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Nov 28, 2017

New business bankruptcy trends in the agriculture industry

Agriculture is a very unique business, and its trends often differ from other Canadian industries. While some may be encouraged by the news that business bankruptcy rates are decreasing for farms across the country, it's important to look at the full picture to understand the trends in this market. The financial picture for Ontario farms is impacted by many factors, as is their response to shrinking margins.

In Canada, less farms have filed for business bankruptcy recently than in years prior. However, this may not be good news for the agriculture industry. Experts suggest that the reason for the trend is that there are simply less farms to shut down. Many have amalgamated into larger corporations, meaning that while bankruptcy in the industry is increasingly rare, the bankruptcies that do take place are much larger in size and debt. 

Insolvencies in the agriculture industry are often the result of a few factors. Low commodity prices and a lack of education in how to adjust a business when margins shrink has always had an impact. Recently, competition from South America has contributed to this challenge. However, Ontario farmers may have an edge due to the sophistication of their operations and continued adherence to risk management strategies.

Farmers in Ontario should be aware of the laws and options for filing for business bankruptcy or restructuring in the province. Options can vary depending on the corporate structure, as well as its limitations on liability and financial situation. It is a good idea for business owners to speak to a lawyer about bankruptcy-related questions so they can move forward in a legal and secure manner.

Source: manitobacooperator.com, "Farm bankruptcies down, but not out - just different", Dave Sims, Nov. 17, 2017