Farm Bankruptcies on the Rise in the US
Farm bankruptcy rates remain elevated across the U.S., reports the American Farm Bureau Federation. Data from the U.S. Courts reveals that for the 12 months ending September 2019, Chapter 12 farm bankruptcies totaled 580 filings, up 24% from the prior year and the highest level since 676 filings in 2011. Chapter 12 farms refers to family farms with regular annual income.
Total bankruptcies filed by state vary significantly, from no bankruptcies in some states to more than 20 filings in others. Bankruptcy filings were highest in Wisconsin at 48 filings, followed by 37 in Georgia, Nebraska and Kansas. Iowa, Kansas, Maryland, Minnesota, Nebraska, New Hampshire, South Dakota, Wisconsin and West Virginia all experience bankruptcy fillings at or above 10-year highs.
This trend is driven by record-high debt, which is projected to rise at USD416bn, with USD257bn in real estate debt and USD159bn in non-real estate debit. The repayment terms on this debt, according to data from the Kansas City Federal Reserve, reached all-time highs for a variety of categories. Put simply, farmers are taking longer to service their debt – a trend made easier due to historically low interest rates.
The increase in farm bankruptcies was the highest in Oklahoma at 14, followed by Georgia at 12, California at 11 and Iowa and Kansas at 10 each. Oklahoma had the sharpest increase in bankruptcy filings, increasing from two filings last year to 17 during the previous 12 months.
Chapter 12 farm bankruptcies continue to increase as farmers and ranchers struggle with a prolonged downturn in the farm economy that’s been made worse by unfair retaliatory tariffs on U.S. agriculture as well as two consecutive years of adverse planting, growing and harvesting conditions.
In the same report, American Farm Bureau Federation also cites the USDA’s projection that farm income in 2019 is estimated to reach USD88bn – the highest net farm income since 2014’s USD92bn, but still 29% below 2013’s record high. Also, nearly 40% of that income – some USD33bn in total – is related to trade assistance, disaster assistance, the farm bill and insurance indemnities and has yet to be fully received by farmers and ranchers.