Farm bankruptcies nearly doubled in the first three months of 2025 compared to last year, and experts don’t expect the trend to change.
Data from the federal court system show 88 Chapter 12 filings through March 31. Last year there were 45 filings in the same period.
For Adam Birk, those filing for bankruptcy at the law firm where he works with his father fall into one category: “tired.”
“Once you hit that point, you know, they've been racking their brains on how to get out of this for quite a while,” Birk said. “There definitely can be some shame to it. … It's a hurt to the pride.”
Birk, whose Missouri firm specializes in farm bankruptcies, told Agri-Pulse that the number of filings he's seen this year has risen sharply. In 2025, seven Chapter 12 bankruptcies have already been filed with the firm, which typically doesn’t see more than one per year.
A pattern for most of these filers, Birk said, is that they’ve been “rolling over” debt from previous years.
“Then you get hit with where we're at in the farm economy, and just — there’s no way,” he said.
What is Chapter 12 bankruptcy?
Chapter 12 bankruptcy is a special form of bankruptcy filing designed to allow “family farmers” to create a plan to repay their debts while continuing to operate their farms, according to the U.S. Courts. Congress created Chapter 12 bankruptcy in 1986 as a temporary response to the 1980s farming crisis, and it was made permanent in the Bankruptcy Code in 2005.
In order to file Chapter 12, a farmer's total debt cannot exceed about $12.56 million. Farms with more debt must file for Chapter 11 bankruptcy instead, which is designed for corporate reorganizations.
Birk said it's important to note that farmers who file under Chapter 12, instead of Chapter 7, create a three- to five-year plan to pay off their debts that gives them the opportunity to keep their farms viable into the future.
As necessary as the bankruptcy process might be for some farmers, Birk said it is both expensive and time-consuming. An aspect of the farm bankruptcy proceedings that Birk said many farmers are unaware of is the way it impacts their ability to make operating decisions quickly — or rather, not so quickly.
“If you want to go get new funding, even if it's just a renewal of your operating loan, we have to make a motion and get that approved,” Birk said. “Well, that stuff can take time.”
It’s easy to be “in the know” about what’s happening in Washington, D.C. Sign up for a FREE month of Agri-Pulse news! Simply click here
Birk said that bankruptcy proceedings get smoother for farmers as they implement their plans, but the first year can be “draining.”
“It requires a very large opening of the books, which can be fairly personal,” he said.
Pressure points
There is no smoking gun that experts can identify as the culprit for the rising trend in farm bankruptcy filings. Still, economists like Jennifer Ifft, professor and Flinchbaugh agricultural policy chair at Kansas State University, cite depressed commodity prices for row crops and elevated inputs costs as the leading pressure points in the current farm economy.
“There's a real margin squeeze for crop producers, which I would see as the primary cause,” Ifft said.
These lower crop prices and high expenses are now also accompanied by higher interest rates. Nate Kauffman, senior vice president and Omaha branch executive at the Federal Reserve Bank of Kansas City, said that while interest rates are higher now than they’ve been in recent years, he wouldn’t call them the main driver of farmers’ bottom lines. However, they are an additional source of pressure, especially for producers with higher debt.
While the current farm economy is comparable to what economists observed in 2016 and 2019, Ifft said farmers are operating with higher debt today.
Estimates from USDA’s Economic Research Service predict farm sector debt in the U.S. will rise 3.7% in 2025 to $561.8 billion. This is a continuation of steady debt growth in the last five years — and with interest rates higher, they “have less tools to deal with it,” Ifft said.
For financially stressed farmers, Ifft recommended seeking out community resources such as Kansas Agricultural Mediation Services, which provides legal, financial and mediation services to producers in the state.
Other policy issues adding to the financial uncertainty of farming are playing out in real time. Ifft told Agri-Pulse that it remains to be seen whether President Donald Trump’s tariffs result in more farm bankruptcies.
“If you have less trade, for whatever reason, you're going to see commodity prices go down,” she said.
She said it is possible USDA would respond with relief payments to make up for tariff-induced revenue losses, following the example Trump set in his first administration when he used Commodity Credit Corp. funding to shore up farmers during his trade war with China. The issue, however, is when those payments would be made, she said.
Ifft said farmers also will need to monitor the farm labor situation, which has become a sticky subject for them as the Trump Administration ramps up its deportations.
“The question is: How much can you adapt your way out of this?” she said.
Historical perspectives
Though farm bankruptcies are on the rise, they remain historically low compared to prepandemic levels. In 2024 there were 216 Chapter 12 filings — a 55% increase from 2023. That number, however, is dwarfed by the 599 filings in 2019. On average, 432 Chapter 12 bankruptcies were filed each year between 2008 and 2024.
Kauffman told Agri-Pulse it’s important to note that the developments in the last year and a half are coming off an “extremely strong” time in agriculture.
“I know there's been a lot of attention on the past 12 to 18 months, but the amount of financial stress that we see now is actually still less than where we were in 2019, and people that were looking at agriculture in 2019 would have remembered that as a year of notable concern in the farm economy,” Kauffman said. “So, it's worth paying attention to, and definitely something that we're monitoring regularly, but it's still, I think, important to keep it in perspective.”
Darren Hudson, professor of agricultural and applied economics at Texas Tech University, also emphasized government infusions of cash in the last five years through programs such as the Coronavirus Food Assistance Program in 2020 and 2021 and the Market Facilitation Program in 2019.
“Older farmers who had more equity in their farm to begin with … this really shored up their finances — if they played the game correctly,” Hudson said.
This means current farm conditions aren’t affecting all producers equally. Hudson said young farmers who entered the industry in the last two years are being hit hardest by the current farm economy and are most vulnerable to bankruptcies.
Kauffman agreed that younger producers who rent more of their land than they own, especially those who have tried to expand rapidly in the last few years, will find themselves more exposed to risk in the coming months.
“The longer it persists, obviously, the more challenging it gets for producers that maybe started in that environment a year or so ago,” he said.
Looking to the rest of 2025 and 2026, Kauffman told Agri-Pulse that farmers should prepare for “continued stress” on their balance sheets.
John Newton, executive head of Terrain and former chief economist for Senate Ag Committee Republicans, warned against disregarding the current rise in farm bankruptcies on the basis of historical comparisons of macro-level indicators such as debt-to-asset, debt-to-equity and debt-to-cash-flow ratios.
“You peel back the onion a little bit, and you would see that there are a lot of farmers that are in economic distress, even though these macro indicators don't show up,” he said, speaking Aug. 5 at the International Sweetener Symposium in Traverse City, Michigan. “Same thing with delinquency rates. They remain historically low, but they are climbing.”
For more news, go to Agri-Pulse.com.
