Chapter 12 Bankruptcies Up Nearly 20% in 2019
There were 595 Chapter 12 family farm bankruptcies reported in 2019, up nearly 100 from 2018 and the highest level since 2011, when there were 637 such filings, reports the American Farm Bureau Federation (AFBF).
It’s unclear how many of these farms were dairies, but Wisconsin led the nation with 57 Chapter 12 filings in 2019. “Wisconsin farm bankruptcies were up 8 filings from the prior year and were also the highest level in a decade,” reports John Newton, AFBF chief economist. (Note: Wisconsin lost 818 dairy farms last year, a full 10% of its licensed dairy farms.)
Minnesota, Ohio and South Dakota, all strong dairy states, were also among the top 10 states with Chapter 12 filings.
Even though the percentage increase in Chapter 12 bankruptcies is large, keep in mind that there are 2 million farms in the United States. So the rate of Chapter 12 bankruptcies per 10,000 farms was just 2.95 in 2019. That was just below the peak filing rate of 2.99 per 10,000 farms in 2011 (which came on the heels of the Great Recession in 2009 and 2010).
“…net farm income in 2019 is slightly above the 20-year average but was supported in large part by the Trump administration’s efforts to financially shield farmers from unfair retaliatory tariffs,” says Newton.
“Without this support, farm-related income from crop and livestock sales in 2019 inflation-adjusted dollars would have been at the second-lowest level in the last decade at $63.6 billion,” he says. “The corollary to this is that farm bankruptcies could have been worse considering the record-high farm debt of $415 billion (in nominal terms) and the likely difficulties servicing this debt without the revenue from the Market Facilitation Program.”
Read more analysis of 2019 Chapter 12 farm bankruptcies here.