Business

Iowa farm bankruptcies up 26 percent in 2020

Small nationwide decline in farm bankruptcies likely due to federal aid for trade dispute, coronavirus

Joel Kurtenbach shows a work room alongside the milking parlor as it sits mostly abandoned in Wyoming, Iowa. He was forc
Joel Kurtenbach shows a work room alongside the milking parlor as it sits mostly abandoned in Wyoming, Iowa. He was forced to sell his farm as part of bankruptcy proceedings in December. (Andy Abeyta/The Gazette)
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Iowa had 34 farm bankruptcies in 2020 — a 26 percent increase from the previous year and the third-highest state total behind Wisconsin and Kansas.

The overall number of farm bankruptcies in the United States fell 7 percent, to 552, the American Farm Bureau reported this week. The organization noted there likely would have been more farm bankruptcies nationwide if not for federal aid to offset trade losses and coronavirus-related damages.

“The support definitely did help,” said Chad Hart, Iowa State University economics professor and crop markets specialist.

“What we were seeing, especially for the dairy industry, some of that support was a little too late.”

Chapter 12 in federal bankruptcy code is intended for family farms or fishing operations to pay off debt in three to five years.

It originally was created to help farmers during the Great Depression, but expired in the 1950s. U.S. Sen. Chuck Grassley, a New Hartford farmer, helped bring Chapter 12 back in 1986.

The nearly 5,000 farm bankruptcies over the past 10 years are less than a quarter-percent of all farm operations in the United States, the Farm Bureau reported.

In Iowa’s Northern District, which covers the top half of the state, there were 24 Chapter 12 bankruptcies in 2020, up from 20 the previous year.

The Southern District had 10, up from seven in 2019.

A higher bankruptcy toll in the northern district is partly a factor of more farms there, but it also indicates the struggles for dairy farms, concentrated in the northeast and northwest corners of the state, Hart said.

A nationwide surplus of milk drove down prices in 2017 and 2018.

“When Wisconsin lights up, that tells you this is a dairy story,” Hart said.

Former Jones County dairy farmer Joel Kurtenbach was forced in December to sell his farm as part of bankruptcy proceedings in Iowa’s Northern District.

Kurtenbach had farmed the nearly 700-acre tract for 25 years, most of that time running a dairy operation. But when milk prices fell, he lost his contracts.

He tried briefly to switch to raising cattle for beef, but could not get financing in time to hold off the sale.

Comments: (319) 339-3157; erin.jordan@thegazette.com

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