A Fighting Chance? Small Family Farmers & How Little We Know

47 Pages Posted: 27 Jun 2019

Date Written: 2018


This Article explores the intent and effectiveness of chapter 12 of the Bankruptcy Code. The last farm crisis inspired debt restructuring tailored to the agricultural sector, which hundreds of small commercial family farmers access annually. While chapter 12 allows qualifying debtors to write down all of their secured debt and extend repayment over a longer period, such specialized features may be insufficient.

This Article reveals that although some chapter 12 debtors reorganize and avoid foreclosure, and the shadow effect of chapter 12 empowers reorganization outside of bankruptcy, few small family farmers file and fewer still report on success. A case study profiling a small family farm bankruptcy in the Middle District of North Carolina suggests an interdependence with the health of the local, rural economy. Yet legal institutions and corresponding research struggle to address the experience of rural communities and their financial circumstances. Similarly, chapter 12 studies on family farm debtors across the country fail to incorporate the input of farmers, the uniqueness of their geographies, or their relationship with the local economy. Research for this Article uncovered only a single study of chapter 12 that interviewed participating farmers. In that study, conducted in 1995, Iowa farmers had two recommendations: enhance access to operating credit in bankruptcy and examine the necessity of a trustee given the capacity of secured creditors to protect their interests.

This Article posits that absent a better understanding of small commercial family farm debtors in recent years, our policies may be driven more by popular media than by lived experiences. Looking ahead, research should focus on the quantitative and qualitative experience of small family farmers within the context of their local economy, including the retail businesses and service providers on which they, their families, and their neighbors rely for income and employment. Such research should explore the nexus between rural poverty, unemployment, food insecurity, and small family farm failure, particularly in underrepresented geographies and from the perspective of farmers themselves.

Keywords: bankruptcy, agriculture, farming, rural, chapter 12

JEL Classification: G33, O13, Q12, Q13, Q14, Q18, R11

Suggested Citation

Lowdermilk, Jamey Mavis, A Fighting Chance? Small Family Farmers & How Little We Know (2018). Tennessee Law Review, Vol. 86, No. 1, 2018, Available at SSRN: https://ssrn.com/abstract=3406833

Jamey Mavis Lowdermilk (Contact Author)

U.S. Bankruptcy Court ( email )

United States

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