Farmers in eastern Idaho head out to help their neighbors complete a harvest before the crops freeze. Photo courtesy of Jason Larson
EVANSVILLE, Ind., Nov. 1 (UPI) -- Farm bankruptcy rates in the United States continue to rise, according to new data from the American Farm Bureau Federation.
The number of Chapter 12 bankruptcy filings increased by 24 percent between September 2018 and September 2019 compared with the previous 12 months, the organization's data show.
"The trend is a concern," John Newton, the chief economist with the American Farm Bureau Federation, said in his latest Market Intel report.
Farmers have endured multiple setbacks in the last few years, all of which contributed to the steadily increasing bankruptcy rate.
Starting around 2014, nearly all commodity prices hit a cyclical low, Newton said. This was nothing unusual because farm prices tend to rise and fall. The problem was that just as prices were starting to rebound, the trade war with China hit -- preventing prices from climbing out of their cyclical trough.
China's retaliatory tariffs on American farm goods meant producers of many commodities lost one of their biggest buyers, sending prices yet lower.
"We've had low ag prices for four to five consecutive years," Newton told UPI in September. "The first year, people weather it. The second year, they tighten their belts and cut costs. But, over time, you run out of options without higher commodity prices."
Adding to the burden, the 2019 growing season was disastrous for many commodities.
Historic spring floods across the Midwest prevented and delayed planting. And then many of the same places experienced record breaking rains again in the fall, which delayed and prevented harvest. Next, a large swath of the Great Plains was hit with a freak fall blizzard that added more moisture to some areas and froze crops in the ground in others.
Farmers of multiple commodities from Idaho to Iowa lost a significant amount of their harvest.
"This is going to be pretty devastating for a lot of farmers," said Travis Blacker, the industry relations director for the Idaho Potato Commission.
Along with the increased bankruptcy rates, farm debt is also climbing. In 2019, the U.S. Department of Agriculture estimates, all farm debt will reach nearly $416 billion, a record high. And data from the Federal Reserve Bank in Kansas City show farmers are slower to pay back that debt.
The Trump administration has provided aid to farmers since the trade war began, which economists say will help keep some farms from bankruptcy court.
In fact, USDA projections show federal aid will account for 40 percent of all farm income in 2019 -- some $33 billion. This money will come from trade and disaster assistance and federally backed insurance payments.