Make no bones about it, we have had a hard couple of years in the agriculture industry. Years of depressed commodity prices have really taken their toll on the American farmer. However, last year gave us a little bit of a silver lining around some dark clouds. We saw a decrease in the number of chapter 12 bankruptcies filed by America’s farmers and ranchers. However, some economists are warning to take that data with a grain of salt. Just because there was a slight decline, doesn’t mean we’re out of the woods just yet.
John Newton is the chief economist at the American Farm Bureau Federation. He says that even though there was a decrease in chapter 12 bankruptcy filings last year, 2020 was the third highest year of filings over the last decade. He explains this a little more.
While this is good news, it does not mean that the agriculture industry is out of the financial woods yet. Newton says that chapter 12 bankruptcy is often the last option for farmers and ranchers who are in financial distress. Even though some of the commodity prices and farmer payouts were enough to stave off the option of chapter 12 bankruptcy, it does not mean that those who were on the path were miraculously saved.
There is no way around it, we all know that 2020 was not a normal year. It seems that we only think of it that way when we talk about the negatives. We must remember that 2020 wasn’t a normal year for the positives either. Newton says there are many factors that could be impacting the data that we got on chapter 12 bankruptcies in agriculture last year. Some of those numbers may be skewed because it was difficult for some farmers to get the proceedings started.
The real test for a turnaround will come this year with a new year, new administration, and new policies.
