- Farm bankruptcies through September surged 24% versus the prior year, to 580, amid a perfect storm created by Donald Trump's trade war with China and Europe, slumping commodity prices, and a year of unfavorable weather.
- The report showed bankruptcy filings at their highest in the state of Wisconsin with 48 filings, followed by 37 filings in Georgia, Nebraska, and Kansas.
- The spillover effect: suicide rates among farmers rise and many rural towns dependent on agriculture become ghost towns.
- President Trump has already earmarked $28 billion in financial assistance for farmers whose sales to China have been crippled or blocked.
Farm bankruptcies in September surged 24% amid a perfect storm created by President Donald Trump's trade war with China and Europe, slumping commodity prices, and a year of unfavorable weather. This August, the USDA reported that more than 19.4 million acres of farmland nationwide weren't planted due to record spring rains and historic, catastrophic flooding.
According to a report released Wednesday by the American Farm Bureau Federation, the nation's largest general farm organization, U.S. farmers increasingly depend on trade aid and other federal programs for income. Record-high debt and a rise in Chapter 12 farm bankruptcies should come as no surprise, the Farm Bureau reported.
"Data from the U.S. Courts reveals that for the 12-month period ending September 2019, Chapter 12 farm bankruptcies totaled 580 filings, up 24% from the prior year and the highest level since 676 filings in 2011," it said.
The figures also highlight the importance of a "phase one" deal the administration is currently negotiating with Beijing to increase agriculture imports in return for a pause in escalating U.S. levies. China said on Friday it has reached a consensus in principle with the U.S. during trade talks this week.
The report showed bankruptcy filings at their highest in the state of Wisconsin with 48 filings, followed by 37 filings in Georgia, Nebraska, and Kansas.
Nine other states experienced Chapter 12 bankruptcy filings at or above 10-year highs.
As early as February of this year, U.S. Agriculture Secretary Sonny Perdue acknowledged that farm debt rivaled that of the '80s, a problem compounded by a loss of China and other export markets due to President Trump's trade disputes.
The effect of the trade war has been acute. Over the first eight months of 2019, Chinese importers purchased about $8 billion of U.S. agricultural goods, far below the $19.5 billion total for 2017 before the trade battle broke out, the U.S. Department of Agriculture reports.
President Trump has already earmarked $28 billion in financial assistance for farmers whose sales to China have been crippled or blocked. On August 23, he signed into law the Family Farmer Relief Act of 2019, which increases the debt limit for family farmers seeking to reorganize under Chapter 12 bankruptcy to $10 million from an adjusted $4.4 million.
But neither those payments nor the farm bill being hammered out in Congress will substantially change the outlook for farm country. Ever since federal farm policy told farmers to "get big or get out" in the '70s, the push toward consolidation has created decades of slow-burning crisis for many farmers. The problem has some rural residents re-envisioning rural policy from the ground up.
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Problems for farmers are compounded by a six-year slump in crop and livestock prices, according to Farm Aid, the non-profit music festival and advocacy group formed in 1985 to keep American family farmers on their land. Overproduction of corn and soybeans, at a time when China imports less and less U.S. commodities, has come as the major companies gobble up more farmland globally; according to the United States Department of Agriculture (USDA), 80% of American farmland today is owned by big Ag companies and some 30% owned by non-operators who lease it out to farmers.
Ben Riensche is one farmer being squeezed by the trade war and climate change. He farms 15,000 acres of corn and soybeans with his 89-year-old father in Jesup, Iowa. Record spring and summer rains, and now early fall snow — two snowstorms that prevented harvesting in the past week alone — have hampered operations for their Blue Diamond Farming Co., as have the loss of the Chinese market.
"We're way down on sales to China," says Riensche, 58. "The balance sheet of who ate what in the world stayed the same; the distribution pattern went all to hell." The trade wars, he adds, "opens the door for your competitors, which would be South America, to ramp up production."
A bright note is the opening of diversified markets, including other Asian as well as European countries. What has also helped farmers like the Riensches are government subsidies.
"Without the MFP, or Market Facilitation Payments, from the government," he says, "there'd be a lot more pain."
Today's conundrum in the heartland is not new. U.S. farmers and ranchers have always lived a precarious existence.
In 1933, at the height of the Great Depression, farm income in the U.S. declined by 60%, resulting in more than 200,000 families losing their farms to foreclosure. At the same time, short-sighted farming practices and prolonged periods of drought followed by windstorms blew away 100 million acres of the Great Plains' fertile soil. The Dust Bowl, as it was called, displaced some 2.5 million people, including more than one-third of all farmers, in the largest migration in U.S. history.
Barely 50 years later, the farm crisis of the 1980s saw an estimated quarter of a million farm foreclosures. The causes of that crisis were complex, but as during the worst years of the Great Depression, the underlying factor was financial. When the Federal Reserve tightened its economic policy in 1979 in an attempt to curb inflation, interest rates skyrocketed from on average 6.8 % three years earlier to 21.5% by 1981. Overproduction and a U.S. grain embargo against the Soviet Union made matters worse, forcing thousands of farmers into bankruptcy. By 1984, U.S. farm debt was 15 times than what it had been in 1950, while net farm income dropped from $19 billion in 1950 to $5.4 billion less than 35 years later.
