Average U.S. Farm Is $1,300,000 In Debt, And Now The Worst Farming Crisis In Modern History

[PAF]

August 14, 2019
By Michael Snyder



We haven’t seen anything like this since the Great Depression of the 1930s. Leading up to this year, farm incomes had been trending lower for most of the past decade, and meanwhile farm debt levels have been absolutely exploding. So U.S. farmers were desperate for a really good year, but instead 2019 has been a total disaster. As I have been carefully documenting, due to endless rain and catastrophic flooding millions of acres of prime farmland didn’t get planted at all this year, and the yields on tens of millions of other acres are expected to be way, way below normal. As a result, we are facing the worst farming crisis in modern American history, and this comes at a time when U.S. farms are drowning in more debt than ever before. In fact, the latest numbers that we have show that the average U.S. farm is 1.3 million dollars in debt…


Debt-to-asset ratios are seeing the same squeeze, with more farms moving into a ratio exceeding 80%. Barrett notes each year since 2009 has seen an increase in the average amount of total debt among farmers, and 2017 was no exception. Average debt rose 10% to $1.3 million. The biggest increase was in long-term debt, such as land.



Farming in the 21st century has become an extraordinarily risky business, and countless U.S. farmers were already on the verge of going under even before we got to 2019.

Now that this year has been such a complete and utter disaster, many farms will not be able to operate once we get to 2020.

Minnesota farmers Liz and Bob Krocak were hoping for better days ahead as this year began, but things have been really tough and their debts have become overwhelming. During a recent meeting with their creditors, Liz was so distraught that she literally burst into tears…



They had to face their creditors at a mediation. There was Del, the mechanic, whom they owe $28,000 and who now can’t help his son buy a home. There was Steve, the feed store guy, who is 64 and has delayed his retirement because of the Krocaks’ $311,000 bill.

Liz recalled the mediator opening the meeting by saying, “This is going to be an emotional day. I can see everybody really likes this family.” Liz had burst into tears then – and she was crying again now, describing the scene seven months later.

“We just hope there’s a farm left at the end of it,” she said.



In total, the Krocaks just happen to be 1.3 million dollars in debt.

At this point, there isn’t a prayer that all of that debt will ever be paid off. All they can really hope for is more patience from their creditors, because without it the farm is going under.

The Krocaks recently received a check for about 12,000 dollars from the federal government, and they are very grateful for the money, but the truth is that it isn’t even going to make a dent in their 1.3 million dollar debt.

If the horrific weather and endless flooding wasn’t enough, about a week ago the Chinese government announced that they would be ending all “purchases of U.S. agricultural products”, and that was a devastating blow for farmers all over the nation.

In particular, soybean farmers are going to see demand for their crops absolutely collapse. In recent years, China has purchased approximately 60 percent of all U.S. soybean exports.

And even if a trade deal is eventually reached, it is unlikely that all of that demand is ever going to come back. Right now, the Chinese are spending enormous amounts of money “to build transportation infrastructure to ship soybeans grown in what used to be rain forests” in Brazil. They aren’t going to abandon all of that just because Trump suddenly changes his mind.


And the truth is that it is extremely unlikely that Trump will change his mind and cave in to the Chinese.

So for the foreseeable future, U.S. farmers are going to be facing weaker markets and lower prices, and that is going to be the final straw for many of them.

Have you ever been at a point in your life where you have endured problem after problem and then one day a final crushing blow comes along that takes away the last shred of hope that you were holding on to? That is precisely what has happened to farmers like Bob Kuylen of North Dakota…



“It’s really, really getting bad out here,” said Bob Kuylen, who’s farmed for 35 years in North Dakota.

“Trump is ruining our markets. No one is buying our product no more, and we have no markets no more.”



We keep hearing about “government bailouts”, but they aren’t going to be nearly big enough for most farmers. Kuylen has worked as hard as he possibly could, but he was not able to overcome the challenges he was facing, and now he is facing financial disaster. He would walk away, but he says he can’t because “I’ve invested everything I have in farming”…



Kuylen, who farms roughly 1,500 acres of wheat and sunflowers, lost $70 per acre this year, despite growing good crops. Current government subsidies only cover about $15 per acre, he said.

“There’s no incentive to keep farming, except that I’ve invested everything I have in farming, and it’s hard to walk away,” he said.



