By Joe Mahon Director,

Regional Outreach, Federal Reserve Bank of Minneapolis

The past few years have been challenging for farmers in the Ninth District. Growing pressure is borne out in the Minneapolis Fed’s Ag Credit surveys, which show slumping incomes and worsening financial conditions over the last two years.

“Farmers … are suffering this year,” commented a North Dakota farm lender on a recent survey. “If prolonged into 2026, we could see some fail.” As that banker suggested, a consequence of leaner times is a rise in the number of farm bankruptcies. Though they have ticked up, farm bankruptcies remain low by historical standards, but there are reasons to expect a continued increase.

It’s perhaps surprising that bankruptcies haven’t increased more. For one thing, a Chapter 12 filing does not necessarily mean a farm is going out of business. In fact, it’s intended to allow farms to continue operating, possibly at a smaller scale after a partial liquidation and restructuring. But filing can help farms avoid liquidating completely when business gets lean.

The number of farm operations filing for bankruptcy under Chapter 12—the section of the Bankruptcy Code specifically for farms—increased in the first two quarters of this year, according to statistics from U.S. Courts. However, this increase comes off of a very low floor, and the overall level is still very low. Only nine farms filed for bankruptcy in the second quarter, in the Ninth District of the Federal Reserve Bank of Minneapolis, which includes Montana.

These have been some lean years. The agriculture sector saw a boom from about 2010 to 2014. But since then, farm incomes have been relatively weak for the better part of a decade, with the exception of a short surge around the pandemic. The U.S. Department of Agriculture forecast that farm incomes will increase this year, though approximately three-quarters of that growth is attributable to a projected increase in government payments.

The weakness in incomes is largely driven by weak prices for crops. Following the same pattern as farm incomes, prices for core row crops produced in the Ninth District—corn, soybeans, and wheat—have receded significantly from their recent peak.

In something of a relief to farmers, prices have been idling slightly above their previous trough. For example, a corn price of $4 per bushel is roughly considered break-even over production expenses (though that threshold varies from region to region); as of July, U.S. farmers on average were receiving $4.29.

A key variable that has held up better than incomes is working capital, or cash on hand for farm operations. Having these cash reserves is crucial both for debt service and for avoiding additional debt needed to finance day-to-day farm operations. After cash reserves dipped in the last decade, farmers built up a bigger cushion during the last few years (see Figure 3).

According to the USDA’s latest estimates, these cash holdings were forecast to increase nationwide (data aren’t available at the state level). But it’s likely much of this aggregate cash growth has been concentrated among producers in more lucrative markets, such as cattle. Comments from lenders on recent Ag Credit surveys suggested that working capital ratios for crop-only producers in the district were weaker.

More troubling is the level of farm debt over the last few years, which has continued to increase even as working capital remained stagnant. Joseph Peiffer, an attorney in Iowa who specializes in Chapter 12 and farm debt restructuring, said that underlying the increasing debt is a change in the structure from short-term borrowing (for things like operating loans) to longer-term borrowing.

“Things haven’t been good the last couple of years, so what they’re doing is that they’re borrowing money on the land,” Peiffer said. This amounts to trading short-term debt, such as operating loans, for longer-term debt. “All we do at that point is increase the amount of payments we’re going to have to make next year.”

As Peiffer said, this restructuring is possible because farm land values remain very strong and serve as a source of collateral for farmers to borrow against. And strong growth in land values over the last two decades could actually accelerate Chapter 12 filings going forward.

One unique feature of Chapter 12 is that it allows for the discharge of taxes owed by farming operations. This feature sets it apart from the rest of the Bankruptcy Code for individuals and businesses. The tax-relief aspect was codified in 2005 and grew out of the original intent of Chapter 12, after Chapter 11 had proved inadequate to keep farmers operating during the 1980s farm crisis. However, use of these tax provisions was limited due to unfavorable court rulings. That changed with federal legislation in 2017 that clarified the provisions, after which the number of filings climbed a bit.

