American farmers and ranchers will be able to obtain debt relief a bit easier now that President Donald Trump has signed the Family Farmer Relief Act of 2019. The bipartisan legislation increases the Chapter 12 debt ceiling from $4.1 million to $10 million, providing relief to family farmers who would otherwise need to address debt issues through the more complicated option of Chapter 11 of the bankruptcy code. The bill moved quickly through the legislative process after being introduced in the spring it passed through both chambers of Congress earlier this month.
“It will help family farmers reorganize after falling on hard times,” said American Farm Bureau Federation (AFBF) President Zippy Duvall. “While this is a sobering reflection of the current state of the agricultural economy, we are grateful to Congress, the President and his administration for their prioritization of reforming our current bankruptcy laws.”
Chapter 12 of the bankruptcy code was initially established specifically to address the challenges that U.S. farmers face. Chapter 12 bankruptcies provide a seasonal repayment schedule between three to five years at a lower cost compared to other chapters. Senator Chuck Grassley, who authored the legislation, noted in a statement that expensive farmland coupled with low commodity prices have had a dire effect on farm debt levels over the past few years. “The Family Farmer Relief Act recognizes these realities and adjusts the law accordingly. It’s a simple one-sentence bill, but it can make a world of difference for American farm families. I applaud President Trump’s action today to expand these safeguards for America’s farmers,” said Grassley.
The need for better debt relief options for farmers was highlighted in a recent AFBF report which showed that delinquency rates for commercial agricultural loans are at a six-year high. The report points to delinquency rates being above the historical average and is trending in the wrong direction after several years of poor farm income. The issue has been intensified by inclement weather and going trade disruptions.