It would be nice to think that all of these farmers will somehow bounce back next year, but that isn’t likely. It is very doubtful that there will be any sort of a trade agreement with China before the 2020 presidential election, and global weather patterns are not going to be getting any more stable. Sadly, it is entirely possible that next year could be even tougher for U.S. farmers than this year was.

So please say a prayer for our farmers. They grow the food that we all eat on a daily basis, and their hard work is rarely recognized on a national basis. They are unsung heroes, and right now most of them are really, really hurting.



https://www.lewrockwell.com/2019/08/...ry-is-upon-us/

[PAF]

//

[CoastieInColorado]

Thats's horrible, but it's not like this everywhere.

Most of the farmers I know around here aren't facing the same crisis, and it's going to be a great year for everyone out here directly because of the excessive rains.

All of the produce, feed and chip corn, alfalfa and of course, the MJ fields look amazing out here right now.

[tod evans]

So please say a prayer for our farmers. They grow the food that we all eat on a daily basis, and their hard work is rarely recognized on a national basis. They are unsung heroes, and right now most of them are really, really hurting.

Farmers are "really hurting" due to artificial markets.

When, not if, the global market corrects itself those who don't produce tangible goods will be left eating the paper they push........Digital or analog.

China has a leg up what with their plethora of small farms and a large portion of the worlds manufacturing. Maybe they'll take Wall Street refugees?

[nikcers]

Farmers are "really hurting" due to artificial markets.

When, not if, the global market corrects itself those who don't produce tangible goods will be left eating the paper they push........Digital or analog.

China has a leg up what with their plethora of small farms and a large portion of the worlds manufacturing. Maybe they'll take Wall Street refugees?

Aren't China's farm getting destroyed by some sort of pig plague and worm eating their crops and they are owned by the state?

[PAF]

Aren't China's farm getting destroyed by some sort of pig plague and worm eating their crops and they are owned by the state?

China is not only regrouping within, they are also seeking other countries to deal with, for example, Brazil, which is in the OP.

This "trade war" is a bad mistake. Either farmers here in America will sink, or we will be required to bail them out.

[tod evans]

Aren't China's farm getting destroyed by some sort of pig plague and worm eating their crops and they are owned by the state?

It's hard to find newz from China and I trust the MSM as far as I can drop kick an anvil...

I have read about the swine issue but to the best of my limited knowledge pigs there are raised on small farms instead of warehouses like most here are, meaning disease is far less likely yo be catastrophic...

[nikcers]

It's hard to find newz from China and I trust the MSM as far as I can drop kick an anvil...

I have read about the swine issue but to the best of my limited knowledge pigs there are raised on small farms instead of warehouses like most here are, meaning disease is far less likely yo be catastrophic...

Doesn't China knock on peoples doors and monitor their citizens and send secret police even to people in other countries to stop damaging information from coming out and have online shills that talk about how great China is?

[Brian4Liberty]

Average U.S. Farm Is $1,300,000 In Debt, And Now The Worst Farming Crisis In Modern History

That is not a farming crisis, it’s a debt crisis.

It’s like saying, “hey, my neighbor is a plumber, and he’s $1,000,000 in debt. There’s a plumbing crisis!”

[nikcers]

That is not a farming crisis, it’s a debt crisis.

It’s like saying, “hey, my neighbor is a plumber, and he’s $1,000,000 in debt. There’s a plumbing crisis!”

Does the government give people free plumbing and distort the cost of plumbing so that the market doesn't know how many plumbers are needed and give people incentives to not do their own plumbing because they can get subsidized plumbing services or buy their own plumbing services bcause they can get it for free?

[Anti Federalist]

All the small farms around me are doing gangbuster business this year.

Large scale farming is just not economically viable for a small independent farmer, just like being an independent trucker is next to impossible.

And this is not a new problem, been going on for years.

This song is over 30 years old now.

[CoastieInColorado]

That is not a farming crisis, it’s a debt crisis.

It’s like saying, “hey, my neighbor is a plumber, and he’s $1,000,000 in debt. There’s a plumbing crisis!”

Exactly.

We have zero debt, started out as one farm with 1800 plants 3 years ago, and now have 3 farms and nearly 20,000 plants.

Of the several local farmers I've talked to, only one said he had a little debt, but wasn't farm related(daughter's college).

The "main guy" out here as far as land ownership and land actively being farmed, claims to not have any debt, but he has also diversified and owns the biggest implement company in the region.

[CoastieInColorado]

All the small farms around me are doing gangbuster business this year.

Large scale farming is just not economically viable for a small independent farmer, just like being an independent trucker is next to impossible.

