The Wall Street Journal reports that farm bankruptcies are now at their highest level since the 2008 financial crisis, but that's not necessarily the number that immediately caught my eye.
Politico reported last week that average farm income has dropped to a 15-year low, but that may not sound as bleak as things really are for many farms.
According to the Wall Street Journal, median farm income was actually negative in 2018.
More than half of U.S. farm households lost money farming in recent years, according to the USDA, which estimated that median farm income for U.S. farm households was negative $1,548 in 2018. Farm incomes have slid despite record productivity on American farms, because oversupply drives down commodity prices. [...]
U.S. farm debt—covering operations, land, equipment, livestock and more—last year climbed to more than $409 billion, according to a USDA forecast. That’s the largest sum in nearly four decades and a level not seen since the 1980s, when farmland values plunged and interest rates skyrocketed, boosting debts and pushing many farmers and lenders out of business.
Nationwide, the volume of loans to fund current operating expenses grew 22% in the fourth quarter from year-ago levels, hitting a quarterly record of $58.7 billion, according to the Federal Reserve Bank of Kansas City. The average size of these loans rose to $74,190, the highest fourth-quarter level in history when adjusted for inflation, the bank said.
Citing court records, the Wall Street Journal reports that Midwestern states from Arkansas to North Dakota saw their farm bankruptcies increase by nearly 100 percent in 2018. States further west saw their bankruptcies increase by nearly 60 percent.
Even in the unlikely event that American and Chinese officials agree to a trade deal of some description in the next two weeks, that will not necessarily mean clear skies for American agriculture.
It would help, but Trump's ongoing trade war with other important trading partners like Mexico and Canada are just as responsible for the economic downturn on American farms. Trump's tariffs on steel and aluminum -- and the retaliatory tariffs levied by Mexico and Canada in response -- hit the agricultural industry before his tariffs on Chinese goods did.
All indications are that 2019 could be an even worse year for American agriculture because in 2018 American farms at least had the benefit of starting the year without a trade war on the books.