According to U.S. Courts data, U.S. farm bankruptcy rates increased by 20% in 2019, an eight-year high. There were a total of 595 Chapter 12 bankruptcies filed by family farmers.
“A lot of the bankruptcies have been on the dairy side of life and there have been a lot of mitigating impacts going on there,” Veronica Nigh, senior economist for the American Farm Bureau, recently told Yahoo Finance.
‘Large amounts of debt’
Wisconsin, the heart of the dairy industry, saw 57 farm bankruptcies, its highest level in a decade. Over the past 15 years, there’s been a 49% decrease in the number of dairy farms in the state. And between 2016 and 2018, Wisconsin lost almost 1,200 dairy farms.
“Milk prices have been low for a number of years,” John Newton, chief economist for the American Farm Bureau, recently told Yahoo Finance. “When you think of the capital requirements to run an operation, small- and medium-sized dairy operations find themselves with large amounts of debt. Several years of low commodity prices and the large amounts of debt are really contributing to the rise of Chapter 12 bankruptcies we see in key dairy producing regions.”