More farmers have filed bankruptcy under Chapter 12 protection in the first three months of 2025 than all of 2024, according to a study by the University of Arkansas Division of Agriculture Research. Many experts warn that this is a turning point, since farm bankruptcies had been on a slow decline for four years in a row.
Chapter 12 bankruptcy protection was established in 1986 to allow farmers and fishermen to reorganize their debt and continue operations. However, they must first exhaust all other means to pay off their debts. Previously, the only option to farmers was Chapter 7—forced liquidation.
Today’s rough economic conditions for farmers are similar to the disastrous 2018 to 2019 period which saw the highest rates of farm bankruptcies in recent times, akin to the 1980s crisis. Today these 2019-type conditions include farm income at a four-year low; farm debt increasing by 4% from 2023 to 2024; working capital exhausted for many farmers; input costs surging on seed, fertilizer, pest control, and diesel. Interest rates for agricultural loans have hit a 10-year high. Farm loans facing a serious risk of default have reached the highest level since 2020; loan-repayment rates are lower; requests for loan extensions and renewals are up; the number of new farm loans (mostly to cover operating costs) rose by 25% from 2023 to 2024. Now farmers are hit by extreme uncertainty over trade and tariffs.
However, while American farmers are going bankrupt at an alarming rate, U.S. Agriculture Secretary Brooke L. Rollins last week unveiled her “Action Plan” for farm security. Her top priority is to keep Chinese nationals from buying U.S. farmland or “infiltrating” agricultural research laboratories.