For a struggling farm looking to rightsize their operations through partial liquidation, selling off acres can be prohibitive, especially if the farm has been operating for many years. If the land was purchased or inherited decades earlier, the tax value (tax basis) would likely be much lower than its current market value, leading to a very sizable return when sold. That profit, however, would be subject to capital gains tax, which would offset the liquidity boost from selling the land. By filing for Chapter 12 after liquidating land, machinery, and other assets, overstretched farmers could avoid paying those taxes and possibly stay in business.

There’s a stigma to overcome for farmers, Peiffer said, a strong cultural aversion to the idea of filing for bankruptcy. But for struggling farmers, he said, the tax relief could be an attractive option.

Montana State University TechLink  assures that federal programs for research  and development are not at risk of federal cost cutting. In a recent statement they stated, “we want to reassure our clients that the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs are not only operational but continue to thrive.”

Federal agencies have active solicitations or are preparing to announce new opportunities, they reported. The Department of Defense remains a source of support for innovative ventures. The National Science Foundation (NSF) is actively engaging small businesses in cutting-edge research and development projects. Likewise, the National Institutes of Health (NIH) continues to fund health-related innovations.

Moreover, NASA’s Ignite SBIR initiative is gearing up to propel small businesses into new realms of aerospace technology and research. The Environmental Protection Agency (EPA) and the United States Department of Agriculture (USDA) websites state plans to roll out solicitations this summer that promise to support sustainability and agricultural advancements.

For entrepreneurs and small businesses navigating these uncertain times, the message is clear: the SBIR and STTR programs are very much “open for business.” These programs represent ongoing opportunities to transform innovative ideas into reality, with substantial backing from federal agencies committed to fostering scientific and technological innovation.

By Brett Rowland

The Center Square

The U.S. Drug Enforcement Administration released its latest report on drug threats, highlighting progress in the fight against fentanyl, a powerful opioid responsible for most overdose deaths.

Even so, fentanyl remains at the top of the DEA threat assessment. 

“Mexican cartels’ production, trafficking, and distribution of powerful illicit synthetic drugs, chiefly fentanyl and methamphetamine, represent a dire threat to public health, the rule of law, and national security in the United States,” the report said. “The Sinaloa and Jalisco New Generation Cartels (CJNG), together with their procurement, distribution, and financial support networks stretching across Latin America, China, and other key global nodes, remain the dominant threats for the trafficking of these and other drugs into the United States.”

The move away from plant-based drugs to synthetics has helped the cartels rake in even-more cash. Cartels maintain steady supply chains for precursor chemicals, primarily from China and India, needed to produce these synthetic drugs.

In the 12 months ending in October 2024, the United States recorded 52,385 overdose deaths from synthetic opioids – a 33% decline – while overall overdose deaths, from any drug, declined about 26%, according to the most recent available CDC provisional data. Provisional data from the CDC showed that 74,702 of the 107,543 total drug overdose deaths in 2023 involved synthetic opioids, primarily fentanyl. That’s about 69% of all overdose deaths in the U.S.

The DEA seized about 29% less fentanyl in 2024 compared to the prior year. In 2024, DEA seized 21,936 pounds of fentanyl. The agency also seized 61.1 million fake pills in 2024, a 24% decrease from the previous year. Data from the El Paso Intelligence Center’s National Seizure System – which consolidates drug seizure data from federal, state, and local agencies throughout the United States – indicated a similar trend, with 23,256 total kilograms seized in 2024, down from the previous year.

Fentanyl purity also fell last year, according to DEA testing. In 2024, the average fentanyl pill contained 1.94 milligrams of fentanyl, ranging from a low of 1.58 mg to a high of 2.18 mg. Based on these analyses, DEA forensic laboratory results found that about 5 out of 10 fake pills contain 2mg or more of fentanyl. The average purity of fentanyl powder samples was 11.36%, ranging from exhibits that contained almost no fentanyl (0.07%) to 82% purity.

“Fentanyl purity declined throughout 2024, consistent with indicators that many Mexico-based fentanyl cooks are having difficulty obtaining some key precursor chemicals,” the report noted. “DEA reporting indicates that some China-based chemical suppliers are wary of supplying controlled precursors to its international customers, demonstrating an awareness on their part that the government of China is controlling more fentanyl precursors to comply with recent updates to the United Nations counter-narcotics treaty.”

