Farm bankruptcies rose 20% in 2019; at an eight-year high

"U.S. farm bankruptcy rates jumped 20 percent in 2019 - to an eight-year high - as financial woes in the U.S. agricultural economy continued in spite of massive federal bail-out funding, according to federal court data," P.J. Huffstutter reports for Reuters. "According to data released this week by the United States Courts, family farmers filed 595 Chapter 12 bankruptcies in 2019, up from 498 filings a year earlier. The data also shows that such filings -- known as 'family farmer' bankruptcies -- have steadily increased every year for the past five years." Chapter 12 bankruptcy was created in the 1980s as a way for small farmers and fishers to keep operating while restructuring their debts.

Bankruptcy experts and agricultural economists said the increase was somewhat expected, "as farmers face trade battles, ever-mounting farm debt, prolonged low commodity prices, volatile weather patterns and a fatal pig disease that has decimated China’s herd," Huffstutter reports.

The federal government tried to help farmers suffering financially from the trade war with China; almost one-third of U.S. net farm income in 2019 came from direct federal aid and crop-insurance payouts, Huffstutter reports. And though court data shows that that aid did prevent a worse crisis for most, some of the biggest bankruptcy spikes happened in places where farmers didn't receive much or any trade aid, such as apple growers in the Pacific Northwest. But many farmers were already in financial trouble: a high-interest alternative farm lender was the single biggest recipient of trade aid, because it forced farmers to assign payments to it.