Farm bankruptcies running 23 percent ahead of a year ago

Chapter 12 bankruptcies of family farming operations in the last year are 23 percent higher than they were for the previous year, John Newton, chief economist for the American Farm Bureau Federation, reports on Feed & Grain Blog.

"Given the challenges to the farm economy in recent years, i.e., low commodity prices, retaliatory tariffs and natural disasters, it’s no surprise that farm bankruptcies continue to rise," Newton writes. "While well below the historical highs of the 1980s . . . Chapter 12 bankruptcy filings have increased for five consecutive years, and the 627 filings over the previous 12 months is the third-highest total over the last 20 years – behind 743 filings in 2011 and 632 filings in 2003." Data are from U.S. courts.

"The continued increase in Chapter 12 filings coincides with recent changes to the bankruptcy rules in 2019’s Family Farmer Relief Act, which raised the debt ceiling to $10 million," Newton writes. "Moving forward, however, the coronavirus’ impact on the national economy as a whole and the farm economy specifically -- high unemployment and low commodity prices and reduced farm revenue -- may make it more difficult for farmers to repay debt, which could increase farm bankruptcies."