Monday, November 04, 2019

Report: farm bankruptcies rose 24% over past year, and growers increasingly depend on federal aid and programs

Chapter 12 farm bankruptcies, Sept. 2018-Sept. 2019 (American Farm Bureau Federation map)
"U.S. farm bankruptcies in September surged 24 percent to the highest since 2011 amid strains from President Donald Trump’s trade war with China and a year of wild weather," Mike Dorning reports for Bloomberg. "Growers are also becoming increasingly dependent on trade aid and other federal programs for income, figures showed in a report by the American Farm Bureau Federation, the nation’s largest general farm organization."

The Department of Agriculture projects 2019 net farm income to hit $88 billion, the highest since 2014's $92 billion, but it's still 29% lower than 2013's record high. "Nearly 40% of that income – some $33 billion 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," says the report. "Moreover, farm debt in 2019 is projected to be a record-high $416 billion, with $257 billion in real-estate debt and $159 billion in non-real-estate debt. The repayment terms on this debt, according to data from the Kansas City Federal Reserve, reached all-time highs for a variety of categories."
Change in Chapter 12 bankruptcies, Sept. 2018-Sept. 2019 (American Farm Bureau Federation map)
In short, the report says, farmers are taking longer to pay off their debt. With such record-high debt, it's unsurprising that Chapter 12 farm bankruptcies remain high. "Data from the U.S. Courts reveals that for the 12-month period 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. For the third quarter of 2019, Chapter 12 bankruptcies decreased slightly to 160 filings, down 2% from the previous quarter." Oklahoma had the most bankruptcies and the sharpest increase in such filings.
Farm bankruptcy filings by region from September 2018 to September 2019 (American Farm Bureau Federation map)

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