There’s bad news in the realm of American agriculture: farms in the midwest are filing for bankruptcy in droves, and our own policies may be to blame.
According to a recent analysis from the Federal Reserve Bank of Minneapolis, a total of 84 farms located in Minnesota, Wisconsin, Montana, South Dakota, and North Dakota filed for bankruptcy over the last year. That’s more than double the number of bankruptcies of this kind filed between 2013 and 2014. Over the past four years, the number of farm bankruptcies filed in Minnesota alone increased from eight to 20. Banks are also seeing an increasing number of farms falling behind on payments, and a report from the Federal Reserve Bank of Kansas City notes that bankers in Kansas, Colorado, Nebraska, Oklahoma, Wyoming, Missouri, and New Mexico have reported lower farm income from the year prior — suggesting this may be a nationwide issue. And according to analysts, the worst may be yet to come.
While filing for Chapter 7 bankruptcy takes only about six months, Chapter 12 bankruptcy (the type designated for family farmers and fishermen) can take three to five years to resolve. Like with Chapter 13 bankruptcy, those who file for Chapter 12 have to come up with a plan to pay back creditors while they continue with their operations.
With nearly 3 million farmers working all across the U.S., it’s hard to imagine that so many could be failing financially. Meat consumption is increasing throughout the country, with experts saying that it should reach levels of more than 200 pounds per year per capita in 2018. In fact, some experts say that overproduction actually contributed to this new problem — farmers were simply too efficient for what the market demand will bear. And given the low market prices for beef, corn, milk, and soybeans, it’s no surprise farmers are struggling.
Those conditions, say experts, were made worse by rising interest rates and the Trump administration’s decision to place $200 billion in tariffs on Chinese goods. The idea might have been to discourage Americans from purchasing the items while simultaneously encouraging China to buy more U.S. goods, but the plan backfired. Instead, China placed its own tariffs on American exports. Making things worse was the U.S.’s decision to place tariffs on imported steel, a move which angered other trade partners and caused them to place duties on American goods like dairy, apples, potatoes, and pork.
Understandably, this has had a significant effect on farmers. According to Vox, prices for agricultural items have fallen to their lowest point in the last decade. And while the president has proposed the idea of a farm stabilization package to provide bailouts, the reality is that these new policies aren’t doing anything to decrease our trade deficit with China — and are doing a lot to harm hardworking Americans.
At this point, experts are predicting that this situation will get worse before it gets better. All signs point to a continuing increase in the number of farm bankruptcy filings. Perhaps if Americans make more of an effort to shop locally and seasonally, farmers may fare at least slightly better.