Barnstorm: A Rash of Farm Belt Bankruptcies Hasn't Reached Idaho...Yet 

"We're in the third year of this downturn. It just gets to you after a while."

Idaho is famous for its potatoes, but a lot more than tubers grow here. Those crops, dairy products and meats have made the Gem State an agricultural powerhouse despite its relatively low population.

"Idaho's a small state, but when it comes to farming, we're not," said Farm Bureau spokesman Sean Ellis. "We're one of the big guys in farming in the nation."

Under the administration of President Donald Trump, farms around the country have suffered as trade disputes pinch foreign markets for American goods. After Trump put up tariffs protecting American steel and aluminum interests, two of the U.S.' biggest trading partners, China and Mexico, retaliated by placing duties on major exports. Prices plummeted and bankruptcies in the Farm Belt have risen to their highest level in a decade, The Wall Street Journal reports.

Idaho may present a special case. In both 2017 and 2018, six farms each year filed for Chapter 12 bankruptcy in Idaho. Compare that to California (18 in 2018, 27 the year before), Texas (25 in 2018) and Wisconsin (49 in 2018). Theories abound as to why Idaho has fared comparatively better, but almost everyone in Idaho agriculture worries about the future. Ellis said part of the reason for Idaho's resilience may be that its 25,000 farmers grow an array of crops, making it less dependent on the rise and fall in the price of one crop.

"Idaho's much more diversified in farming, just based on the number of crops we grow. A lot of Midwestern states grow the big farm program crops like soybeans, corn, cotton, wheat—stuff like that. Idaho's much more diverse. We grow 180 different commodities in Idaho," he said.

Each state faces similar hardships. Between 2014 and 2015, total cash receipts fell by 30 percent nationwide and have remained low. Cash receipts for wheat have tumbled by 45 percent after a high in 2013, and corn cash receipts are down one-third from 2012.

The Gem State's wheat growers seem to be weathering the storm, said Cathy Wilson, director of research collaboration for the Idaho Wheat Commission. In part, it's because Idaho's wheat is roughly split between domestic and export markets, safeguarding growers against an export market ravaged by tariffs.

"We're one of the few states where 50 percent of our wheat goes to export and 50 percent goes to the domestic market. When things happen to the export market, we have a buffer. Other states don't have that luxury," she said.

Wilson warned that the continued resilience of Idaho's wheat farmers will hinge on the success or failure in the coming months of negotiations between the U.S. and its trading partners. Garth Taylor, an associate professor of agricultural economics and rural sociology at the University of Idaho, agreed that those negotiations will spell the fortunes of Idaho farmers, but balked at attributing Idaho's resilience to crop diversity, saying it may help Idaho as a whole, but provides little relief for individual growers and doesn't account for how they've survived multi-year price slumps.

"This is the fifth-straight year of down farm income," he said. "We have a lot of foreign pressure and high stocks [of agricultural products], and all these tariff problems with our grains."

Compared to previous moments of crisis in the 1980s and the Great Recession, he said, land values have continued to increase, and the bankers who manage farm loans have largely shied away from practices that allow producers to get in over their heads. Doug Robison, president of Northwest Farm Credit Services, added that farmers took advantage of higher prices before 2015, and their savings have kept their ledgers in the black. While some economic factors have worked in their favor, it will take a price bump and the resolution of retaliatory tariffs to bring them back to profitability.

"When the new USMCA agreement is signed into law and a trade agreement is reached with China, many of the commodities produced in the State of Idaho will benefit from the removal of tariffs and increased demand from our top three trade partners," Robison wrote in an email.

Idaho's wheat farmers may be somewhat protected from a mean export market, but the largest agricultural sector, dairy, is in deep pain. Mexico is Idaho's fifth-largest trading partner, and in 2017, its agricultural exports to the U.S.' southern neighbor were nearly $170 million. However, those exports have trended downward since 2014, and in late 2018 Mexico delivered a body blow to Idaho's dairy farms when it instituted a 25 percent tariff on milk product imports.

"Cheese is the No. 1 product we make in Idaho, and Mexico is our biggest import partner," said Rick Naerebout, president of the Idaho Dairymen's Association. "We're having significant headwind with our biggest trading partner."

The dire situation is wearing down farmers, but Naerebout said dairy bankruptcies are rare. As talks between the U.S. and Mexico continue, Naerebout said he hopes relief will come soon and prices will rise.

"We do see an end in sight. It does appear like the second half of 2019 will get back to profitable levels, so there is some optimism out there," he said. "It doesn't make it any easier between now and then. We're in the third year of this downturn. It just gets to you after a while."

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