Bitter Harvest: Debt And The Bankrupting Of The American Family Farm

Minnesota dairy farmers Amanda and Derek Zigan are still paying for a bold bet they made when dairy prices were flying high. The couple built a new barn equipped with state-of-the-art milking equipment, hoping to reduce their dependence on hired help, lower their vet bills and keep their cows healthier and more productive. Back in 2014, a local paper dubbed them Todd County, Minnesota’s first robotic farm.Then the bottom fell out of the dairy market. The average price received by farmers for a hundred pounds of milk has fallen from about $25 in late 2014 to below $20 in early 2015 and has recently been hovering in the mid-teens. That move has left the Zigans struggling to make payments on their debt, which rose to $1.6 million after all the new capital investments.“We didn’t even have time to get our feet on the ground,” said Amanda Zigan, 32. She and her husband, a third-generation farmer, only reluctantly opted to seek relief in court. They were finally pushed to file for Chapter 12 bankruptcy protection in September 2018 after she said they were unable to refinance a roughly $269,000 Farm Service Agency loan.In fact, bankruptcy filings have continued to tick up for the specialized Chapter 12 protection that’s available only to family farmers. In 2018, there were 474 new Chapter 12 filings, up from 458 in 2017 and up materially from 317 in 2014.Already this year, the upward trend is continuing, with 110 filed through 22 March compared to 100 in the same period a year earlier. Cattle-related farms – encompassing dairy and/or beef – represented the biggest group to turn to Chapter 12 last year, comprising at least 41% of the total filings