Senators Introduce Bipartisan Bill to Expand Reorganizations Tools to More Family Farmers
Mar 27, 2019
WASHINGTON – As bankruptcy rates among American farmers near record highs, a bipartisan group of U.S. Senators is introducing legislation to help family farms reorganize after falling on hard times. The Family Farmer Relief Act of 2019 (S.897)is led by Senator Chuck Grassley (R-Iowa) and cosponsored by Senators Amy Klobuchar (D-Minn.), Ron Johnson (R-Wis.), Patrick Leahy (D-Vt.), Thom Tillis (R-N.C.), Doug Jones (D-Ala.), Joni Ernst (R-Iowa) and Tina Smith (D-Minn.).
“For family farms whose assets are largely tied up in land and essential equipment, reorganizing debts can be particularly challenging when falling on hard times. As low commodity prices force farmers to take on more debt, this bill guarantees a safety net is in place for more farmers who need help getting back on their feet. By providing relief to these small-to-mid-size farms, we can ensure more successful reorganizations, which will be beneficial for everyone involved in the supply chain, while avoiding mass liquidations and further consolidation in the largest sectors of the industry,” Grassley said.
“Family farmers are essential to the fabric of local communities across the country. But changes in the farm economy have put small family farms under increasing financial pressure, and they need bankruptcy laws that are up to date. We must support our farmers when times are tough. This bipartisan, commonsense legislation would give struggling farming families the opportunity to keep their farms, reorganize their businesses, and repay their debts. These reforms aren’t just good for farmers, they are good for small towns and rural areas throughout our country,” Klobuchar said.
“For a host of reasons, farm bankruptcies have increased. Current policies don’t accurately reflect the increased cost of running a farm in today’s day and age. This legislation is designed to help keep more of Wisconsin’s family farms operating by allowing them access to a streamlined path to reorganization to get through tough times,” Johnson said.
“As farmers in Vermont and across the country continue to weather economic headwinds, it’s critical that they have every tool they need. The Family Farmer Relief Act will update the farm safety net to better reflect the current financial climate and offer more flexibility to farmers struggling to stay afloat. The loss of even a single farm can have a profound impact on the surrounding community. We must do everything we can to prevent it,” Leahy said.
“Our farmers are struggling with a debt crisis the likes of which we haven’t seen in almost 40 years, and that’s why I support expanding access to Chapter 12 bankruptcy. We need to do everything we can to help Alabama farmers succeed, especially at a time when the business of farming is becoming increasingly difficult,” Jones said.
“Farmers in Iowa feel the pinch of low commodity prices, ongoing trade disputes, and overall farm debt, as well as the recent devastating flooding which has wreaked havoc on farmland across Iowa. A number of our family farms across the state have been forced to close their barn doors. While bankruptcy is a last resort for our family farms, our bipartisan measure will increase the eligibility to file and provide an opportunity to keep the operations going,” Ernst said.
“It’s been a challenging time for our farmers and ranchers and it is important that we do our part to ensure that family farms can get back on their feet during stressful financial situations. This bill will ultimately help family farms avoid extremely difficult bankruptcy proceedings, giving them a better chance at reorganizing and restructuring to get back on their feet,” Smith said.
Recognizing the unique challenges that family farmers and fishers face, Congress established Chapter 12 of the U.S. bankruptcy code, which removes certain costly reorganization requirements intended for large corporations. The Family Farmer Relief Act of 2019 raises the Chapter 12 operating debt cap to $10 million, allowing more family farmers to seek relief under the program.
Several years of low commodity prices, stringent farm lending regulations and market uncertainty have taken a toll on America’s agriculture producers. Farm bankruptcy rates in many farming regions across the country are at their highest point in a decade. In some places in 2018, farm bankruptcies doubled from the previous year. Debts held by farmers are nearing historic levels set in the 1980s, further financially extending farm operations.
The Family Farmer Relief Act of 2019 is supported by the American Farm Bureau Federation.
“Our farmer members have experienced several consecutive years of weak commodity prices and the low profitability and poor farm income that follow. As a result, farmers and ranchers are watching their equity erode as their debt-to-asset ratios climb and debt financing reaches a 30-year high. The double-whammy of nominal record farm debt and poor economic conditions have led many farmers to seek Chapter 12 bankruptcy as a debt relief and restructuring option. Lifting the liability cap and giving more farmers an opportunity to qualify for Chapter 12 bankruptcy provides the restructuring and seasonal repayment flexibility that many farmers need in today’s lagging farm economy and will help to align bankruptcy law with the scale and credit needs of U.S. agriculture,” said Zippy Duvall, President of American Farm Bureau Federation.
Grassley first introduced this legislation in December. Bill text of the Family Farmer Relief Act of 2019 is available HERE.