The weakened farm economy continues to be reflected in Chapter 12 farm bankruptcies. Bankruptcy court statistics show 38 farm bankruptcies were filed in Nebraska last year, 11 more than in 2018 (Figure 3).
The increase in filings in Nebraska was not unusual compared to other states. Nationwide, Chapter 12 bankruptcies were up 20 percent totaling 595 filings. Figure 4 maps the number of filings by state compiled by John Newton, an economist with the American Farm Bureau. Wisconsin and Georgia had the most filings with 57 and 41 respectively. Nebraska and Kansas followed. Overall, states in the Midwest region saw bankruptcies increase 17 percent in 2019 while the Northwest, Southeast, and West regions saw filings increase 79 percent, 48 percent, and 39 percent respectively.
While the growth in bankruptcies is concerning, the number should be kept in perspective. Nationwide, the number is far less than those seen in the middle 1980s during the farm crisis. Additionally, delinquency rates at commercial banks highly concentrated in agriculture remain low. The increase in filings in Nebraska resulted from many events—low prices, trade disputes, flooding, winter cyclone bomb, prevented and late planting, livestock death losses, and others. Changes in the law raising the debt ceiling under Chapter 12 also contributed to the increase. The financial pressure on Nebraska’s farmers and ranchers continued to build in 2019. Whether it will continue this year will come down to export opportunities for Nebraska livestock producers and whether larger grain and oilseed crops likely to be produced this year will be offset by enhanced trade.
Figure 3. Chapter 12 Farm Bankruptcies in Nebraska
Source: U.S. Bankruptcy Courts
Figure 4. Chapter 12 Farm Bankruptcies by State, 2019