Farmers in California, particularly almond growers in the San Joaquin Valley, are navigating through what is being considered a multifaceted financial challenge. Low commodity prices, reduced land values, and a restricted credit market have escalated concerns among local growers. In 2024, the United States saw 216 farm bankruptcies, marking a 55% increase from the previous year, with California leading with 17 cases. Farmers and bankruptcy attorneys have noted a rise in inquiries from growers aiming to avert financial collapse.
Jim Maxwell, owner of the farm management company Agriland in Madera, emphasizes the collaborative efforts needed with banks and farmers to manage these challenging circumstances. The almond sector, in particular, faces scrutiny from lenders concerned about debt repayment capabilities. The sector witnessed almond prices decline from $4 per pound in 2014 to approximately $2 per pound, affecting revenue amid rising input costs and interest rates.
Fresno bankruptcy attorney Peter Fear highlighted the burden of increased loan interest rates, rising from 3-4% to 8-9%, straining profitability. He has observed an uptick in bankruptcy filings and expects more cases due to the financial stress on farmers. A specific instance involved Bay Area businessman John Vidovich, who defaulted on $105 million in loans, while Trinitas Advantaged Agricultural Partners filed for Chapter 11 with $188 million in debt, emphasizing the volatility in the almond sector.
Smaller entities are not immune as well. Shawn Gill, farming across multiple counties, filed for Chapter 12 bankruptcy, attributing financial distress to loan defaults. The subsequent land availability has led to depressed land prices, dropping from $22,000 per acre in Madera and Fresno counties in 2022 to $12,000 in 2023. A corresponding decrease in collateral value is impacting loan negotiations.
Bankruptcy attorney Hagop Bedoyan noted the ripple effects on collateral valuation, adding that lenders now favor farmers with dual water sources. Riley Walter, another Fresno bankruptcy attorney, pointed to a historical shift toward almond cultivation driven by global demand, which contributed to the current predicament as almond prices fell. Walter mentioned that a majority of farmers remain unencumbered (80%), while leveraging issues affect a smaller fraction (20%), underscoring the disparities within the agricultural community.
Source: The Fresno Bee
