South Dakota farm bankruptcies increase in 2019

KELOLAND.com Original

SIOUX FALLS, S.D. (KELO) — South Dakota had six times more bankruptcies from 2018 to 2019, a study from the American Farm Bureau said.

In a 12-month period that ended in September, the state had 13  farm, or Chapter 12 , bankruptcies. The state had two in a prior 12-month period.

The state had 51 total farm bankruptcies from 2009 to 2018, according to the American Farm Bureau.

South Dakota isn’t alone.  Iowa, Nebraska and Minnesota also had increases. Minnesota had 31 bankruptcies while Iowa had 24 and Nebraska had 37. Nebraska had six in the prior year, Iowa, 10, and Minnesota, 7.

The study said there was a 24% increase in bankruptcies from the prior year.

Scott VanderWal, a Volga farmer and South Dakota Farm Bureau President and American Farm Bureau Vice President, cited three reasons for the increase: Low commodity prices that have not adequately increased since 2013 and 2014, the trade wars, including the tariffs on China, and weather problems. The spring weather in South Dakota was so poor it kept farmers from planting many acres, he said.

Although the number of bankruptcies is not at the levels of the 1980s, VanderWal said the numbers are still very concerning.

“The U.S. needs a healthy agriculture economy that assures we can raise our own food,” VanderWal said. “It’s really a national security issue.”

VanderWal compared access to homegrown food in the U.S. to America’s dependence on foreign oil. The U.S. doesn’t want big swings in food prices nor does it want times of limited access, he said.

In the 1970s long lines for gasoline were common because of limited access to foreign oil, VanderWal said. He doesn’t want the same thing to happen with food.

Angel Kasper, the outreach director for AgUnited, a non-profit based in Sioux Falls, said not only does a bankruptcy increase impact the farm economy, it can also impact the consumer.

Fewer farmers means fewer food producers and likely higher prices, Kasper said.

It’s also a trend that’s not good for the future of farming, she said.

The average farmer in South Dakota is in his 50s, Kasper said. As those farmers leave the field, who will take their place?

Main Street feels the impact if farmers are struggling financially, Vanderwal said. As more money needs to be devoted to the farm operation, farmers will spend less money on items such as furniture, vehicles, flowers and such, VanderWal said.

Yet, while farm bankruptcies have risen, The U.S. Department of Agriculture released a report on Nov. Nov. 27 that net farm income is expected to increase this year to its highest level since 2014.

The USDA said that while  farm income would increase by $8.5 billion to $92 billion in 2019, much of that is because of governmental payments. But the American Farm  Bureau said while income is predicted to increase, debt will reach a record high $611 billion.

VanderWal said insurance payments and governmental program payments that provide relief from the losses in the tariff war will help farmers in 2019 but those aren’t long-term fixes.

Farmers need a long-term trade agreement with Canada and Mexico. Once that agreement is in place, the U.S. can then work on agreements with Europe and Pacific Rim countries, VanderWal said.

South Dakota had  29,600 farms with about 43.2 million acres in 2018, according to the United States Department of Agriculture. The state ranked 9th in farm income in 2018. USDA reports show a decline in the number of farms from 31,900 in 2010.

Key pieces needed to file for Chapter 12 bankruptcy, according to the American Farm Bureau, are: More than 50% of the gross income for the prior year must have come from farming and at least 50% of the debt must be related to farming. None of the debt can include a house.

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