BY Stan Maddux
WASHINGTON D.C. — Farm bankruptcies in the U.S jumped 20 percent last year but the picture isn’t quite a bleak as it might seem.
The number of farms going under was much greater in the 1980’s and glimmers of hope seem to be emerging from the dark clouds, according to agricultural economists Todd Hubbs at the University of Illinois and Bill Knudson at Michigan State University. “I personally don’t think it’s that big of an issue. Is it concerning? Yes, it is concerning. We’ll see how it ends up turning out.”
According to figures released by American Farm Bureau, there were 2.95 bankruptcies filed for every 10,000 farms in 2019. Knudson argues the figure really isn’t that high given the economic struggles in agriculture the past several years and difficulty small businesses in other areas like retail and food service have keeping their doors open. “That’s still not a lot,” Knudson said.
Hubbs said the increase might be used by the media to grab attention but things could be worse. “It’s a far cry from the bankruptcies we were seeing in the 80’s. I mean, it’s not even close.”
According to AFB, most of the farm bankruptcies at 57 happened in Wisconsin.
Georgia, Nebraska, Kansas and Minnesota followed with bankruptcies ranging from 41 to 30 apiece.
Illinois, Michigan, Ohio, Kentucky, Indiana and Tennessee were toward the middle of the pack with anywhere from 16 to 8 farm bankruptcies apiece, AFB said.
There were eight more bankruptcies than the previous year in Wisconsin while Ohio, Illinois and Michigan respectively saw increases of 7, 6 and 5 from 2018.
Indiana saw 7 fewer bankruptcies, though, while there were two less in Kentucky and Tennessee, according to AFB.
Knudson said he wasn’t surprised to see bankruptcies higher in states like Wisconsin and Michigan heavier into dairy. Milk producers have been hit hardest by the prolonged slump in prices while grain producers have fared slightly better in the market.
Knudson also stated things could get somewhat better especially in the soybean arena depending on how much exports rebound from the trade deal between the U.S and China. “Maybe not better days but less bad days.”
“It’s not a farm crisis in my opinion yet. We’ll see how it all plays out in the next couple of years,” Hubbs said.
Knudson points out that the figures also reflect farmland prices are holding steady but don’t shed light on how many farmers to avoid bankruptcy sold to recover the equity still left in their properties.
“I think some older farmers are seeing the writing on the wall and saying let’s get out while I can still get some money out of the business to fund my retirement,” he said.
According to AFB, net farm income in 2019 when adjusted for inflation was still up nearly 40-percent from the decade low from 2016 and slightly higher than the 20-year average.
AFB noted farm incomes the past two-years were supported largely by payments the Trump administration ordered to offset losses incurred by farmers from tariffs imposed by China on grain and other U.S farm products during the trade war.