Current Farm Challenges Not Comparable to 1980s Crisis

WASHINGTON, DC – Most know of the Farm Crisis of the 1980s, and some of us even experienced it. Times are tough on the farm right now as commodity prices have fallen significantly, and in some cases by 50 percent since 2014. Unlike the Farm Crisis of the 1980s, today’s interest rates are not between 18-20 percent, land values have not dropped 1-2 percent per month and lending is not balance-sheet-driven. In 1987, there were 5,788 Chapter 12 family farm bankruptcies filed, while in 2019 there were a total of 595 filings. This year does present a new set of challenges that will affect the ag sector in different ways. Changing consumer demand, supply chain disruption, constricted trade, labor availability and broader economic weakness- coming in the wake of years of depressed commodity prices – are likely to drive an increase in distressed farm and agribusiness loans over the next decade. The American Bankers Association (ABA) has four paths to consider for lenders looking at “Trouble On The FARM” including: (1) out-of-court and forbearance agreement, (2) receivership, (3) claim and delivery (personal property) or foreclosure (real estate), and (4) bankruptcy as a final option.
More information at ABA Banking Journal
(SOURCE: American Bankers Association)