Report finds mixed results for farm bankruptcies
A new report found farm bankruptcies increased 8 percent between June 2019 and June 2020, but a six-month comparison shows the number of new Chapter 12 filings slowing in 2020.
Data from a U.S. Courts report discovered 580 filings during the one-year time period. Several contributing factors are likely at play as farmers struggle to stay afloat during the COVID-19 pandemic, the report said.
The Midwest, Northwest and Southeast were hardest hit, representing 80% of the filings across the U.S. Wisconsin led the nation with 69 filings, followed by 38 in Nebraska. Georgia and Minnesota each had 36. Virginia recorded nine.
A closer examination of the numbers shows that while year-over-year filings increased for the month of June, filings slowed during the first six months of 2020 compared to the first half of 2019.
An American Farm Bureau Federation market intel report, written jointly with the Association of Chapter 12 Trustees, shows from January to June 2020, there were 284 new Chapter 12 bankruptcy cases, 10 fewer than the same time in 2019. The reduction in filings coincides with aid distributed in the Coronavirus Aid, Relief and Economic Security Act that compensates farmers and ranchers for losses incurred from January through mid-April of this year.
“2020 has brought a great deal of stress from both a market and price standpoint on Virginia farms, but we’ve been fortunate to have a good package of aid from the CARES Act, the Coronavirus Food Assistance Program and the Market Facilitation Program to help cushion the blow,” noted Ben Rowe, national affairs coordinator for Virginia Farm Bureau Federation.
According to the Association of Chapter 12 Trustees, approximately 60% of farm bankruptcies are successfully completed—the highest successful percentage of all the reorganization chapters.
“Every farm bankruptcy potentially represents the end of a family’s dream,” said AFBF President Zippy Duvall. “The fact that we saw bankruptcy filings slow in the first six months of 2020 shows how important the economic stimulus alongside the food and agricultural aid from the CARES Act have been in keeping farms above water, but the economic impact of the pandemic is far from over. It’s imperative that Congress addresses the challenges facing farmers and ranchers in current coronavirus relief legislation.”
As of Aug. 3, $6.8 billion in CFAP payments have been delivered to farmers and ranchers. Virginia farmers have received a total of $67.5 million in CFAP payments.
“This is likely to be a year of tight expense management and limited profitability, but with the newly signed USMCA trade agreement, and some progress on trade with China and other foreign partners, farmers have reason to be optimistic toward the future,” Rowe said.