Examining the Role of U.S. Agricultural Policy on Chapter 12 Bankruptcy Filings and Active Cases

Abstract

Farm bankruptcy enables eligible farmers the opportunity to reorganize debts while remaining operational. Providing safety nets for farmers is a long-standing U.S. agricultural policy that has recently reached historic levels because of trade disputes and market disruptions. Research has looked at the effect of government payments on farm survivability, and the impacts of payments on state level bankruptcy filings numbers (Dinterman & Katchova, 2018; Key & Roberts, 2006; Dixon et al., 2004). These studies looked at state aggregates that do not consider local geographic variation in agricultural activity. In this research, we evaluate the relationship between government payments and the number of county, district, and state bankruptcy filings and active cases. We use bankruptcy data from the Federal Judicial Center and government payment data. A fixed effect Poisson regression is used, finding that Gross Domestic Product, land values, certain government payments and net farm incomes are significant indicators of filings and active cases at different geographic levels of observation from 2008-2020.