Farm bankruptcies are up
Year-to-year farm bankruptcies are up 23 percent. American Farm Bureau Chief Economist John Newton says there were more than 600 Chapter 12 farm bankruptcies over the last 12 months.
“That’s the third highest number we’ve seen in the last 20 years and while it’s still well below what we saw in the 80s, it’s still a very concerning trend,” he says.
Wisconsin was hit the hardest with nearly 80 bankruptcies in a 12-month period.
“The highest number of bankruptcies were in Wisconsin,” he says. “It’s no secret how the dairy industry has fared in the last four or five years.”
Following Wisconsin, Nebraska had 41 Chapter 12 bankruptcy filings and Iowa had 37 filings.
Newton tells Brownfield the increase in farm bankruptcies is not surprising.
“Where we find ourselves today with the coronavirus, with livestock prices being hit especially hard, crops being plowed under, farm dumping milk – the economic situation is as uncertain as I’ve ever seen it,” he says.
He says the increase in bankruptcies is not currently related to the coronavirus pandemic.
“The bankruptcies in the first quarter are related to things that happened prior to the coronavirus really hitting agriculture as hard as it did,” he says. “I would imagine when we start to see the numbers come in for the second and third quarter that’s going to be more reflective of people that ran into more recent hardships due to low commodity prices and low farm income.”
He says Congress and the administration made an initial down payment for agriculture in the Coronavirus Food Assistance Program, but more must be done to address challenges related to working capital, livestock and dairy processing plant closures, negative ethanol plant profitability, and more.
Audio: John Newton