Increasing Farm Bankruptcies Highlight Urgent Economic Situation
Samantha Ayoub
Economist
Chad Smith
Associate News Service Editor, NAFB
photo credit: AFBF Photo, Betty Resnick
Samantha Ayoub
Economist
Chad Smith
Associate News Service Editor, NAFB
The latest farm bankruptcy data serves as another indicator of a struggling farm economy. Chad Smith has more.
Smith: 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.
Ayoub: 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.
Smith: Ayoub notes that farm bankruptcies are not a perfect indicator of the farm economy, since the data often lags behind real farm finances.
Ayoub: 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.
Smith: 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.
Ayoub: 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.
Smith: For more information, go to fb.org/marketintel. Chad Smith, Washington.
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