Farm Bankruptcies Increased 55% in 2024

By Ryan Hanrahan

The American Farm Bureau Federation’s Samantha Ayoub reported last week that “the U.S. Courts report that 216 farm bankruptcies were filed in 2024, up 55% from 2023. This is still 64% lower than the all-time high of 599 filings in 2019. However, 2024 is the end of a four-year downward trend in bankruptcies, which appears to mark a turning point in long-term farm financial health.”

“Row crop markets have experienced sharp decreases in cash receipts for three years, with expected further declines of over 4% and 6% in corn and soybean receipts, respectively, in 2025. Cotton had a nearly 24% decrease in cash receipts in 2024 but is the only major row crop forecast to post an increase in cash receipts in 2025,” Ayoub reported. “Chapter 12 bankruptcies lag declines in farm income as farms must exhaust their ability to pay back debt before filing. It is likely that the downward trend in net farm market returns, combined with even longer-term declines in government payments in 2024 due to an outdated farm bill, drove more farmers in the Grain Belt and South to their last resort of farm bankruptcy in 2024.”

Ayoub reported that “all but one region had increases in Chapter 12 bankruptcy filings last year. Bankruptcy filings in territories and states outside the contiguous 48 states — designated ‘Other’ by the U.S. Courts — more than tripled in 2024, hitting a five-year high of 14 bankruptcies. However, this is still lower than any year between 2007 and 2019.”

“Chapter 12 bankruptcies filed in the Northwest doubled from 2023–2024. With 12 filings, they tied the Southwest for the region with the second fewest filings. The Southwest was the only region with a decrease in filings (down 14% from 2023) after being the only region to increase in Chapter 12 filings in 2023,” Ayoub reported. “After experiencing significant droughts and weather-related losses in the Southwest in 2023, all states except Utah had lower weather losses in 2024.”

“All other regions — Southeast, West, Northeast, Mid-Atlantic and Midwest — had double-digit increases in filings from 2023–2024,” Ayoub reported. “The number of filings in each of these regions varies drastically. The Northeast had a 25% increase to five Chapter 12 filings in 2024, one more than in 2023. The Midwest had a 69% increase in 2024 to 71 filings. The Southeast followed closely behind with 62 filings, a 55% increase. On a state level, the total number of bankruptcies widely varies. Thirteen states/territories had no bankruptcies, while California had the most at 17.”

Bankruptcies Follow Another Farm Income Decline in 2024

The Iowa Capital Dispatch’s Cami Koons reported in December that “farm income is forecasted to have decreased in 2024 by 4% from 2023, largely because of a decrease in cash receipts, or the gross income, from the sale of commodity crops, according to the December update of the U.S. Department of Agriculture’s farm income forecast.”

“Net cash farm income for 2024 is projected to be $158.8 billion, which in inflation-adjusted figures is 3.5% lower than net cash farm income in 2023,” Koons reported. “The forecast shows the 2024 figure, however, is 9.8% above the 20-year average for net cash farm income, and represents a less gradual decline than that of 2022–2023.”

“The sale of agricultural commodities is projected to decrease by less than 1% overall, as an over 8% increase in animal and animal product receipts nearly offsets the over 9% decrease in forecasted crop receipts,” Coons reported. “Because of this, net cash income for all farm businesses specializing in crops is forecasted to be lower this year than last, but all farm businesses specializing in animal or animal products are expect to have higher net cash farm income than they did in 2023.”

Number of Farm Loans Increased in 2024

Ayoub reported that “according to the Kansas City Federal Reserve, non-real estate farm loans at commercial banks rose 25% from the end of 2023–2024. At the same time, interest rates on agricultural loans remain at decade-high levels. Interest expenses rose nearly 4% in 2024 to over $29.5 billion, closely following a 4% increase in farm debt in 2024. Farm debt is expected to continue to increase in 2025 to nearly $562 billion.”

“As farms continue to carry larger debt loads without increasing net cash revenue, they also experience worsening credit. Loans across farm country, including real estate, production, and agribusiness loans, increased in ‘less than acceptable’ loan ratings, signifying a larger share of loans at risk of nonpayment,” Ayoub reported. “Loans facing serious risk of default in the Seventh District of the Federal Reserve, which covers much of the Midwest, rose to the highest level since 2020.”

Farm Bankruptcies Increased 55% in 2024 was originally published by Farmdoc.