The number of farm operations filing for bankruptcy in Illinois is holding steady despite spikes in neighboring states.
When a farmer files for bankruptcy, it’s done under Chapter 12 of the tax code. A report by the Federal Reserve Bank of Minneapolis said 84 farm operations nearby states had filed for chapter 12 bankruptcy protection over the 12 months ending in June 2018 – more than twice the level seen in June 2014.
“The trend is both simple and complex,” the report said. “For example, current numbers are not unprecedented, even in the recent past, having reached 70 bankruptcies in 2010. However, current price levels and the trajectory of the current trends suggest that this trend has not yet seen a peak.”
Researcher Robert Dinterman with Ohio State University said that Illinois seems to be resisting the trend of growing bankruptcies, despite low-profit margins and tightening credit lines.
“Illinois is averaging about ten bankruptcy filings per year since 2005,” he said. “In 2018, Illinois had seen eleven and in the previous year it was ten and eleven in the previous year.”
One common trait, Dinterman said, of Chapter 12 filings nationwide are monetary ties in low-value real estate, which he said would explain the location of filings in Illinois.
“You’re going to see them in Southern Illinois and you’re also going to see some in northern Illinois to the western edge of the state,” he said.
He warned that delinquencies on bank loans, a common precursor to bankruptcies, are up in Illinois and most other states.