Late last week as the political news was hitting a near fever pitch with the rigged impeachment trial coming to a peak and the first presidential contest in the Iowa caucuses but a few days away, much news that was not about those two subjects sort of got shunted to the background and forgotten even though the stories were major news.
One such major story that was somewhat glossed over was that farm bankruptcies are up some 20% over the past year. This should be an alarming trend in our economy.
CHICAGO (Reuters) – U.S. farm bankruptcy rates jumped 20% in 2019 – to an eight-year high – as financial woes in the U.S. agricultural economy continued in spite of massive federal bail-out funding, according to federal court data.
According to data released this week by the United States Courts, family farmers filed 595 Chapter 12 bankruptcies in 2019, up from 498 filings a year earlier. The data also shows that such filings – known as “family farmer” bankruptcies – have steadily increased every year for the past five years.
Farmers across the nation also have retired or sold their farms because of the financial strains, changing the face of Midwestern towns and concentrating the business in fewer hands.
The increase in cases had been somewhat expected, bankruptcy experts and agricultural economists said, as farmers face trade battles, ever-mounting farm debt, prolonged low commodity prices, volatile weather patterns and a fatal pig disease that has decimated China’s herd.
Some of the biggest bankruptcy rate increases were seen in regions, such as apple growers in the Pacific Northwest, that did not receive much or any of the latest round of trade aid from the Trump administration.
From Yahoo we have a brief story of the hard hit milk industry:
Wisconsin, the heart of the dairy industry, saw 57 farm bankruptcies, its highest level in a decade. Over the past 15 years, there’s been a 49% decrease in the number of dairy farms in the state. And between 2016 and 2018, Wisconsin lost almost 1,200 dairy farms.
“Milk prices have been low for a number of years,” John Newton, chief economist for the American Farm Bureau, recently told Yahoo Finance. “When you think of the capital requirements to run an operation, small- and medium-sized dairy operations find themselves with large amounts of debt. Several years of low commodity prices and the large amounts of debt are really contributing to the rise of Chapter 12 bankruptcies we see in key dairy producing regions.”
“In 2014, we had record high milk prices and dairy farmers in the U.S. expanded output, and farmers around the world expanded output,” Newton said. “We’ve really been in a 4-5 year hangover trying to get rid of excess supply. We’re finally moving from a global milk supply situation of oversupply to one that’s a little bit tighter.”
Competition in the beverage milk space isn’t helping either, as more people are turning to plant-based beverages.
“When you see the biggest milk processors, Borden and Dean Foods, go bankrupt, we’re kind of at an inflection point with respect to the fluid milk business,” Newton said.
The next several years will be challenging for the farm industries. Electing a president who has a feel for farm policies and who will choose an Agricultural Secretary based on knowledge and not based on loyalty will be key.