Thursday, February 07, 2019

Midwest farm bankruptcies most numerous in a decade

Low commodity prices, growing global competition, and trade disputes are nudging already-struggling Midwestern farmers to file for Chapter 12 bankruptcy at levels not seen in at least a decade, according to a review of federal data. Chapter 12 bankruptcies allow farmers and fishermen to repay creditors over three to five years.

Total U.S. farm debt topped $409 billion last year, according to the data. "Bankruptcies in three regions covering major farm states last year rose to the highest level in at least 10 years. The Seventh Circuit Court of Appeals, which includes Illinois, Indiana and Wisconsin, had double the bankruptcies in 2018 compared with 2008. In the Eighth Circuit, which includes states from North Dakota to Arkansas, bankruptcies swelled 96 percent. The 10th Circuit, which covers Kansas and other states, last year had 59 percent more bankruptcies than a decade earlier," Jesse Newman and Jacob Bunge report for The Wall Street Journal. "States in those circuits accounted for nearly half of all sales of U.S. farm products in 2017, according to U.S. Department of Agriculture data."

The bankruptcies didn't come out of the blue: more than half of U.S. farm households lost money farming in recent years because of low prices on commodities such as corn and soybeans and increasing competition from Brazil and Russia. Low milk prices and overproduction has taken a major toll on dairy farmers. Upheaval in international trade has contributed to the crisis too, including tit-for-tat tariffs with China, the European Union, Canada and Mexico, Newman and Bunge report.

"Agribusinesses such as Archer Daniels Midland Co., Bunge Ltd. and Cargill Inc. are feeling the heat, too. Even though lower crop prices translate into less-expensive raw materials for the commodity buyers, tariffs impact the global flow of goods and in some cases drive down prices, cutting into profits," Newman and Bunge report. "Low prices and mounting farm debts have sparked fears of more farm closures to come, among both large-scale farms that grew rapidly on rented land and small farms run by families working multiple jobs."

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