US Farm Belt Bankruptcies Climb, Canada The Beneficiary Of Trump's Trade Policy

Trump's trade policies put US farmers at risk. One beneficiary is Canada.

Trade disputes over agriculture add pain to low commodity prices that have been grinding down American farmers for years.

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Throughout much of the Midwest, U.S. farmers are filing for chapter 12 bankruptcy protection at levels not seen for at least a decade, a Wall Street Journal review of federal data shows.

Bankruptcies in three regions covering major farm states last year rose to the highest level in at least 10 years. The Seventh Circuit Court of Appeals, which includes Illinois, Indiana and Wisconsin, had double the bankruptcies in 2018 compared with 2008. In the Eighth Circuit, which includes states from North Dakota to Arkansas, bankruptcies swelled 96%. The 10th Circuit, which covers Kansas and other states, last year had 59% more bankruptcies than a decade earlier.

States in those circuits accounted for nearly half of all sales of U.S. farm products in 2017, according to U.S. Department of Agriculture data.

More than half of U.S. farm households lost money farming in recent years, according to the USDA, which estimated that median farm income for U.S. farm households was negative $1,548 in 2018. Farm incomes have slid despite record productivity on American farms, because oversupply drives down commodity prices.

Nationwide, the volume of loans to fund current operating expenses grew 22% in the fourth quarter from year-ago levels, hitting a quarterly record of $58.7 billion, according to the Federal Reserve Bank of Kansas City. The average size of these loans rose to $74,190, the highest fourth-quarter level in history when adjusted for inflation, the bank said.

To stay in business, some farmers have sold second homes purchased during a prosperous period earlier in the decade. They or their spouses have sought off-farm jobs to bring in additional income or pay for health insurance. Others have shrunk their operations, giving up rented ground or selling equipment to lower debt loads.

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Gary Anderson 1 month ago Contributor's comment

From Mish: Trump's trade policies have been an unmitigated disaster.

And: The US has trillion dollar deficits as far as the eye can see, and recession hasn't even hit. Unfortunately, the most likely way the trade deficit drops is via an import demand collapse in the next recession.

Trump's deal will be like the deal he made with Korea. It won't be a win for America. It won't bring business to our shores, except on the edges. Maybe some high end production. Wages are too high here in comparison to China. That can't be changed by any deal.