Farm bankruptcies continue to rise, but the rate of new filings is slowing. Chad Smith tells us bankruptcy filings rose eight percent from June of 2019 to June 2020.
Smith: The number of filings from June 2019 to June 2020 totaled 580. John Newton is the Chief Economist with the American Farm Bureau. He says the year to year numbers don’t tell the entire story.
Newton: It’s a little bit of a mixed bag, and what we see is during the second quarter of 2020, Chapter 12 family farm bankruptcies actually slowed to about 115 filings. That’s 50 filings below what we saw in the second quarter of 2019. But on an annual basis, Chapter 12 farm bankruptcies remain eight percent higher than prior-year levels.”
Smith: Newton says farms in the Midwest, Northwest, and the Southeast were hit the hardest by bankruptcy.
Newton: When you look at the state that was hit hardest from Chapter 12 bankruptcies, we continue to have our eyes on Wisconsin. It led the country in terms of the number of bankruptcies for three consecutive years, and a lot of that has to do with low milk prices. I think when you look at other commodities in the Midwest, we’ve seen depressed corn and soybean prices. And out west, I think the trade war, a lot of those commodities were headed west towards China and retaliatory tariffs may have impacted the farm income there.
Smith: Without further assistance for the struggling ag sector, Newton says another rise in Chapter 12 bankruptcy filings is possible.
Newton: One of the things we saw with COVID-19 was many things had to go virtual, so I think that likely played a role in the slowing number of bankruptcy filings we saw this past quarter. I think the CARES Act stimulus certainly helped. That stimulus is set to expire, and I think we could see Chapter 12 bankruptcies accelerate if we don’t see the House and Senate come up with another stimulus package, not only for the broader U.S. economy, but for agriculture.
Smith: Chad Smith, Washington.