Jenny Schlecht Forum press service
Farm bankruptcies continue to rise nationwide, with the highest number of such filings occurring in the Midwest region, according to a report from the American Farm Bureau Federation.
The report, authored by Farm Bureau economist John Newton, details the number of bankruptcies by state in the 12-month period ending September 2019, how those bankruptcy numbers compare to the previous year and a overall analysis of farm income.
Farm income is at record highs, but that’s not the whole story. According to the report, not only are bankruptcies increasing, but farm debt is expected to hit record highs and producers are taking longer to repay their loans.
The Farm Bureau report shows Wisconsin with 48 bankruptcies; Nebraska, Kansas and Georgia with 37; and Minnesota with 31. The Midwest region, made up of 13 states including Minnesota, North Dakota and South Dakota, saw 255 bankruptcy filings, far more than any other region.
Those numbers come as no surprise to Megan Roberts, an educator based in Mankato, Minn., who is part of the farm business management team at the University of Minnesota Extension. The region has a high number of dairy farms and row crop farms, two sectors stressed by the news. Dairy prices have been low for several years and trade issues, including tariffs and the lack of trade agreements, have particularly affected corn and soybean producers.
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“These agricultural products in particular are really struggling financially,” she says.
But Roberts says it’s the prolonged downturn in the farm economy that makes things difficult. While there is no single reason for the increase in bankruptcy filings, multi-year price weakness certainly plays a role.
“It’s not just a one-year downturn,” she said. “Bankruptcies happen and loan deficiencies happen when there are more protracted problems.”
The Farm Bureau report makes the same points.
“Chapter 12 farm bankruptcies continue to rise as farmers and ranchers grapple with a prolonged downturn in the farm economy that has been made worse by unfair retaliatory tariffs on U.S. agriculture as well as two years consecutive adverse planting, growing and harvesting conditions,” the report said. “In the prior 12 months, Chapter 12 bankruptcies totaled 580 filings and increased 24% from the prior 12 months.”
The report says bankruptcies still haven’t reached the level of the 1980s farm crisis, and some farmers are finding relief through trade assistance, farm bill programs, crop insurance and disaster relief. These measures could lower the numbers in the future, the report predicts.
“As a result, it could take some time for financial relief to show up in farm bankruptcy trends,” he says.
Roberts says just as there is no single answer to why there are so many farm bankruptcies in the Midwest, there is no single answer to what farmers can do to handle situations. difficult finances. Roberts works primarily on agricultural transitions, which are also difficult in this environment. She advises people to look at their strengths and weaknesses, analyze their bottom line, and look for ways to save money as well as ways to capitalize on market upsides.
“For example, the dairy industry is getting price relief right now,” she says. “Can a farmer capitalize on a price above the break-even point?
To read the Farm Bureau report, visit https://www.fb.org/market-intel/farm-bankruptcies-rise-again.