As in the 1930s and 1980s, at stake today is more than the survival of the family farm. The future of family farms is also the future of rural American communities and culture.
A ripple effect of the crisis has turned some farm-dependent communities —like Downs, Kansas, population 103 and dwindling — into ghost towns, as farm families leave, jobs disappear, stores close and dust from soil erosion covers sidewalks and streets.
One under-reported effect of the current crisis, meanwhile, is the rising incidence of suicide in the Heartland. According to the Centers for Disease Control and Prevention, the suicide rate for farmers and agricultural workers is 1.5 times higher than the national average and could be higher, given that some farm suicides may be attributed to farm-related accidents.
While reliable statistics on the suicide rate among U.S. farmers aren't available, states with high agricultural populations have seen a noticeable rise in depression, calls to suicide hotlines and recorded deaths. In Wisconsin alone, where net farm income has plunged 50% in six years, a record 915 suicides were reported in 2017, the last year for which this data is available, according to the Wisconsin Department of Health Services.
Yet American farmers have also always been resilient. Many of the families still working the land are third- and fourth-generation farmers and ranchers, relying on one another and on themselves.
"When you're out in the middle of a field 20 miles from town and your tractor breaks down, you don't call someone and wait for him to come — you fix it," says Pat O'Toole who, with his wife Sharon, runs Ladder Ranch, a five-generation sheep and cattle operation in Wyoming at the headwaters of the Colorado River.
They and fellow ranchers and farmers are helping fix the problems facing the family farm in a number of ways.
To counter the effects of climate change and the droughts and floods that have become all too common in the Midwest, West and South, they are experimenting with new varieties of seeds and crops and more sustainable methods of farming the land. To help do this, they have also joined forces with non-profit environmental, advocacy and policy groups across the country.
O'Toole sits on the board of the Family Farm Alliance, a lobbying and advocacy group aligned with farmers and ranchers in Wyoming and Colorado, as well as with governments and industries, on water supply and irrigation issues.
In Colorado, the AGree Economic and Environmental Risk Coalition works with farmers and ranchers to protect both natural resources and farmers' livelihoods.
Indigo Agriculture (Indigo AG), a start-up which advocates for regenerative farming practices, also works alongside growers as well as buyers to produce high-quality, sustainably-produced food and fiber. In addition, the company develops microbial and digital technologies that improve grower profitability and environmental sustainability, in turn improving consumer health.
These and other groups are turning to farmers to counter the greenhouse effect and its role in climate warming. In May, Indigo AG announced an initiative to remove 1 trillion tons of carbon dioxide from the atmosphere by paying farmers to modify their farming practices. The company forecasts signing up 3,000 farmers on more than a million acres worldwide by the end of the year.
As American farmers look for new crops to supplement or replace corn and soybeans, which are subject to wild swings in weather and markets, they have begun testing the viability of a plant once considered a weed: "Ditch grass," or hemp, a fast-growing strain of the cannabis sativa plant, minus the psychotropic THC compound in marijuana, that is used in everything from CBD oil, food-grade oil and protein powder to rope, clothing and paper.
In Colorado, farmers who once grew alfalfa replanted a portion of their acreage this growing season with hemp.
In Indiana and Michigan farmers are already harvesting the first legal hemp crop for the first time since World War II. Their efforts are supported by the Midwest Hemp Council, an information center and policy group that promotes the hemp economy for farmers in the Hoosier and neighboring states.
In Iowa, one of the ag states hardest hit by the current farm crisis, Republican Governor Kim Reynolds recently signed into law a state "hemp bill." The Iowa Department of Agriculture and Land Stewardship is now developing a plan to license and regulate hemp production. If approved by the USDA, Iowa farmers will begin planting the crop in 2020.
Back at the Ladder Ranch in southern Wyoming this October, as several of the O'Toole's six grandchildren — and sixth generation on the land — scampered indoors during a snowstorm, Pat talked about his hopes for reversing a long-standing trend of the young leaving the ranch and farm for jobs and lives elsewhere.
"We're not appealing to youth the way we should be because there isn't any money in it," he said. "As a family, we're trying to figure out how in the long term we can survive."
Rather than wait for the trade wars to end or commodity prices to rise, farmers and ranchers like O'Toole are thinking up new uses of the land that are not agricultural. He and his wife Sharon have opened Ladder Ranch to paying guests who come year-round to hunt, fish or simply stay and enjoy the scenic spread.
"Staying here is everything to us," he says. "Our daughter chaired the state's Environmental Quality Council. Our son is the youngest member on the American Farmland Trust Board. Our grandkids, who range in age from seven to 15, are all competent riders and ropers. They're proud of who they are. As a philosophy, we buy into the saying 'If you're not at the table, you're on the menu.' So we all believe in supporting our community and in keeping on doing what we're doing because it's a fundamentally good way of living."