In 2022, the Chapter 12 bankruptcy rate reached the lowest level in nearly two decades, 0.78 bankruptcies per 10,000 farms. Under Chapter 12 bankruptcy, a financially distressed family farmer can propose and carry out a plan to repay their debts fully or partially, and the total number of these bankruptcies is an indicator of financial stress in the farm sector. In 2003, the annual bankruptcy rate reached a high of 3.3 per 10,000 farms and then declined to a low of 0.5 per 10,000 farms in 2004.
After 2010, the bankruptcy rate declined until 2014 but started to increase again in 2015 with another peak in 2019 (2.9 bankruptcies per 10,000 farms). Since then, bankruptcies have declined to the lowest level in two decades after 2004. In 2022, 0.78 farms per 10,000 filed for Chapter 12 bankruptcy, almost two-thirds lower (61.0 percent) than the 10-year annual average of 2.00 bankruptcies per 10,000 farms.
Based on the data from U.S. courts, the number of bankruptcies not only declined nationally but also in the major agricultural States. When examining the 10-year average bankruptcy rate (2013-22) for major agricultural states, Wisconsin had the highest rate at 5.66 per 10,000 farms, followed by Nebraska and Kansas. Texas had the lowest average bankruptcy rate among the top 10 agricultural States at 0.77 per 10,000 farms.
EDITOR’S TAKE:
No real shocking news in this report. We would expect that with the farm/ranch economy in excellent financial condition that bankruptcies would, in fact, decline. And that is exactly what the data shows. Not only the lowest in over two decades, but well below the 10-year annual average. Like we have stated many times over the past few years, farmers/ranchers are your best customer prospects! Put them at the top of the list and be sure your marketing efforts are pointed in their direction. And if it takes a trip or two to visit the farmers/ranchers in the area, by you or someone in your dealership who is charged with sales to this market, it is a wise investment. Farmers/ranchers have money and they are willing to spend on the things they want and need for their operation – like trucks! Make sure you are on AgTruckTrader.com, the only website designed specifically to put your inventory in front of the farmer/rancher target audience!
