Farm Bankruptcies Rise in 2025
- Dave Price
- 4 days ago
- 3 min read
Farm bankruptcies are back, climbing much faster in the United States. Fortunately, they remain significantly lower than during the second half of the previous decade. However, their rapid escalation could signal looming financial crises for America’s farm communities dealing with uncertainties about higher tariffs, frozen USDA funding for various programs, and heightened worry about a national recession.
Chapter 12 farm bankruptcies have continued their increase through the first four months of 2025.
“Chapter 12 is designed for ‘family farmers’ or ‘family fishermen’ with ‘regular annual income.’ It enables financially distressed family farmers and fishermen to propose and carry out a plan to repay all or part of their debts. Under chapter 12, debtors propose a repayment plan to make installments to creditors over three to five years. Generally, the plan must provide for payments over three years unless the court approves a longer period ‘for cause.’ But unless the plan proposes to pay 100% of domestic support claims (i.e., child support and alimony) if any exist, it must be for five years and must include all of the debtor's disposable income. In no case may a plan provide for payments over a period longer than five years.”
Chapter 12 Farm Bankruptcies Increased
Quinn Kendrick, general counsel for Iowa-based Peoples Company, charted the challenges. Kendrick tracked Chapter 12 bankruptcy filings.
Iowa, which has been beset with thousands of agriculture layoffs over the past two years due to decreased demand following a drop in farm income, leads other states with 12 bankruptcies this year, according to Kendrick’s research.
The chart also serves as a reminder about the importance and prevalence of farms in Iowa. For example, California has more than 12 times as many residents as Iowa but nearly 25,000 fewer farms. And it has half as many bankruptcies as Iowa so far this year, according to Kendrick.
RESEARCH: American Farmland Owner tracked layoffs in agriculture, which further strain smaller communities.
“Farmer profitability remains a significant concern within the farmland sector. Year-to-date in 2025, Chapter 12 bankruptcy filings have surged by nearly 70% compared to the same period in 2024,” Kendrick posted on LinkedIn.
Kendrick sees further economic hardship for farmers unless the Trump administration and Congress provide support.
“Unless additional ad hoc support payments are introduced this year, I anticipate that the number of filings will continue to rise,” he wrote.
Rise in Farm Bankruptcies in 2024
The American Farm Bureau Federation warned in February about the increase in farm bankruptcies in from 2023-2014. Associate Economist Samatha Ayoub noted an increase of 55% from the previous year, which reflected the strain on family farmers after a second straight year of declining farm incomes.
Ayoub’s analysis also keyed in on the struggles by region, especially for row crop producers.
“Row crop markets have experienced sharp decreases in cash receipts for three years, with expected further declines of over 4% and 6% in corn and soybean receipts, respectively, in 2025,” Ayoub wrote.
“Cotton had a nearly 24% decrease in cash receipts in 2024 but is the only major row crop forecast to post an increase in cash receipts in 2025. Chapter 12 bankruptcies lag declines in farm income as farms must exhaust their ability to pay back debt before filing,” she added.
Ayoub also noted Congress’ failure to agree on a new Farm Bill, which added to financial pressures for some producers. “It is likely that the downward trend in net farm market returns, combined with even longer-term declines in government payments in 2024 due to an outdated farm bill, drove more farmers in the Grain Belt and South to their last resort of farm bankruptcy in 2024.”
RELATED: Dr. Craig Lemoine, University of Illinois Urbana-Champaign Director of Financial Planning Program and Ag Focused Financial Planning Program has this advice to help new farmers understand the economics of the industry.
