Kansas has the third-highest amount of farm bankruptcies in the United States. Here's what it means.

Alice Mannette
The Hutchinson News
A wheat field in Pretty Prairie just before wheat harvest 2021.

Although farm insolvencies have declined nationally, Kansas is third highest in the nation for these bankruptcies. 

Beginning from June 2020 through June 2021, Kansas Chapter 12 farm bankruptcies trailed only Wisconsin and Minnesota. According to the American Farm Bureau Federation, Wisconsin had 48 farms file Chapter 12 bankruptcy, with Minnesota and Kansas falling behind the Badger State with 31 and 30 filings, respectively. Iowa and Nebraska had more than 20 filings, with all the other states in the teens or below. 

Although bankruptcies have fallen nationwide since 2012, when there were 582 filings, farmers continue to ride a tightrope. As of 2021, the number of bankruptcies is 438 nationwide.  

Kansas had two less filings than last year.

Because the data compiled by U.S. Courts is generalized, the location in each state or the type of farm that declares bankruptcy is not delineated.

According to the acting chief economist for the American Farm Bureau Federation, Veronica Nigh, the dairy sector was particularly hard hit over the last several years. But, she said, all portions of agriculture have seen Chapter 12 filings.

"Farmers, in general are price takers," Nigh said. "Meaning that they do not have the ability to exert control over either the prices they receive or the cost of inputs that they utilize."

Nigh suggests that farmers look toward other avenues to protect themselves.

"What they can do is try to utilize the risk management tools available to them, such as crop insurance and futures markets," she said. "They can attempt to diversify their revenue streams to try to hedge against revenue downturns in any one portion of their business."

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By introducing other crops, cattle, chickens or hogs, a farmer may be able to diversify income streams. Farmers can also look at the bottom line, or ask an expert for help as to whether they are making money in wheat or corn, 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 are also able to contact the K-State Research and Extension Farm Analyst Program at 1-800-321-FARM who will put them in touch with an unbiased analyst. These analysts assist producers who are confronting financial and business challenges or those who would like to analyze what they are doing and figure out how to increase their bottom line. 

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If a farmer needs help with debtors, a farm analyst will come in from this program and serve as a mediator. These producers pay a one-time fee of $150 for this help, with much of the extra expenses being covered by a grant.

"I work with them (the producers) and their lenders to help them make changes," said Dave Kehler, a K-State farm analyst. "We will go there and we will talk specifically."

Kehler also helps guide farmers and ranchers with business plans, analyzing costs and benefits and delving into each producers return on investment. Along with helping with the bottom line, experts can help farmers analyze how best to decrease or pay off debtors, advise on new technologies and figure out whether it is in the farmer's best interest, based on the numbers, to purchase a new piece of equipment or hire a custom bailer or seeder.

"We look at any potential changes, so they can make educated choices based on what the numbers show," Kehler said. "We help them with an updated balance sheet and a plan that provides us with a cash flow projection."

Although this 12-hour consultation will cost the producer, it is provided at a below-market cost. 

"We are not consultants or advisors," Kehler said. "We ask if they considered doing anything different."

Experts like Kehler are there to lend an ear, but more importantly to empower and help farmers succeed. They educate producers with numbers. Then the producers can make more informed decisions.

"There is no silver bullet," Nigh said. "The solution is likely different for each business."