Project description:

Debtwire Investigations’ feature on a little-known chapter of the US Bankruptcy code available only to small farmers shed light on an area of the law that’s ripe for reform. Our multimedia reporting included a proprietary dataset categorizing all Chapter 12 bankruptcy filings during 2018 that we put together when we realized that no such data existed. We produced a podcast featuring an interview with Senator Chuck Grassley, who sponsored the Family Farmer Relief Act of 2019. The story also tackled the highly personal and traumatic experiences of several individual farmers who made the difficult decision to file for Chapter 12.

Impact reached:

We were able to determine where the pockets of farming distress were concentrated, both geographically and by farm type. The team combed through every Chapter 12 filing on Pacer for 2018 to compile the data, and concluded that Wisconsin was home to the most Chapter 12 filings by far in 2018, with 10% of all petitions. Not surprisingly, then, by farm type, dairy topped the list with 16% of all US filings last year. Dairy shared the first place position with corn-focused operations, a segment that also came in at 16%. 

 

This proprietary data has been cited by numerous agricultural industry publications, and lead reporter Maura Webber Sadovi received feedback from a range of industry professionals thanking her for creating the much-needed data.  

 

The data is especially important right now, as the ongoing trade wars have had an outsized impact on the farming industry – and in particular on family farmers who have taken out debt to keep up with fast-paced and expensive technological advances. And the personal storiesunderscore the reasons that broadening Chapter 12 eligibility could be a critical lifeline that helps more farmers hang onto their farms. 

 

A few weeks after the story was published, the US Senate finally passed the Family Farmer Relief Act, which extends Chapter 12 eligibility to a broader group of farmers. And in the ensuing months, Chapter 12 filings continue to grow on a year-over-basis. Chapter 12 family farm bankruptcy filings soared in 2019 to their highest level since 2010 as unusually brutal weather heaped more stress on an agriculture sector already reeling from the trade war with China and multiple years of low commodity prices.

Techniques/technologies used:

We knew that Chapter 12 family farm bankruptcies were on the rise but we were looking to dig into them and figure out what was behind the rise by looking for patterns in the type of farm, location of farm and the size of farm. 

 

We used the Pacer search functions to access and download all Chapter 12 filings in the US in 2018. We then created our own master database of the nearly 500 filings, categorizing the data contained in the filings. 

 

We divided up the nearly 500 filings between four reporters and pulled the information based on data from the filings. Where the data was not available in the filings, we called attorneys and farmers to confirm, entailing hundreds of calls. Ultimately we were able to confidently determine that dairy and livestock farms were showing the most signs of distress.   

What was the hardest part of this project?

Combing manually through every Chapter 12 filing on Pacer grew more complicated the longer it went on due to the lack of standardized filing forms and descriptions, as well as inaccuracies.

 

As the process evolved, it became apparent that we had consistent data on farm type and location but farm sizes in terms of acreage was far less available. So after initially hoping to use the data to get a picture of what sizes are farms were filing, we shifted gears to focus more closely on location and farm type. 

 

Ultimately, phone calls to lawyers involved in all 474 of the cases were required in order to properly classify them. One of the wrinkles we addressed is that we needed to reconcile the number of filings available via Pacer versus more static data published by the US Courts quarterly analysis.

In addition, understandably, farmers were not enthusiastic about discussing their bankrupt finances in a public forum. But Maura was able to persuade several farmers to explain their stories and their difficult choices to her on the record, after she to traveled to meet with them in person. One of the on-the-record sources told Maura at the last minute that he no longer wanted to be quoted in the story – and required an arduous persuasion process to get him back on the record!

Also, the weather posed challenges for meetings and getting photos/art. Maura planned to get photos of farmers at a weekly farm auction in Wisconsin but snowstorms to the remote rural area repeatedly prevented the trip.

What can others learn from this project?

Readers of “Bitter Harvest” could learn about an important lifeline for family farms: the Chapter 12 bankruptcy. Filing for a Chapter 12 bankruptcy is an extraordinarily difficult business and personal decision but it also can enable a family to get a fresh start and avoid “losing the farm.” 

Still, the finances that underpin struggling farmers’ challenges–and the specialized relief available to them under Chapter 12 of the Bankruptcy Code for farmers—are often little known or misunderstood. Even some farmers interviewed for “Bitter Harvest” report weren’t aware of Chapter 12’s potential role as a financial solution for their families’ farm-thinking instead that it signaled a farm sale.

Indeed, one bankrupt farmer who was reluctant to go on the record for fear of reprisals in his community ultimately said he felt it was important for him to talk about his bankruptcy and get the word out about the options his fellow farmers had. Readers of “Bitter Harvest” learned about the rise in the bankruptcies as well as the special benefits that are offered farmers, such as lower filing fees and the fact that, unlike in Chapter 11, the judge rather than creditors approve the plan. making it more likely that the reorganization be a roadmap to the future rather than the end of the road. 

Project links:

investigations.debtwire.com/bitter-harvest-debt-and-the-bankrupting-of-the-american-family-farm/

soundcloud.com/user-510253489/debtwire-investigations-podcast/s-jDz9l

www.debtwire.com/intelligence/view/prime-2962050