And this is not a new problem, been going on for years.

Going to be our best year so far, as long as the frost cooperates.

[Anti Federalist]

More than anything else, what has killed small US farmers are free trade policies.

There are plenty of ways to bash Trump if you want, but holding up the teary breakdown one of the most heavily government subsidized and socialized business models as an example of how bad the Drunken Monkey is, well, that's a pretty piss poor example.

[Anti Federalist]

Going to be our best year so far, as long as the frost cooperates.

When's your first killing frost, on average?

[PAF]

More than anything else, what has killed small US farmers are free trade policies.

There are plenty of ways to bash Trump if you want, but holding up the teary breakdown one of the most heavily government subsidized and socialized business models as an example of how bad the Drunken Monkey is, well, that's a pretty piss poor example.

Not Free Trade, “fair trade”. There is a vastly huge difference.

I don’t recall bashing anybody, I merely report the news. Perhaps take it up with Lew Rockwell.

[CoastieInColorado]

When's your first killing frost, on average?

[IMG][/IMG]We'll just say I'm somewhere in the Blue Zone 1 east of Pueblo.

Oct 1-10. Got us bad last year on the 1st, all of the outdoor crop in Colorado took a nasty hit last season. We're going to start pulling a little earlier this year to abate it.

2 years before that the hard frosts didn't come till the plants were harvested.

[Zippyjuan]

https://www.agriculture.com/news/bus...s-report-shows

CORN, DAIRY FARMS LEAD CHAPTER 12 BANKRUPTCY FILINGS, REPORT SHOWS

KANSAS FARMERS FILE THE MOST CHAPTER 12 BANKRUPTCY CASES.

DES MOINES, Iowa -- The number of family farms declaring bankruptcy is going up, not down, according to the latest data from the federal government.

For that reason, on Wednesday, a bipartisan group of U.S. Senators has introduced legislation to help family farms reorganize after falling on hard times.

The Family Farmer Relief Act of 2019 (S.897) is led by Senator Chuck Grassley (R-IA) and cosponsored by Senators Amy Klobuchar (D-MN), Ron Johnson (R-WI), Patrick Leahy (D-VT), Thom Tillis (R-NC), Doug Jones (D-AL), Joni Ernst (R-IA) and Tina Smith (D-MN).

The Family Farmer Relief Act of 2019 raises the Chapter 12 operating debt cap to $10 million vs. the current limit of $4.2 million, allowing more family farmers to seek relief under the program.

COMPARING BANKRUPTCY TYPES
In the bankruptcy world, Chapter 12 is unique in that it is only available to family farms.

The different bankruptcy types include: Chapter 7, Chapter 9, Chapter 11, Chapter 12, and Chapter 13, and Chapter 15.

While Chapter 7 is the most common filing, Chapter 11 is made more for corporations to reorganize debt. However, Chapter 11 is more expensive to file and has fewer protections for the debtor.

Farmers with debt above $4.2 million are forced to file Chapter 11, but it doesn’t have the protections that Chapter 12 has to try and help the farmer keep the farm and assets.

Also, in Chapter 12, a judge makes the decision on a reorganization plan, the creditors don’t get a chance to vote on it.

The farmer has to be able to cash flow the written-down debt. But, it’s much more debtor friendly than the other bankruptcy chapters.

In Chapter 12, farmers have to be able to prove that the creditors would get more than if the assets were liquidated in a Chapter 11 filing.

In 1986, then-U.S. President Ronald Reagan signed into law a temporary Chapter 12 bankruptcy filing procedure.

It wasn’t until 2005 that Chapter 12 became a permanent part of the bankruptcy code.

FARM BANKRUPTCIES MOVE UP
Interestingly enough, Maura Sadovi, a reporter with Debtwire, an Acuris media company, released the findings this week of an in-depth effort to discover the types of farmers filing for Chapter 12 bankruptcy.

To tabulate the findings, Sandovi conducted an examination of all Chapter 12 filings logged on PACER, the federal court system’s online database.

In 2018, there were 474 new Chapter 12 filings, up from 458 in 2017 and up materially from 317 in 2014, according to filings from PACER.

“Already this year, the upward trend is continuing, with 110 filed through March 22 compared with 100 in the same period a year earlier,” Sadovi told Agriculture.com.

Though the number of bankruptcies is a small subset of the 2.5 million U.S. farms, the trend is concerning, Sadovi says.

Chapter 12 filings were one of the only areas where bankruptcies were on the rise, according to the PACER data.

