While the coronavirus has affected every industry this past quarter, the agriculture industry has been hurting before this pandemic even started. Year-to-year farm bankruptcies increased 23 percent, according to recently released data from U.S. Courts. An American Farm Bureau Federation Market Intel report shows a total of 627 filings during the 12-month period ending March 2020, marking five consecutive years of Chapter 12 bankruptcy increases, including an accelerated rate since January.
Wisconsin was the hardest hit with 78 filings in the 12-month period, followed by Nebraska with 41 Chapter 12 filings and Iowa at 37. More than 50 percent of the Chapter 12 filings were in the 13-state Midwest region, followed by 19 percent in the Southeast.
“Each bankruptcy represents a farm in America struggling to survive or going under, which is both heartbreaking and alarming,” said American Farm Bureau President Zippy Duvall. “Even more concerning, the difficulty staying afloat is made worse by the pandemic and related shutdowns as farmers are left with fewer markets for their products and lower prices for the products they do sell.”
Currently, the increase in bankruptcies is not related to the coronavirus pandemic. That is certain to change as U.S. unemployment is projected to reach 14.5 percent in the second and third quarters, which will cause a decline in off-farm income. This could affect farmers’, notably small-to-medium-sized farms’, ability to service a record $425 billion in debt, because many farmers rely on off-farm income as a stabilizing force.
“Congress and the administration made an initial investment in America’s farmers and ranchers with the $19 billion Coronavirus Food Assistance Program,” Duvall said, “but more must be done to ensure farms survive to continue providing food for America’s families during the pandemic and beyond.”
You can read the Market Intel report on the American Farm Bureau website.