The low crop prices, high machinery costs, high freight rates, heavy mortgage debt and the perception that the fruits of their labor was being lost to middlemen led farmers to look beyond agricultural clubs to organizations that would help them address the challenges they were facing. In 1877 in Goodlettsville, Tennessee, farmers formed the Goodlettsville Lamb and Wool Club so they could pool their animals at auction in order to secure a better price from the bidders.
Started in 1867 as fraternal order for farmers—similar to the Masons—and as a means of overcoming the sectional divide between the North and the South, the Grange’s focus soon changed as farm prices began to fall and, from the farmer’s perspective, freight rates ate up most of the declining price. As the Grange grew into a national organization, it focused its energy on railroads, monopolies, and the banking sector, all of which it saw as the cause of the woes faced by farmers—low prices for the products they sold and high prices for the products and services they had to purchase.
To tackle these problems the Grange developed supply and marketing cooperatives, though they failed because they expanded too quickly and were not sufficiently based on sound business principles. They lobbied for the establishment of railroad commissions that could set “fair” rates for the things that farmers bought and sold. The Grange also influenced the passage of the Federal Farm Loan Act of 1916 and the development of the farm credit system.
The next general farm organization to come onto the US scene was the National Farmers Union which was established in Point, Texas in 1902. In its charter the Farmers Union set as its purpose “to assist [local and state units] in marketing and obtaining better prices for their products.” To do this, local organizations made contracts with local cotton gins where members brought their cotton to be ginned at a more favorable rate than they paid in the past.
They built warehouses at the behest of the national organization and called for voluntary holding actions to manage the supply of cotton so that farmers could receive a higher price for their crop. Over the years, the Farmers Union expanded beyond the South and established grain elevators and farmers’ cooperatives in areas where they were strong.
The American Farm Bureau Federation began in 1911 as an outreach effort of a local Chamber of Commerce in New York State to help teach farmers better farming methods. The idea caught on and soon other farm bureaus were established throughout the country with the formation of its first state organization in 1915 in Missouri. The national organization was not established until 1919. The Farm Bureau has historically worked closely with the Cooperative Extension Service, which was established by the Smith-Lever Act of 1914. Like the Grange and the Farmers Union, the Farm Bureau supported the establishment of supply and marketing cooperatives.
To summarize, between the end of the Civil War and the early 1900s, several general farm organizations were formed that initiated self-help attempts to ease the effects of low price periods. Their approaches included the use of cooperatives, teaching the latest farming methods and pushing for the state and federal regulation of input and service providers. Those activities helped farmers cope with low price sieges but they did not, nor could not, address the macro causes of chronically low prices and incomes.
Source: Daryll E. Ray and Harwood D. Schaffer, Agricultural Policy Analysis Center, University of Tennessee