Ag News
Farm Bankruptcies increased in 2019
Posted on Feb 05, 2020 at 0:00 AM
The number of Georgia farmers who filed for Chapter 12 bankruptcy in 2019 increased by 57.7% over 2018, according to U.S. court documents and analysis by the American Farm Bureau Federation.
In 2019, 41 Georgia farms filed for Chapter 12 bankruptcy, up from 26 in 2018. From 2010 to 2019, 351 Georgia farms filed for Chapter 12, surpassed only by California (388) and Wisconsin (375). Nationally, more than 5,000 farms filed for Chapter 12 from 2010 to 2019.
Chapter 12 provides reorganizational advantages and financial relief specifically for family farmers in debt. Those advantages include a seasonal repayment schedule over a three- to five-year period and lower costs relative to other chapters. Filing under Chapter 12 provides a quick and predictable process for farmers to reorganize debt to avoid asset liquidation or foreclosure.
While well below historical highs, Chapter 12 family farm bankruptcies nationwide in 2019 increased by nearly 20% from 2018, according to recently released data from the U.S. Courts. Compared with figures from over the last decade, the 20% increase trails only 2010, the year following the Great Recession, when Chapter 12 bankruptcies rose 33%.
During the 2019 calendar year there were 595 Chapter 12 family farm bankruptcies across the country, up nearly 100 filings from 2018 and the highest level since 2011’s 637 Chapter 12 filings. Given that there are slightly more than 2 million farms in the U.S., the 2019 bankruptcy data reveals a bankruptcy rate of approximately 2.95 bankruptcies per 10,000 farms, slightly below the rate of 2.99 filings per 10,000 farms in 2011.
During the fourth quarter of 2019, there were 147 Chapter 12 bankruptcy filings, which was up 14% from the prior year but down 8% from the third quarter of 2019. On a year-over-year basis, Chapter 12 filings have increased for five consecutive quarters. The continued increase in Chapter 12 filings was not unanticipated given the multi-year downturn in the farm economy, record farm debt, headwinds on the trade front and recent changes to the bankruptcy rules in 2019’s Family Farmer Relief Act, which raised the debt ceiling to $10 million.
- Categories:
- Tags: