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MORE STABLE: Ohio had fewer bankruptcies than the rest of the country, with nine new farm bankruptcy filings from July 1, 2018, to June 30, 2019.

Farm bankruptcies: Ohio doing better than nation

Ohio farmland owners have fared much better than their counterparts in many Midwest states.

Farm bankruptcies across the nation are up, but Ohio’s rate remains among the lowest in the Midwest, according to a new analysis by researchers at Ohio State University College of Food, Agricultural, and Environmental Sciences (CFAES).

Ohio had nine new farm bankruptcy filings from July 1, 2018, to June 30, 2019. That’s compared to 45 in Wisconsin, 39 in Kansas and 32 in Minnesota — the three states in the nation with the highest number of new filings during that period.

Farm bankruptcies in Ohio have been stable in recent years, with a total of under 10 annually since 2017, says Robert Dinterman, a postdoctoral researcher in agribusiness at CFAES. Dinterman and Ani Katchova, associate professor, analyzed farm bankruptcy trends over the past decade.

Currently, Ohio has 1.2 farm bankruptcies for every 10,000 farms. That’s less than half of the national rate of 2.6 for every 10,000 farms, Dinterman explains. The only other Midwest states with a lower farm bankruptcy rate than Ohio’s are Missouri and Kentucky.

“Ohio is particularly resilient and has not seen the massive increase of farm bankruptcies that some states have,” Dinterman says.

In Nebraska and Kansas, land values have been on the decline for the past three years, which has contributed to an increase in farmers filing for bankruptcy, he says. The value of land is the biggest factor that influences farm bankruptcy filings, because a lot of people use their land as an asset against debts.

Ohio farmland owners have fared much better than their counterparts in many Midwest states. In Ohio, land values are up this year by 1.5% on average — just slightly below the U.S. average of 1.9% .

Wisconsin and Minnesota bankruptcies are high, because both states have a concentration of dairy farmers, and those farmers have been struggling from slumps in milk prices, Dinterman says.

Farm bankruptcies up across U.S.

Nationwide, farm bankruptcies are up for the third consecutive quarter.

“It’s not cause for alarm, but something to watch,” Dinterman says.

Bankruptcies nationally are expected to rise with the passage of the Family Farmer Relief Act of 2019, which will more than double the debt limits for those who can file for a farm bankruptcy — from $4.4 million to $10 million, he says.

Farmers or family fishermen who file for bankruptcy pursue Chapter 12 bankruptcy. After filing, individuals have to keep their agricultural businesses open while they work to pay off their debts over a period of three to five years. A certain level of those debts is forgiven.

Some farmers have opted to go out of business without first filing for bankruptcy, so national bankruptcy numbers do not account for those who closed down their businesses. Also, farmers can file for other forms of bankruptcy, but U.S. courts do not track the profession of those who file — so it’s difficult to know the total number of farmers filing for bankruptcy.

At the same time farm bankruptcies are on the increase nationwide, net farm income is declining. Aside from 2017, net farm income in the nation decreased every year since 2013 and is currently about half of the historical high of 2013, Katchova says.

“Sustained low income is putting strain on farmers — especially farmers with a lot of debt,” she says.

To view the analysis of bankruptcy rates done by Dinterman and Katchova, visit go.osu.edu/farmbankruptcy.

Source: OSU Extension, which is solely responsible for the information provided and is wholly owned by the source. Informa Business Media and all its subsidiaries are not responsible for any of the content contained in this information asset.
 
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