The Federal Reserve Bank of Minneapolis counted 84 bankruptcies during a 12-month period
By Diego Flammini
Staff Writer
Farms.com
The number of American farms that have filed for bankruptcy protection has increased each year since 2014, a new bank report says.
At least 84 farms filed for chapter 12 bankruptcy (which allows producers to propose and carry out plans to repay debts) between June 2017 and June 2018, the Federal Reserve Bank of Minneapolis says. The operations are in Wisconsin, Minnesota, the Dakotas and Montana.
About 32 area farms went bankrupt in 2014. Another 46 filed for bankruptcy in 2015, followed by 60 in 2016 and 67 farms in 2017, the report says.
Around 50 farms, or 60 percent of the bankruptcies, in the June 2017-18 data happened in Wisconsin. This state is the country’s second-largest dairy producer after California.
Producers aren’t surprised by the figures given the state of the dairy industry.
“I’m surprised there’s not more to be honest,” Brian Forrest, a dairy producer from Stratford, Wis., told Farms.com. “When the cost of production is more than what the market price is, it’s difficult to keep going. Even if you’re super competitive now, you’re probably kidding yourself if think you’re making any money.”
Aside from market prices, a lack of succession planning may also contribute to challenging financial balance sheets, Forrest said.
Trade deals might help a little, but they generally won’t turn around the fortunes of entire farms, he added.
Although U.S. dairy producers are set to access about 4 per cent of the Canadian dairy market through the USMCA, this trade agreement isn’t enough to keep some farms afloat.
“On a scale of one to 10, with 10 being an unbelievable amount of help, I would say it’s about a one-and-a-half,” he said. “Canada has its own farmers, its own milk and its own (supply management) system which I think is pretty cool. How much help are we actually going to get? Not much to make it very impactful.”
Cash crop producers are also concerned about the rising bankruptcies in the dairy industry.
A struggling dairy sector means grain producers may be put in challenging positions, said Jamie Beyer, a soybean grower from Wheaton, Minn.
“Livestock are a very important part of the agricultural market, especially for a soybean farmer like myself,” she told Farms.com. “So, if their industry is struggling, so will ours. The availability of dairies is also important for farmers to have the opportunity to grow perennial crops like alfalfa and to have a source of natural fertilizers, too.”
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