Family farms go bankrupt: tariffs, low prices for corn, soy, milk and beef contribute to rising farm bankruptcies in the Upper Midwest

The number of farms declaring bankruptcy is increasing in the Upper Midwest. According to a new analysis by the Federal Reserve Bank of Minneapoli, the trend is lagging behind the low prices of corn, soy, milk and beef.

The analysis revealed that 84 farms had declared bankruptcy in Wisconsin, Minnesota, North Dakota, South Dakota and Montana during the 12 months that ended in June. That's more than double the number over the same period in 2013 and 2014.

"Current price levels and the trajectory of current trends suggest that this trend has not yet peaked," said Ron Wirtz, an analyst at the Minneapolis Fed.

The increase in Chapter 12 deposits reflects the low prices of corn, soy, milk and beef, reported The Star Tribune. The situation has deteriorated for farmers since June because of the retaliatory tariffs that closed the Chinese soybean market and slowed exports of milk and beef. Chapter 12 Bankruptcy is designed for family farmers and fishermen and allows repayment of debt over three years.

"Dairy farmers have the most problems right now," said Mark Miedtke, president of Citizens State Bank in Hayfield. "Grain producers have had low prices in the last three years, but high yields have helped them pass, we are just waiting for a turnaround and we are waiting for the tariff problem to disappear."

Miedtke said the underlying problem had started before trade problems, as farmers were too efficient for their financial good and demand could not keep pace with production.

"The situation could change in the spring," said Miedtke. "We are doing what we can to try to work with farmers."