Farm Bankruptcies Continue to Climb

Financial pressure is building on American farmers, and the number of farm bankruptcies has been increasing. “We’ve had 259 filings in the United States between April 1 of 2024 and March 31 of this year,” said Ryan Loy, extension economist for the University of Arkansas System Division of Agriculture.

Chapter 12 bankruptcy filings:

• First quarter of 2024: 45

• First quarter of 2025: 88

(Source: University of Arkansas Division of Agriculture Research & Extension)

Chapter 12 of the federal bankruptcy code allows farmers the chance to be part of a plan to repay their debts (all or some of the debts) vs. Chapter 7, which liquidates farm assets to pay creditors.

“We’ve already beat last year in terms of Q1 national filings,” Loy said. “Once you see this on a national level, it’s a clear sign that financial pressures that we saw before in the 2018 and ‘19 are kind of re-emerging.”

That re-emergence is a combination of factors: higher borrowing costs, more expensive input costs, and commodity prices that fell to 2018-19 levels.

RELATED: This is a significant reason for why interest rates haven’t fallen yet, according to Federal Reserve Board Chair Jerome Powell.

High Borrowing Costs for Farmers

Elevated interest rates have likely helped to cool the economy after five trillion dollars in federal stimulus money circulated following COVID-19’s outbreak. But they have also meant that farmers must pay more if they want to borrow.  

“A lot of these operating loans that might have been financed in the three, four, or five percent are now getting financed in the seven to nine percent rates,” said Quinn Kendrick, general counsel for Iowa-based Peoples Company, told NewsNation. 

The higher interest rates combined with lower commodity prices make the math impossible for some farmers. “It just results in farmers having no other option but to seek a Chapter 12 bankruptcy to continue their operation,” Kendrick explained.

Farmers Delay Major Purchases

Feed costs haven’t fallen to offset commodity prices’ declines, which adds to farmers’ financial stress. As a result, some farmers continue to put off major capital purchases out of anxiety, necessity, or both.

• Tractor sales: Down 13% from last year

• Combine sales: Down 48% from last year

• Repayment rates for non-real estate farm loans: Lowest since 2020

Four in ten banks reported lower repayment compared to 2024, a reflection of how widespread the challenges are for farmers. Delaying significant purchases can help short-term. But eventually, that equipment will not last. Access to credit could become vital for some farmers.

Pork Producers Assess Future Agricultural Conditions

The 55% increase in bankruptcies for 2025’s first quarter will send warning signals across the agricultural community. Pork producers are watching a variety of factors as they look at their own financial well-being.

“The road ahead will test the resilience of pork producers and all of U.S. agriculture. As policymakers debate trade, tariffs, immigration, and farm policy, the voices of those on the ground — including small and midsized family farms — will be critical." -- Swineweb

RELATED: A veteran agricultural executive has stated that current interest rates are appropriate.  Here is where he told American Farmland Owner he thinks they should go from here.