What's Happening?
Chapter 12 farm bankruptcies in the United States have increased for the second consecutive year, with 315 filings in 2025, marking a 46% rise from 2024. The Midwest and Southeast regions have been particularly affected, with significant increases in states
like Arkansas and Georgia. The rise in bankruptcies is attributed to financial pressures across various agricultural sectors, including row crops, dairy, hogs, and poultry, compounded by high operational costs. The USDA projects farm debt to reach $624.7 billion in 2026, with operating loans and interest expenses also on the rise. Chapter 12 bankruptcy offers relief for family farms, but many are unable to qualify due to income requirements, leading to potential closures and reduced production.
Why It's Important?
The increase in farm bankruptcies highlights the financial challenges facing the U.S. agriculture sector, which is crucial for the nation's food, fiber, and fuel supply chains. The financial strain on farmers could lead to further farm closures, impacting rural economies and the agricultural workforce. The rising debt levels and interest expenses also pose a risk to the sustainability of family farms, which are integral to the agricultural landscape. The situation underscores the need for policy interventions to support farmers and stabilize the sector.
