Farm bankruptcies were down slightly in 2020, but an industry economist warns farmers are “not out of the woods yet.”
Caseload statistics from U.S. Courts indicate that Chapter 12 family farm and family fishery bankruptcies totaled 552 filings during 2020, down 43 filings, or seven percent, from 2019 third-highest over the last decade.
American Farm Bureau Federation Chief Economist John Newton writes in a Farm Bureau Market Intel analysis, “these numbers should not be considered a sign that the farm economy has recovered.”
In 33 of the 94 district court regions, Chapter 12 bankruptcies increased from prior years. According to the Kansas City Federal Reserve, delinquency rates at commercial banks continue to increase, and USDA recently temporarily suspended debt collections, foreclosures and other activities on farm loans to support distressed farmer borrowers.
Newton says the key to turning the farm economy around is a COVID-19 recovery, restored biofuels demand, increased trade, and new income sources, including adopting climate-smart practices and ecosystem services markets.