Virginia farm bankruptcies remained low in 2021
Count holds steady as farm bankruptcies drop nationwide
Cattle grazing near Dickensonville, Va. (Sarah Vogelsong / Virginia Mercury)
Farm bankruptcies in Virginia continue to be low as nationwide trends show a dramatic drop in every region of the U.S. between 2020 and 2021.
The finding by the American Farm Bureau Federation, which was released in a market intelligence brief earlier this month, is based on records of Chapter 12 filings in federal bankruptcy court.
Chapter 12 bankruptcies are specifically designed for “family farmers” and “family fishermen” and cannot be filed by people or businesses that don’t meet those definitions.
According to data from the federal bankruptcy courts, five farming operations in Virginia filed for Chapter 12 bankruptcy in 2021, the same number that filed in 2020.
A Virginia Mercury review of Chapter 12 bankruptcy filings over the past decade shows Virginia farm bankruptcies have largely been low during this period, with a spike between 2015 and 2017. The highest number of farm bankruptcies was recorded in 2016, when 13 operations underwent the process.
Altogether, 61 Chapter 12 bankruptcies have been filed in Virginia since 2012.
Carroll County, on the Virginia-North Carolina border, saw more farm bankruptcies than any other county during that time, with at least seven Chapter 12 filings. (Data for 2012 records only one bankruptcy but doesn’t list the county where it occurred.) Other top counties for Chapter 12 filings include Russell, with five, and Fauquier and Shenandoah, each with four.
While “the fact that the numbers have gone down is a positive indication,” just looking at Chapter 12 bankruptcy numbers could potentially underestimate how many farm bankruptcies are actually occurring in Virginia said, Tony Banks, a senior assistant director with the Virginia Farm Bureau Federation.
“There’s a large number of very small farms in Virginia that are part-time activities for the owners, and as such they may or may not avail themselves of Chapter 12 bankruptcy protection,” he said. “The number of Chapter 12s is probably a good bellwether, but it’s not the entire picture.”
Michael Wallace, a spokesperson for the Virginia Department of Agriculture and Consumer Services, said the state agency doesn’t track farm bankruptcy data.
Banks said he wasn’t sure what was behind the 2015-17 spike in Virginia, but that it could be linked to dairy farm closures, which by 2018 were amounting to more than one per week in the commonwealth.
“During that time, dairy prices were extremely low relative to operating cost, and there were a number of dairy farms that exited the business,” he said.
While Virginia farm bankruptcies appear to be holding low and steady, the Mid-Atlantic region — of which Virginia is a part — saw Chapter 12 filings decline by 8 percent between 2020 and 2021.
Other regions saw far steeper declines, according to the American Farm Bureau Federation analysis, with farm bankruptcies in the Northeast dropping by 82 percent and those in the Pacific Northwest by 81 percent.
Altogether, the market report found that “Chapter 12 bankruptcy filings were down an incredible 50 percent in 2021.”
“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 author wrote.
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