Farm bankruptcies continuing to decline
An economist with the American Farm Bureau Federation says significantly higher net farm income last year helped cut Chapter 12 bankruptcies by nearly 40 percent.
Veronica Nigh tells Brownfield 2022 was the first time since 2005 that there were fewer than 200 filings.
“We were at $79 billion in net farm income in 2019, last year net farm income was estimated at $163 billion,” she shares.
A Chapter 12 Bankruptcy filing allows a farm to stay in business, restructure its debt, and provides a new timeline to pay back loans while retaining its assets.
Nearly 60 percent of bankruptcies took place in the Midwest and Southeast, but Nigh says those regions also saw the largest percentage decline in filings, down 67 percent in the Midwest alone.
“Certainly, dairy prices improving in 2022 slowed down the decline,” she says.
Last year was the first time Wisconsin did not lead the nation in bankruptcies since 2016.
The largest increase in filings was reported in Puerto Rico, up more than 140 percent, which Nigh says shows how much impact natural disasters can have on farm businesses.
She’s watching to see how USDA’s expectations for a lower net farm income this year, along with high costs, impacts the number of bankruptcies in 2023.