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Farm Bankruptcies Have Now Surpassed Great Recession Levels

farm bankruptcy

American farms are going bankrupt, a rising trend that sees no respite in sight.

In a report recently published by the Federal Reserve Bank of Minneapolis, a growing number of American farms are unable to maintain their operations. And the numbers indicate that more filings are to be expected in the near future.

84 farms in the upper Midwest filed for Chapter 12 bankruptcy between June 2017 and 2018.

What’s striking about this figure is not only that it is twice the number of bankruptcies in 2014, this figure surpasses the total number of farm bankruptcies in 2010, when the Great Recession was at its peak.

The Fed analysis takes into account filings from Minneapolis, Montana, North Dakota, South Dakota, and Wisconsin. Wisconsin bore the brunt of bankruptcy filings, with Minnesota following at a close second.

Based on current trends and price levels, it appears that bankruptcies are on an uptrend, projected to rise rather than recede in the coming months.

While commodity prices have remained relatively flat over the course the year, farmers have had to deal with the negative consequences of President Trump’s tariffs on China, namely the dampening demand for U.S. soybeans.

As we usher in a mixed Congress in the coming year, farmers may expect some relief depending on the outcome of a new farm bill making its way across the halls of legislation.

But what does this mean for the American consumer and investor? Might the lower supply increase food prices? Might a rise in feed prices for livestock contribute to a rise in food prices? Will this hurt farm equipment makers, or chemical/fertilizer companies? How will this affect the transportation industry?

Lots of questions to ask as the disruption of American agriculture will invariably produce many significant and chain reactions and unintended negative consequences.

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