I happened upon a story last month in the Milwaukee newspaper that offered this startling statistic: Between January and May, more than 300 Wisconsin dairy farms shut down, including 90 – the equivalent of three a day – in April alone.
And that was on top of the 700 lost in 2018, according to the article, part of a year-long reporting effort by media partners to identify the market forces battering the state’s dairy industry.
Separately, Wisconsin led the country for the third straight year in farm bankruptcies, according to the newspaper. That standing was confirmed in an exhaustive look at 2018 filings nationwide by the financial news website Debtwire, which put Wisconsin at the head of a Top 10 list of states for Chapter 12 family farm bankruptcies.
Guess what other state was on the list: New York, tied at No. 5 with Georgia.
Data from U.S. Bankruptcy Court for the Northern District of New York, which includes the Capital Region but stretches west to Syracuse and Binghamton and north to the Canadian border, show rather modest Chapter 12 numbers. They’re higher, though, than the state’s western, eastern and southern court districts, comparison data show.
Last year, 15 Chapter 12 filings were made in our district, close to the number also seen a decade earlier. In between, they increased in the aftermath of the Great Recession – to 22 in 2012 – but settled down in more recent years. As of this week, 2019 Chapter 12 filings stand at seven.
Chapter 12 is a lesser-known cousin to Chapter 11, which businesses use to reorganize debt while staying open, and Chapter 7, in which assets are liquidated. Chapter 12 was specifically created to help “family farmers” keep going while repaying debts.
The American Farm Bureau Federation points out that one advantage to Chapter 12 is a seasonal repayment schedule over three to five years that recognizes farm income is not steady but cycles with planting and harvesting.
But the federation is among the groups pushing for a change to Chapter 12’s $4.2 million cap on debt for qualifying filers.
“[T]he liability cap under Chapter 12 does not align with the modern credit and risk environment associated with family farming,” it says in support of a bipartisan bill in Congress that would raise the cap to $10 million.
The Family Farmer Relief Act of 2019, as the bill is known, was introduced in the Senate in March by Republican Charles Grassley of Iowa and in the House a few weeks later by freshman New York Democrat Antonio Delgado of Rhinebeck (whose 11-county district, he wrote in a recent opinion piece, has more than 5,000 farms.)
A spokesman for the New York Farm Bureau, which also supports the bill, said it was assigned to House and Senate ommittees after introduction. The bill-tracking site GovTrack.us gives it high odds for enactment.
Marlene Kennedy is a freelance columnist. Opinions expressed in her column are her own and not necessarily the newspaper’s. Reach her at [email protected].
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