That doesn’t mean fentanyl is any safer. 

“The downward trend in fentanyl purity does not mean that street-level fentanyl is less dangerous,” according to the report. “Drug dealers in the United States continue to adulterate fentanyl with various animal tranquilizers (such as xylazine), anesthetics (such as ketamine), and other synthetic opioids (such as nitazenes).”

DEA Acting Administrator Robert Murphy said the report shows progress.

“This year’s report indicates progress in the fight against fentanyl and also outlines the increasing challenges we face with the changing landscape of the synthetic drug crisis,” he said. “The adulterating of fentanyl with highly potent, dangerous chemicals reminds us that this fight is far from over.”

By Casey Harper

The Center Square

The Centers for Medicare & Medicaid Services is cracking down on states’ use of taxpayer dollars allotted to Medicaid to pay for unauthorized treatments for noncitizens.

The federal government allocates billions of dollars each year to states to help pay for Medicaid, healthcare for lower income Americans, one of the federal government’s largest expenditures. States are generally allowed to use Medicaid to cover emergency and lifesaving treatment for illegal immigrants, but CMS said it is cracking down on the practice of states using federal dollars to cover treatments not authorized under Medicaid for noncitizens.

CMS said that states are “pushing the boundaries” of what can be covered under Medicaid, at taxpayer expense.  

“Medicaid is not, and cannot be, a backdoor pathway to subsidize open borders,” said CMS Administrator Dr. Mehmet Oz. “States have a duty to uphold the law and protect taxpayer funds. We are putting them on notice – CMS will not allow federal dollars to be diverted to cover those who are not lawfully eligible.”

Democrats have denied the allegation that some states, generally Democrat-led, use Medicaid dollars for illegal immigrants. Republicans insist they use loopholes or don’t check immigration status as a way to circumvent federal rules. They argue that free healthcare of this kind is what helps motivate the influx of illegal immigrants into the U.S. 

“Medicaid funds must serve American citizens in need and those legally entitled to benefits,” said CMS Deputy Administrator and Director of the Center for Medicaid & CHIP Services Drew Snyder. “If states cannot or will not comply, CMS will step in.”

CMS sent a letter to the states this week warning them of the ratcheting up on controls and that the federal government could demand back any federal dollars improperly spent on noncitizens.

“To ensure that federal money is not used to pay for or subsidize healthcare for individuals with an unsatisfactory immigration status in a manner contrary to federal law, CMS is ramping up financial oversight activities of state claiming in this area, to the extent consistent with applicable law,” the letter said. “Activities are expected to include focused reviews of Medicaid expenditures reported by states on the quarterly CMS-64 and in-depth financial management reviews.”

By Bethany Blankley

The Center Square

In the first four months of 2025, illegal border crossing encounters and apprehensions reported nationwide totaled 168,390, an 83% drop from the number reported during the same time period last year.

Under the Biden administration, U.S. Customs and Border Protection reported 993,035 illegal border crosser encounters/apprehensions from January through April 2024.

More than 29,000 were reported in April and in March of this year, record lows by comparison to those months under the Biden administration, according to the latest CBP data.

In the first four months of 2023, 958,569 illegal border crosser encounters were reported; in 2022, 889,899 were.

April’s 29,238 encounters were 88% fewer than the 247,929 reported in April 2024; nearly 90% less than the 276,036 reported in April 2023 and the 274,992 reported in April 2022, according to the data.

The reason for the dramatic drop is due to the Trump administration enforcing federal immigration law, eliminating Biden administration programs, and “for the first time in years, more agents are back in the field – patrolling territories that CBP didn’t have the bandwidth or manpower to oversee just six months ago,” Acting CBP Commissioner Pete Flores said. “Thanks to this administration’s dramatic shift in security posture at our border, we are now seeing operational control becoming a reality – and it’s only just beginning.”

Fiscal year to date, from Oct. 1, 2024, through April 30, there were 560,618 illegal border crosser encounters reported nationwide, according to the data. The majority were reported under the Biden administration, stretching into most of January. The numbers began to drop off in February. In Trump’s first full three months in office, the numbers hovered between 28,624 and 29,238, according to the data.

