Farm bankruptcies across the U.S. rose again in 2019, as a prolonged slump in commodity prices, poor weather and the ongoing trade war with China squeezed farmers.
Last year, 30 farmers in Minnesota — a 15% increase — filed for Chapter 12 bankruptcy, which allows family farms to restructure their finances and avoid liquidation or foreclosure.
Farm bankruptcies rose 20% nationally in 2019 and 16% , according to data released by the federal court system.
While the absolute numbers are small, they have been rising steadily since 2013, a year after the most recent peak in farm profits. Small dairy farms have led the way.
Chapter 12 filings are the tip of the iceberg when it comes to farm financial troubles. Some farmers file for Chapter 7 bankruptcy and liquidate their holdings. Farmers with more than $4.2 million in debt cannot file for Chapter 12, and corporations or partnerships in which no single farmer owns more than 50% of the farm more often file for Chapter 11 bankruptcy.
The extended downcycle since the 2012 peak has led farmers to take on more debt and lenders to demand more collateral. Alternative lenders fill some gaps.
“The situation is just kind of dragging out and wearing people down,” said Kevin Klair, director of the Center for Farm Financial Management at the University of Minnesota Extension. “The big difference between…