Although farm insolvencies have declined nationwide, Kansas is the third highest in the country for such bankruptcies.
From June 2020 to June 2021, Kansas Chapter 12 farm bankruptcies followed only Wisconsin and Minnesota. According to American Federation of Agricultural Offices, Wisconsin had 48 farms filed for Chapter 12 bankruptcy, with Minnesota and Kansas lagging behind Badger State with 31 and 30 filings, respectively. Iowa and Nebraska had over 20 deposits, with all other states in teens or below.
Although bankruptcies have declined across the country since 2012, when there were 582 filings, farmers continue to ride a tightrope. In 2021, the number of bankruptcies is 438 nationwide.
Kansas had two fewer records than last year.
Since the data compiled by the US courts is generalized, the location in each state or the type of operation that declares bankruptcy is not demarcated.
According to the American Farm Bureau Federation’s Acting Chief Economist Veronica Nigh, the dairy sector has been particularly affected in recent years. But, she said, all parts of agriculture have seen Chapter 12 filings.
âFarmers, in general, are price takers,â Nigh said. “Which means they don’t have the ability to exercise control over the prices they receive or the cost of the inputs they use.”
Nigh suggests that farmers look to other ways to protect themselves.
“What they can do is try to use the risk management tools available to them, such as crop insurance and futures markets,” she said. “They can try to diversify their sources of income in an attempt to protect themselves against declining income in any part of their business.”
By introducing other crops, livestock, chickens or pigs, a farmer may be able to diversify his sources of income. Farmers can also look at the financial results or seek expert help to see if they are making money with wheat or maize, when in fact they might be better off with sorghum, cotton or alfalfa.
Nigh suggests a team approach, making sure farmers and ranchers choose reputable lenders and mentors.
Kansans can also contact K-State Research and Extension Agricultural Analyst Program at 1-800-321-FARM who will put them in touch with an impartial analyst. These analysts assist producers facing financial and business challenges or those who wish to analyze what they are doing and find out how to increase their bottom line.
If a farmer needs help with debtors, an agricultural analyst will come from this program and mediate. These producers pay a one-time fee of $ 150 for this assistance, with much of the additional expenses covered by a grant.
âI’m working with them (the producers) and their lenders to help them make changes,â said Dave Kehler, K-State agricultural analyst. “We will go there and talk specifically.”
Kehler also helps guide farmers and ranchers with business plans, analyzing costs and benefits, and examining each grower’s return on investment. In addition to helping with profitability, experts can help farmers analyze the best way to reduce or repay debtors, advise on new technologies and determine whether it is in the best interests of the business. farmer, on the basis of the figures, to buy a new piece of equipment. or rent a scoop or a personalized seeder.
âWe’re looking at all potential changes, so they can make informed choices based on what the numbers show,â Kehler said. “We help them with an updated balance sheet and a plan that provides us with a cash flow projection.”
While this 12-hour consultation will cost the producer, it is provided at a below-market cost.
âWe are not consultants or advisers,â Kehler said. “We ask them if they have considered doing anything different.”
Experts like Kehler are there to lend an ear, but above all to empower and help farmers succeed. They educate producers with numbers. Producers can then make more informed decisions.
âThere is no quick fix,â Nigh said. “The solution is probably different for each business.”