Congress clears bill to expand debt cap to $10 million for Chapter 12 bankruptcy.

Jacqui Fatka, Policy editor

August 5, 2019

3 Min Read

Before adjourning for the August in-district work period, the U.S. Senate passed bipartisan legislation to ease the process of reorganizing debt through Chapter 12 bankruptcy rules to assist farmers during this down farm economy. The legislation now awaits President Trump’s signature.

The bill expands the debt cap that can be covered under Chapter 12 bankruptcy from $3,237,000 to $10,000,000. The changes reflect the increase in land values, as well as the growth over time in the average size of U.S. farming operations and are meant to provide farmers additional options to manage keep their doors open during downturns in the farm economy.

The Family Farmer Relief Act was introduced with a Senate companion led by Sens. Chuck Grassley (R., Iowa), Amy Klobuchar (D., Minn.), Ron Johnson (R., Wisc.), Patrick Leahy (D., Vt.), Thom Tillis (R., N.C.), Doug Jones (D., Ala.), Joni Ernst (R., Iowa) and Tina Smith (D., Minn.).

Rep. Antonio Delgado (D., N.Y.) introduced H.R. 2336, the Family Farmer Relief Act in April along with House Judiciary Committee Ranking Member Jim Sensenbrenner (R., Wisc.), House Agriculture Committee Chairman Collin Peterson (D., Minn.) and Reps. TJ Cox (D., Calif.), Kelly Armstrong (R., N.D.) and Dusty Johnson (R., S.D.). The House passed H.R. 2336 on July 26.

The legislation was endorsed by: American Farm Bureau, National Farmers Union, National Corn Growers Association, National Milk Producers Federation, the National Pork Producers Council, and American Bankruptcy Institute.

American Farm Bureau Federation President Zippy Duvall said with farm bankruptcies at a record high in some regions of the country, Senate passage of the Family Farmer Relief Act sends an important signal to family farmers and ranchers that our elected officials are willing to act in these challenging times.

“The bill gives more farmers an opportunity to qualify for financial restructuring so they can keep their land and livelihoods,” Duvall said.

“For family farms whose assets are largely tied up in land and essential equipment, reorganizing debts can be particularly challenging when falling on hard times. As low commodity prices force farmers to take on more debt, this bill guarantees a safety net is in place for more farmers who need help getting back on their feet. By providing relief to these small-to-mid-size farms, we can ensure more successful reorganizations, which will be beneficial for everyone involved in the supply chain, while avoiding mass liquidations and further consolidation in the largest sectors of the industry,” Grassley said.

Senate minority leader Chuck Schumer (D., N.Y.) said he was proud of the role he played in getting the bill to the Senate floor as family farmers, especially in upstate New York, face unprecedented difficulties.

“Our family farmers across Upstate New York are some of the most competitive and hardest working anywhere in the world but have been taking a beating in recent years, with dairy farmers specifically challenged by shockingly low milk prices and grappling with manipulative and unfair trade practices. Passing this sorely-needed legislation was a critical step towards providing them with the relief they need and deserve,” Schumer said.

National Farmers Union president Roger Johnson applauded the passage and urged for swift signature by the President. “Chronic overproduction, an ongoing international trade war, and a series of extreme weather events have created a perfect storm for the farm economy. Farm debt is at a record high, and too many operations have been pushed to the brink financially. The Family Farmer Relief Act will help more family farmers access Chapter 12 relief, giving them a fighting chance to stay in business,” Johnson said

About the Author(s)

Jacqui Fatka

Policy editor, Farm Futures

Jacqui Fatka grew up on a diversified livestock and grain farm in southwest Iowa and graduated from Iowa State University with a bachelor’s degree in journalism and mass communications, with a minor in agriculture education, in 2003. She’s been writing for agricultural audiences ever since. In college, she interned with Wallaces Farmer and cultivated her love of ag policy during an internship with the Iowa Pork Producers Association, working in Sen. Chuck Grassley’s Capitol Hill press office. In 2003, she started full time for Farm Progress companies’ state and regional publications as the e-content editor, and became Farm Futures’ policy editor in 2004. A few years later, she began covering grain and biofuels markets for the weekly newspaper Feedstuffs. As the current policy editor for Farm Progress, she covers the ongoing developments in ag policy, trade, regulations and court rulings. Fatka also serves as the interim executive secretary-treasurer for the North American Agricultural Journalists. She lives on a small acreage in central Ohio with her husband and three children.

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