Even though the number of farm bankruptcies in the United States remains well below historical highs, it grew by nearly 20% in 2019. The U.S. courts recently released data showing the number of Chapter 12 bankruptcies which are defined as a part of the federal bankruptcy code that's designed to allow family farmers and fishermen to restructure their finances and avoid liquidation or foreclosure. Family farmers filed 595 such bankruptcies in 2019, an eight-year high.
The number of Chapter 12 bankruptcies has been rising every year since 2014 when there were 361 filings. In 2018, there were 498. Despite the Trump administration bailing the U.S. agricultural sector out to the tune of $28 billion (twice as much as the 2009 bailout of Detroit's Big Three automobile producers), the rise in bankruptcies has not come as too much of a surprise.
The aid package has given farmers relief but many are continuing to struggle due to the trade war with China which has cut them off from one of their most important markets. On top of that, agricultural workers are also experiencing low commodity prices, growing levels of farm debt and increasingly volatile weather conditions.
According to the U.S. Department of Agriculture, close to a third of projected net farm income in 2019 came from government aid and taxpayer subsidized insurance payments. The dairy industry is one of the sectors suffering the most from farm closures, particularly in Wisconsin. It was the state with the highest number of farming bankruptcies in 2019 with 57, its highest total in a decade. Over the past 15 years, the number of dairy farms across the state has fallen by 49%.
*Click below to enlarge (charted by Statista)
Number of chapter 12 bankruptcies filed in the U.S. by year
