY SUAREZ: Luckily, Schouten also had a full-time job, with benefits, running the Ag Department at nearby Dordt College. Still, stories like his are starting to worry folks in Sioux Center.

JOHN BROOK: I can tell you of two, three of them right now that are going bankrupt. And they aren’t going to survive this. So, what’s going to happen, pretty soon, the only way we can get out this thing is to get our — cut our production. And that’s going on right now.

RAY SUAREZ: On a typical morning, farmers gather at Doc’s to discuss crop and commodity prices over coffee. On this day, they talked with us about how hard it is for family farmers to stay in business.

KEN SNELLER: Just getting a tractor, a combine, a planter, a field cultivator, and maybe a sprayer, you got a million dollars, boom. And now you haven’t got seed, fertilizer, help, nothing.

RAY SUAREZ: So, you have got to live in debt. You have got to live in debt. No one has a million bucks.

KEN SNELLER: Either that or have an awful rich daddy.

RAY SUAREZ: What insulated farmers earlier in the recession was simple enough: Everybody’s got to eat. But they recognize, the recession is finally pounding on their doors.

BEN JANS: We have to get our working people in our nation working. And if we can — we get that going, the farmers here will produce food for the world.

RAY SUAREZ: So, even though bucolic life in Sioux Center seems far away from imploding banks, a jittery stock market, and the elbows-out hustle of American life, people in tractor country are hoping the economic recovery they have been hearing about will take hold soon.

GWEN IFILL: You can find a lot more about the Patchwork Nation project on our Web site, including an interactive map of tractor country communities across the nation.

Ray’s series continues tomorrow, when he will take us to the boomtown of Eagle, Colorado.