Farm bankruptcies trending downward in Virginia
Published 4:47 pm Thursday, February 24, 2022
For the first time in the last decade, every region in the U.S. had fewer farm bankruptcies in 2021 than the year before.
With dramatic decreases in Chapter 12 farm bankruptcy filings, mid-Atlantic states, including Virginia, are keeping a slower pace, with an 8% drop in filings in 2021.
Chapter 12 bankruptcy allows family farms to avoid liquidation or foreclosure. According to data from the United States Courts, Chapter 12 bankruptcy filings nationwide were down a staggering 50% last year.
“What a difference a year can make,” said American Farm Bureau Federation senior economist Veronica Nigh in an AFBF Market Intel report. “The number of Chapter 12 filings in 2021 is the lowest in the last decade, and this is the first time in at least 10 years that there were fewer than 300 filings. The decrease in bankruptcy filings is a noteworthy shift given the significant increases in the number of bankruptcies over the previous three years.”
Five farm bankruptcies were recorded in Virginia in 2021, the same as in 2020. The mid-Atlantic had 15 fewer Chapter 12 bankruptcies than in 2020.
A snapshot of previous years reveals a positive trend in Virginia. While farm bankruptcies in 2019 increased nearly 20% nationwide, there was no significant increase in the number of Chapter 12 filings in Virginia. Six Chapter 12 farm bankruptcies were listed for Virginia in both 2018 and 2019.
Industry specialists hope this slow-but-steady trend continues for Virginia and surrounding states.
MidAtlantic Farm Credit regional lending manager Matt Ritenour, who is based in Winchester, said the report is cause for optimism.
“Each farming operation is truly unique, but despite the many challenges 2021 brought us, overall Virginia’s agriculture community had a positive year,” he said. “Our members and the industry have proven resilient and continue to successfully provide food, fuel and fiber for our country.”
Economists agree the decline is worthy of celebration; however, they don’t lose sight of the fact that 276 Chapter 12 bankruptcies were filed in 2021.
“Returns to farm operators have been incredibly volatile over the last decade,” Nigh said. “So, while the last year has brought higher commodity prices for some, it has most certainly brought higher input costs for all. How the latter compares to the former will dictate whether the trend of fewer bankruptcies will continue be ‘in’ or ‘out’ in 2022. For once, this is a trend we hope has some staying power.”