Farm bankruptcies have been surging since 2011 and at the same time, the stock market is hitting new highs. Farmers are continuing to struggle under the weight of the policies kneecapping them and the heavy burden of the trade war.
U.S. stocks closed at fresh record highs on Friday on revived hopes for a U.S. – China trade deal despite mixed economic data. The Dow hit 28,000 for the first time after posting a fourth straight week of gains, while the S&P500 index rallied for a sixth week, its longest winning streak since November 2017. –Market Watch
But this is all happening as farm incomes are falling and bankruptcies are surging. Farms incomes are falling in Colorado, Kansas, Nebraska, Oklahoma, Wyoming, and portions of western Missouri and northern New Mexico, according to the Kansas City Federal Reserve. These falling incomes and bankruptcies could cause a food crisis in this country too. It’s the perfect storm. Most Americans don’t grow their own food.
Farm income fell in each state within the region from a year ago and credit conditions in the Federal Reserve’s Tenth District deteriorated in the third quarter despite an increase in the price of certain commodities and additional government aid to farmers. no amount of government aide can und the damage to the free market the government does in the first place, however.
Farmers have struggled to escape a downturn that began in 2013, a slump made worse by President Trump’s trade war with China, Mexico, and Canada that cut exports and depressed already low prices. All of this is happening while extreme weather including flooding, a freeze, and drought early in 2019 added to farming woes and prevented or delayed planting.
Alejandro Plastina, the Iowa State agricultural economist who conducted a study with Iowa State University on the disaster farmers are facing, told the Des Moines Register that many problems persist in the farming industry and, “It’s getting harder and harder for farm operations to cash-flow their business.” Plastina expected the hardships in farming to persist throughout the next year and says that Trump’s bailout was unsuccessful.
Thanks to the government’s policies, growers are becoming increasingly dependent on trade aid and other federal programs for income, according to figures in a report by the American Farm Bureau Federation, the nation’s largest general farm organization. Farmers are now dependent on the government instead of customers who buy their food.
Plastina said the assistance Iowa farmers received has only slowed, but not reversed, the trend of financial decline for farmers. That means bankruptcy could be inevitable for the many people who grow the food we eat.