Farm bankruptcies on the rise

There have been numerous stories on the rise in farm bankruptcies in 2018. Picking one from December 1, 2018 in the Lincoln Journal Star by Matt Olberdin called “As ag economy continues to struggle, farm bankruptcies rise,” through October, bankruptcies in a seven state region including and around Nebraska are up 45% compared to all of 2017.

Trade issues and low crop prices are two main issues driving down farm incomes. Coupled with rising interest rates and property taxes, and it is a tougher road for farmers. Per PBS Newshour, trade issues means tariffs getting in the way of the farmers’ markets.

These farmers use Chapter 12 bankruptcy that makes it easier to file and reorganize. This approach allows a higher debt limit as well. Per The Wall Street Journal, farm bankruptcy filings are the highest they have been in ten years.

As with the shutdown, real people are impacted by ill-conceived decisions by the President. Loyalty to a President becomes tough when you cannot feed your family and may lose your livelihood. With the tariffs blocking markets for the farmers’ products, the buyers must look elsewhere. These farmers will have to dump product or let it go to waste.

This is a key reason economist say trade wars cannot be won. More people lose than win on targeted tariffs. Yet, this does not seem to bother the man in the White House. That is troubling and sad for our country.

9 thoughts on “Farm bankruptcies on the rise

  1. Erika, it is that simple. He is such a good salesmen, these folks bought his elixir. Only now is it coming to their attention, they may have been swindled. Yet, too many are still not paying attention. Keith

  2. I would bet money that some of his advisors tried to explain to him in the beginning that this was an inevitable result of the tariffs, but he “trusts his gut” more than he trusts the advice of those with years of experience and education. Now, as a result of this, we will be seeing even more price increases at the grocery stores come spring … we’ve already seen some, partly as a result of tariffs, and partly as a result of the severe weather caused by climate change. All of which the ‘man’ in the Oval Office is oblivious to, for he thinks you have to have an ID to buy groceries!

    • Jill, the principal economic advisor against this was Gary Cohn and he resigned as Trump was not listening his globalism is good approach. Peter Navarro was a key orchestrator of this and he cited two economists who he influenced him, as most every economist said tariffs are bad tactics. Not ironically, the of the two men Navarro cited, one said “I am not an economist” and the other said Navarro took his position out of context.

      These comedy of errors would be laughable if they were not true or the exception. There is a level of incompetence in this White House due to the one in charge, the people who never joined or left and the fact there is a startling deficiency of people. Keith

      • Jill, true. And, sadly yet another reporter (a BBC cameraman) was beaten by a Trump supporter. Here is a headline to the man in a MAGA cap saying “f**k the media” as he hurt someone. The fake news purveyor is behind the podium. You have been played.

        Keith

  3. Dear Keith,

    Many of these farmers who supported President Trump are facing the reality that President Trump is big on promises but short on delivery.

    President Trump had so many knowledgeable peoples advising him against the imposition of tariffs that I’m still wondering why he acted besides his own biases based on his gut.

    China has purchased some soybeans from Brazil but as per 5/18/18 Farm Futures report, China, the world’s biggest soybean importer, almost tripled purchases from Russia amid a trade dispute with the U.S., the biggest producer.

    Why did I expect the name of Russia to pop up as another possible explanation?

    Hugs, Gronda

    • Gronda, the issue that is lost on this President due to his mercurial, regal decision-making is the due diligence involved with planning. Many of the terrible rollouts of Trump mandates were due to not vetting issues before announcing. Vetting is also key to get feedback on how to rollout. He does not appreciate the “doing” part, so he does not study it.

      CFOs and business owners, including farmers, need to plan. They need to know where they can sell things and get supplies. They detest building inventories that just sit there. These folks desire stability as much as possible and sometimes will pay more for a stable pipeline and price. When Trump shakes things up, he causes great pain in this process, so buyers and sellers have to make plans.

      Then, he relents, but it is too late, they have made the pipeline. What Trump also fails to understand, is the tariffs issue may appear to be short term to him, but because of this pipeline issue on sales and supplies, it may be a multiyear issue.
      People talk of Trump as if he knows business, but again and again, I do not see it. We should not forget that this real estate tycoon established Trump Mortgage in the midst of the housing recession. That was a very unwise move and, of course, it failed.

      Keith

  4. Note to Readers: Attached is an excerpt from Gronda’s recent post (link below) citing the Wall Street Journal and Axios. I forwarded this excerpt to several farm state senators. This is why tariffs are poor.

    “As per the 2/6/19 Axios report, “Farmer bankruptcies swell to decade high in Farm Belt” by Shannon Vavra, “U.S. farmers in the Midwest are filing for bankruptcy at levels the U.S. hasn’t seen for approximately a decade, the Wall Street Journal reports.”
    “What’s happening: Low commodity prices have been gouging U.S. farmers’ bottom lines for years now, exacerbated by increasing agricultural competition from Russia and Brazil. President Trump’s trade disputes, meanwhile, are adding salt to the wounds, as tariffs drive down prices and decrease profit for farmers.”

    By the numbers:
    “In the 7th Circuit Court of Appeals, which includes Illinois, Indiana and Wisconsin, twice as many farmers declared bankruptcy in 2018 as during the 2008 recession.”
    “In the 8th Circuit, which spans from North Dakota to Arkansas, bankruptcies shot up 96%.”
    “In the 10th Circuit, which includes Kansas, Colorado and parts of Oklahoma, bankruptcies were up 59%. Together, these three jurisdictions accounted for nearly 50% of all farm product sales in 2017, per the Journal.”
    “Last year, farm debt rose to over $409 billion, with the average size of loans in the 4th quarter reaching $74,190, the highest 4th quarter level in history.”
    “Between the lines: The Midwest is hurting, and even though the Trump administration has been rolling out federal government relief for farmers to make up for tariff damage, lawmakers from both sides of the aisle fear it is only a short-term, partial solution.””

    https://grondamorin.com/2019/02/26/president-trumps-trade-war-tariffs-on-china-is-doing-real-harm-to-midwest-farmers/

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