For her story, Sadovi interviewed multiple analysts, with some projecting farm bankruptcies to go even higher in 2019.

“The canary in the coal mine is sick, but not dying,” one economist was quoted as saying to Sadovi.
Sadovi added, “I’ve talked to other financial experts that say that they are seeing Chapter 11 bankruptcy filings rise in the agricultural sector, as well.”

TYPES OF BANKRUPT FARMS
Sadovi’s research shows that of the 474 Chapter 12 bankruptcy filings, corn and dairy operations had the most at 16% each. Also, 15% of all filings were soybean operations, and beef cow operations came in fourth place with 14%.

Other filing categories included produce farms, wheat, poultry, and others.

TOP 10 STATES FOR CHAPTER 12 BANKRUPTCY FILINGS
Sadovi says when you look at the filings by state, Wisconsin had the most cases at 47, equaling 10% of the total.

The states of Kansas, Minnesota, Texas, Georgia, New York, Nebraska, California, Indiana, and Pennsylvania all followed in that order.

DEBT IS THE CATALYST
There are numerous factors as to why the bankruptcy cases are going higher, says Sadovi.

Dairy farmers have been hit with souring milk prices, soybean farmers have been fighting low commodity prices due to trade disputes, and all farm operations face higher debt, economists told Sadovi.

“Some of the smaller farmers had access to capital in 2012 and 2013 to improve operations with technology, new equipment, etc. But the commodities markets fell sharply. Farmers are left strapped with larger debt.”

Sadovi was quick to point out that the total direct USDA Farm Service Agency loans outstanding to farmers also rose to $11.2 billion in January from $10.7 billion a year earlier, and from the $7 billion area from 2010 to 2014.

“Delinquencies on direct Farm Service Agency loans rose in January to 21%, from 17.9% in January of 2018, the highest for the month since 2010 when they touched 23%, according to the USDA,” Sadovi stated in her story published in Debtwire, this week.

HIGHER PRICES?
There is good news to report. On March 6, the USDA’s latest Farm Income Forecast, predicted a 10% rebound in net farm income in 2019.

“It doesn’t make up for the estimated 16% decline in 2018 from the year earlier, some economists say,” Sadovi says.

Also, 2019 milk, corn, and wheat prices are forecast to go higher, yet soybean prices are expected to fall, according to the USDA forecast.

[Anti Federalist]

Not Free Trade, “fair trade”. There is a vastly huge difference.

I don’t recall bashing anybody, I merely report the news. Perhaps take it up with Lew Rockwell.

Fair enough, I realize it was a copypasta, happens to me all the the time.

[Krugminator2]

Farmers are "really hurting" due to artificial markets.

When, not if, the global market corrects itself those who don't produce tangible goods will be left eating the paper they push........Digital or analog.

China has a leg up what with their plethora of small farms and a large portion of the worlds manufacturing. Maybe they'll take Wall Street refugees?

Wrong for 243 years and counting. Maybe some day everyone will go back to living like cavemen. Wouldn't count on it though.

[Swordsmyth]

It's hard to find newz from China and I trust the MSM as far as I can drop kick an anvil...

I have read about the swine issue but to the best of my limited knowledge pigs there are raised on small farms instead of warehouses like most here are, meaning disease is far less likely yo be catastrophic...

It is the small farms that are hit the worst because they don't follow proper protocols to avoid spreading the disease.

[Swordsmyth]

China is not only regrouping within, they are also seeking other countries to deal with, for example, Brazil, which is in the OP.

This "trade war" is a bad mistake. Either farmers here in America will sink, or we will be required to bail them out.

Fighting back in the trade war is required to keep us from being reduced to an agrarian peasant economy and turned into a communist country.

The farmers set themselves up for trouble in many different ways and I refuse to dry for one of the most subsidized industries we have.

[PAF]

Fighting back in the trade war is required to keep us from being reduced to an agrarian peasant economy and turned into a communist country.

The farmers set themselves up for trouble in many different ways and I refuse to dry for one of the most subsidized industries we have.

Look, I know you hate the thought of a true Free Market economy without all of the subsidies and bailouts. But you don't have to keep rubbing my nose into it just because I disagree with you.

[Swordsmyth]

Look, I know you hate the thought of a true Free Market economy without all of the subsidies and bailouts. But you don't have to keep rubbing my nose into it just because I disagree with you.

LOL

As if if Chinese manipulation is a true Free Market economy without all of the subsidies and bailouts.

LOL