National Farm Bankruptcies Continue To Climb; Drop In The NW

Chapter 12 farm bankruptcies increased nationwide for the second year in a row in 2025, a 46% year-over-year increase. 

The American Farm Bureau Federation noted the key takeaways when looking at the numbers:

• Chapter 12 bankruptcies 315 filings nationwide last year.
• The Midwest and Southeast filed 121 and 105 Chapter 12 cases, respectively, far outpacing any other regions.  Deep crop losses across commodities common in these two regions have compounded after years of declining receipts and rising expenses.
• Families must earn the majority of their income from farming to qualify for Chapter 12. As off-farm income becomes more important for family benefits and supporting farms during economic downturns, many family farms are not eligible for Chapter 12 bankruptcies and may have to close altogether when debt and operating expenses become too great.

While the Southeast, Midwest and Southwest all reported an increase in the number of farm bankruptcies, the Northwest reported a 17% year-over year drop.

The Farm Bureau said 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 more 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.

AFBF added many farms do not qualify for Chapter 12.  Particularly in down years, off-farm income has become a crucial resource for many farms to provide benefits for their families and support their farming enterprise. Yet, earning most of your income from off-farm employment disqualifies farmers from Chapter 12.  So, AFBF noted, many families may face the even more difficult decision to sell land, limit production or close their farm altogether. This continues the alarming rate of farm loss in the United States, with over 160,000 farms closing between 2017 and 2024.

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