North Dakota's ag economy bucking Upper Midwest trend
While many states in the Upper Midwest are seeing a spike in farm bankruptcies, North Dakota seems to be bucking the trend.
Over 12 months ending this past June, 84 farm operations in Montana, South Dakota, North Dakota, Minnesota and Wisconsin filed for bankruptcy, according to the Federal Reserve Bank of Minneapolis.
While other states in the Upper Midwest have seen increases year over year, North Dakota has not.
From June 2016 to June 2017, North Dakota had two farms file for bankruptcy. From June 2017 to June of this year, the state saw one.
South Dakota had seven farms file for bankruptcy in 2017 and 12 file in 2018.
The number of farms in Minnesota that filed for bankruptcy jumped from 12 in 2017 to 20 this year. The last time the number of farms filing for bankruptcy reached these levels was during the recession in 2010.
"This kind of rise in bankruptcies shouldn't come as a surprise for those who have been paying attention to farm trends. It's something that the data says; farmers are struggling, this is another piece of evidence that they are," said Ron Wirtz, the author of the Minneapolis Fed study.
Crop prices have been low for about four years, Wirtz said.
"We've seen multiple years of very low, comparatively low prices," he said.
But for the number of farmers in North Dakota, Wirtz said, the number of bankruptcies is relatively low.
Hillsboro, N.D., farmer and banker Dana Kaldor said he has not seen a spike in ag-related bankruptcies.
"In the (Red River Valley) there have been some challenging times and that, but overall, the farm economy as a whole has been fairly strong," Kaldor said.
While the farm economy hasn't been in a "boom" period for a number of years, Kaldor said it still is profitable.
"Its tighter, but I don't think its unprofitable," Kaldor said.
Kaldor also said the low number of bankruptcies could be due to the fact that filing for bankruptcy is a last resort.
"Sometimes producers maybe get shut off at the bank first and they may not have a chance to file for bankruptcy," Kaldor said.
But regardless of the agriculture economy, Kaldor said, a good producer will find a way to make it work.
"In general, you'll have producers that are good producers and plan well; they'll keep making money," Kaldor said. "But other producers will not plan or overspend and won't make it, and that's whether the ag economy is up or down."
According to Wirtz, the bankruptcy trend most likely will continue.
The circumstances that have put the current farm economy in this spot are low prices, which aren't predicted to change.
"Crop prices are staying at stable, low levels, so I wouldn't expect the trend to stop," Wirtz said. "Given that the most fundamental piece of the puzzle isn't changing, I'd be hard pressed to say that bankruptcies are going to change."