Grasshopper Damage

The weakening farm economy is showing up in Chapter 12 farm bankruptcies. Bankruptcy court statistics show 11 bankruptcies were filed in Nebraska during the first half of the year, already more than the 7 filed in all last year (Figure 4). To be fair, last year had the third-lowest number of bankruptcies filed since 2000 and was the fourth consecutive year filings had declined. So, filings were bound to increase at some point. Still, the uptick does indicate growing financial stress on farms. The increase in bankruptcy filings was not limited to Nebraska. Nationally, 116 bankruptcies were filed during the first six months compared to a total of 139 filed all last year. Filings last year were off 18% from 2022, a record low.

High commodity prices and farm incomes in 2022 led to the record low bankruptcy filings last year. This year, low prices, slow exports, higher interest rates, and higher costs are putting the squeeze on farm finances. Other signals also point to growing financial concerns in agriculture. The latest agricultural credit survey by the Kansas City Federal Reserve Bank found farm loan repayment rates declined and repayment problems on farm loans rose slightly. The Bank also reported farm income in Nebraska showed the largest decline in the Tenth District. Given current market conditions, the deterioration in farm finances is likely to continue.

FIGURE 4. CHAPTER 12 FARM BANKRUPTCIES IN NEBRASKA

Source: U.S. Bankruptcy Courts

FIGURE 5. CHAPTER 12 FARM BANKRUPTCIES BY STATE, 2023