COVID-19 is likely leading more U.S. farmers to file for bankruptcy
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Mitchell Hora is a seventh-generation family farmer in Washington County, Iowa. He plants corn and soybeans and said finances were tough even before this crisis. It costs more to grow the crops than he can charge for them.
“You run the numbers and it’s like, holy smokes, like how does this even get close to working?” Hora said.
He said most farmers in the United States can’t think about the future or invest in their farms because they’re living harvest to harvest.
“I gotta have maximum revenue coming in so I can pay off my debt, pay the next interest payment. And that is not good,” he said.
Long before the coronavirus pandemic hit, American farmers were struggling. They lost important export markets because of the U.S.-China trade war and growing international competition. Then this health crisis emerged and disrupted an already volatile supply chain. That has agricultural economists predicting a rise in farm bankruptcies across the United States.
Part of the problem is that 80% of farm assets are tied up in land values, and those values have been declining for the past few years. And now, COVID-19 has disrupted farmers’ supply chains.
“It’s been hard for them to get a lot of their livestock to slaughterhouses and whatnot,” said Robert Dinterman, postdoctoral researcher in agribusiness at Ohio State University.
His data shows farm bankruptcies up about a quarter from last year. But he expects many more as the legal system gets back to normal.
“We’re probably going to see quite a jump in the second quarter, especially if bankruptcy courts start opening up again,” Dinterman said.
Many farmers forced into bankruptcy will continue to grow crops, of course, as demand for food is pretty consistent.
Jason Skaggs with the Texas and Southwestern Cattle Raisers Association said his members are determined to get through the pandemic.
“We’ve survived drought, wildfires and hurricanes. Obviously, this is a new challenge, but how ranchers go about attacking these kinds of things and dealing with them is the same,” he said.
But surviving COVID-19 won’t be easy for many farmers who were up against it before the pandemic. This particular crisis adds another layer of difficulty. Greater restrictions on immigration have limited the supply of labor, a workforce many farmers rely on to help produce their crops.
COVID-19 Economy FAQs
When does the expanded COVID-19 unemployment insurance run out?
The CARES Act, passed by Congress and signed by President Donald Trump in March, authorized extra unemployment payments, increasing the amount of money, and broadening who qualifies. The increased unemployment benefits have an expiration date — an extra $600 per week the act authorized ends on July 31.
Which states are reopening?
Many states have started to relax the restrictions put in place in order to slow the spread of COVID-19. Although social-distancing measures still hold virtually everywhere in the country, more than half of states have started to phase out stay-at-home orders and phase in business reopenings. Others, like New York, are on slower timelines.
Is it worth applying for a job right now?
It never hurts to look, but as unemployment reaches levels last seen during the Great Depression and most available jobs are in places that carry risks like the supermarket or warehouses, it isn’t a bad idea to sit tight either, if you can.
You can find answers to more questions here.
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