U.S. Farm Bankruptcies Climbed for Another Consecutive Year in 2025
A MarketIntel report on Chapter 12 farm bankruptcies in 2025. | American Farm Bureau Federation
Filing for Chapter 12 bankruptcy is a last resort for farmers who have undertaken large debts to continue operating with increased flexibility for payments. U.S. Courts report that 315 farm bankruptcies were filed in calendar year 2025, up 46% from 2024. While still down from recent highs, this is the second year in a row of increased filings. Chapter 12 also does not reflect larger trends in farm closures that may be the only option for certain struggling operations.
Declining Farm Receipts Drive Local Increases
The most recent farm income forecast confirmed that the farm economy has faced extreme financial pressure, with little relief in sight. Significant losses are expected across crop sectors for another year, and many livestock sectors are also tightening margins. The Midwest and Southeast each filed 121 and 105 Chapter 12 cases, respectively, far outpacing any other regions. This is a 70% increase in filings for the Midwest, and a 69% increase in the Southeast.
Deep losses across commodities common in these two regions have compounded after years of declining receipts and rising expenses. For example, rice farmers are expected to lose more than $200 per acre, even after supplemental assistance. The nation’s leading rice-producing state, Arkansas, leads the U.S. in Chapter 12 filings in 2025 with 33 filings, more than double 2024 and the most in the state in the 21st century. Georgia follows with 27 filings, up 145% from 2024, reflecting both losses per acre in principal row crops and limited support for high-cost specialty crop production. Other Southeast states with double-digit bankruptcies include Texas and Louisiana, with 12 each, and Florida, with a 200% increase from 2024 to 16 filings.
In the Midwest, principal row crop losses combined with weakening dairy, hog and poultry markets have led to double-digit Chapter 12 filings in Iowa (18, +220%), Nebraska (17, +29%), Missouri (16, +167%), Wisconsin (16, +700%), Minnesota (13, +300%) and Kansas (11, +10%).
Other states with significant increases in filings in 2025 include Montana, with 200% more filings, and Pennsylvania, with a 160% increase in filings. While California was unchanged from 2024, they tie for the fourth-highest number of filings with 17 in 2025, reflecting continued price and cost pressures on their diverse agricultural industries.
Another Sign of a Struggling Farm Economy
Farm bankruptcy filings are a lagging indicator that spike when prolonged financial pressures push farms to explore last resorts. According to the Federal Reserve Bank of Kansas City, farmers are taking larger operating loans and taking longer to repay them. USDA estimates that total farm debt will rise 5.2% to a record $624.7 billion in 2026, highlighting the financial backing farmers need under current conditions.
This is driven especially by the need for additional lines of credit simply to cover input costs, rather than business investments. Nearly 40% more new farm operating loans were opened in the fourth quarter of 2025 than in 2024. At the individual farm level, the average operating loan in 2025 was 30% larger, with an average maturity, or payment length, three months longer than in 2024. For machinery and equipment loans specifically, the average maturity hit the highest level since 2021, signaling how difficult it is to invest in operational upgrades. On top of this drastic need for credit to get through the year, interest rates remain above decade averages, with interest expenses expected to reach a record $33 billion in 2026 across the farm economy.
All of these credit and debt factors are stretching farmers and ranchers to the brink. With expected financial pressures into the future, Chapter 12 provides an opportunity to better manage the debt loads that have kept operations afloat.
For additional information on the current state of farm bankruptcies, including a visual look at farm bankruptcy statistics in the U.S. and situations where farmers don’t qualify for Chapter 12, please read the full article written by Samantha Ayoub on the American Farm Bureau Federation website.
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