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
What are the details of President Joe Biden’s coronavirus relief plan?
The $1.9 trillion plan would aim to speed up the vaccine rollout and provide financial help to individuals, states and local governments and businesses. Called the “American Rescue Plan,” the legislative proposal would meet Biden’s goal of administering 100 million vaccines by the 100th day of his administration, while advancing his objective of reopening most schools by the spring. It would also include $1,400 checks for most Americans. Get the rest of the specifics here.
What kind of help can small businesses get right now?
A new round of Paycheck Protection Program loans recently became available for pandemic-ravaged businesses. These loans don’t have to be paid back if rules are met. Right now, loans are open for first-time applicants. And the application has to go through community banking organizations — no big banks, for now, at least. This rollout is designed to help business owners who couldn’t get a PPP loan before.
What does the hiring situation in the U.S. look like as we enter the new year?
New data on job openings and postings provide a glimpse of what to expect in the job market in the coming weeks and months. This time of year typically sees a spike in hiring and job-search activity, says Jill Chapman with Insperity, a recruiting services firm. But that kind of optimistic planning for the future isn’t really the vibe these days. Job postings have been lagging on the job search site Indeed. Listings were down about 11% in December compared to a year earlier.
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