(NAFB) New data from U.S. court filings indicate farm bankruptcy has risen again. Samantha Ayoub an economist with the American Farm Bureau Federation, says the data paints a stark picture of the farm economy.
“Chapter 12 bankruptcies increased for the second year in a row in 2025, reaching 315 filings. That’s up 46 percent from 2024. That second increase in a row shows that the farm economy, as we’ve been talking about, is really struggling, and excessive debt loads are starting to hit family farms.”
Ayoub notes that farm bankruptcies are not a perfect indicator of the farm economy, since the data often lags behind real farm finances. “When you have some good years, that capital might be able to get you through a few downturns. We know we’ve seen declining receipts for four years now, and we’re just starting to see that second year in a row of increases in bankruptcies. And then secondly, a majority of farms actually don’t qualify for Chapter 12 farm bankruptcies. In order to qualify, you have to make the majority of your family income from farming.”
Additionally, Ayoub cautions that only a small number of farms are even eligible for Chapter 12 bankruptcy to begin with. However, many farms are in difficult financial situations. “We are seeing our fourth year in a row of declining cash receipts, driven largely by crop losses, as well as high-cost specialty crop production really facing negative or very thin margins. Even some of our livestock receipts and markets are weakening a bit. All of that compounds to a very difficult situation when we’re also seeing increasing production costs.”
For more information, go to fb.org/marketintel.
(Story courtesy of the American Farm Bureau Federation Newsline)