After the Trump administration ended the Biden administration “catch and release” policy, the number of illegal border crossers released into the U.S. dropped to nearly zero.

“Only five illegal aliens were temporarily allowed into the U.S. in April for U.S. special interest court cases – a staggering drop from the roughly 68,000 released along the southwest border during the same month last year,” CBP said.

CBP is also categorizing apprehensions slightly differently, referring to apprehensions and encounters at ports of entry as “at entry” and those in the interior as “at large.”

Of April’s 29,238 encounters and apprehensions reported, 8,383 occurred at the southwest border, including 906 that remain at large. Southwest border apprehensions represent a 93% drop from the 128,895 apprehensions reported last April, according to the data.

Last April, there were an average 4,297 apprehensions a day; last month there was an average of 279, according to the data.

As under the Biden administration, the majority apprehended were single adults, followed by single adults claiming to be in a family unit, unaccompanied minors and accompanied minors.

In the last four years, the greatest number of single adults encountered and apprehended totaled more than one million in 2023. The greatest number of unaccompanied minor illegal border crossers reported nationwide totaled nearly 153,000 in 2022.

The number represents a reversal of more than 14 million illegal border crossers reported under the Biden administration, including two million who evaded capture, The Center Square reported.

With median home prices exceeding $1 million in many U.S. housing markets, some real estate professionals are drawing attention to a 28-year-old capital gains tax law, citing it as one factor contributing to the nationwide housing shortage.

Ken DeLeon, founder of DeLeon Realty in Palo Alto, told The Epoch Times that some communities have experienced skyrocketing home price. In some cases they have jumped 667 percent on average since 1997.

“This outdated capital gains law has resulted in an artificially-created housing shortage,” DeLeon said. “A lot of older people who have lived in their homes for 30 years or more want to sell, but the value of those homes has tripled or quadrupled now. Some of these sellers could now be facing capital gains taxes of over $1 million.”

According to a HUD report, the median cost of a single-family home in 1997 was $143,000, compared with $414,000 in April 2025, as reported by the National Association of Realtors.

With the combined federal and state capital gains tax rate now at 37.1 percent in California, potential sellers seeking to avoid elevated tax exposure are choosing instead to remain in their current properties.

As a result, DeLeon said inventory levels have reached historic lows and sellers are stuck in a tax trap.

DeLeon contends that the economic ripple effects of the almost three-decade-old tax formula is causing not only fewer home sales, but less revenue from transfer taxes, reset property taxes, and local economic activity.

“We have older people who may have bought their home 30 years ago for less than $100,000 and now they’re worth $4 million,” she said. “They may want to downsize and move, but they can’t afford to pay all those capital gains taxes.”

The hefty tax makes it difficult to buy their next home for cash which they most likely want to do.

It’s a situation that is pushing our country further into a housing market where only large, wealthy corporations can purchase the increasingly rare single-family home.

A bipartisan effort to resolve the issue is already underway in Congress. Reps. Jimmy Panetta (D-Calif.) and Mike Kelly (R-Pa.), along with many others, in February reintroduced the More Homes on the Market Act to make housing more available and affordable for Americans.

The legislation would update the tax code by doubling the exclusion of capital gains from the sale of a principal residence. For single sellers, the exemption would move to $500,000 and for couples, to $1 million. The bill is designed to incentivize homeowners to sell their properties, thereby increasing the supply of housing and helping to alleviate affordability challenges across the country.

The US Treasury recently announced it will stop making the penny. Producing one penny cost almost four cents, costing the US Mint $85 million a year. This isn’t the first time this has been considered by Congress. The Cato Institute said that the penny should have been jettisoned long ago, but previous efforts in Congress failed in part because a special interest benefits from its continuance.

The penny was originally made of copper, now it’s made of zinc and it has been the lobbying efforts of zinc producers that has kept Congress from acting.

They say the nickel too should be eliminated – or the government should let the private sector make those coins if they want. It costs the government 13.8 cents for every nickel it makes. It costs 5.8 cents to make a dime and 14.7 cents to make a quarter.

Another interesting trend is that transactions done with cash are becoming less and less. Last year cash transactions of less than $25 declined by 16 percent.