Farm Bankruptcies on the Rise Again in 2025

By Ryan Hanrahan

Bloomberg Law’s Alex Wolf and Skye Witley reported that “family farm bankruptcies increased by 55% last year compared to 2023 and are trending even higher this year as farmers continue to grapple with depressed agricultural commodity prices and high input costs.”

“And while much of the industrywide distress predates his second stint in the White House, (President Donald) Trump has quickly nudged more farmers closer to the brink of going under and created turbulence for producers trying to make ends meet,” Wolf and Witley reported. “Unpredictable tariffs, immigration overhauls, federal program cuts, and frozen Agriculture Department funding are now part of the discussions farmers are having as they seek financial help.”

“‘What’s going on in Washington?’ is the subject of almost every conversation that I have,’ said North Carolina farm bankruptcy attorney David Mills of Narron Wenzel, P.A.,” Wolf and Witley reported. “‘There’s a lot of anxiety.’”

“Farm bankruptcy filings soared in 2019 during the height of Trump’s trade war with China, which targeted U.S. agriculture with a sweeping retaliatory tariff regime mirroring the response China is pursuing today,” Wolf and Witley reported. “Trump’s administration sent farmers an estimated $23 billion covering export losses to try to stop more farms from going under.”

“Following the bailout, family farm bankruptcies — filed under Chapter 12 of the U.S. bankruptcy code — declined each year until 2024, when the number of new cases jumped to 216 from a near 20-year low of 139, according to court records,” Wolf and Witley reported. “Filings have continued to speed up this year, with 82 cases filed over the first three months of 2025, nearly doubling the figure for the same period a year ago.”

Some Farm Loan Default Risk Highest Since 2020

The Federal Reserve Bank of Chicago’s David Oppedahl and Elizabeth Kepner reported in February that “the share of the District’s farm loan portfolio assessed as having ‘major’ or ‘severe’ repayment problems was 4.3% in the fourth quarter of 2024 — the highest it’s been since the end of 2020.”

“Non-real-estate loan repayment rates relative to a year ago were down for the fifth consecutive quarter. The index of non-real-estate farm loan repayments was 64, with 36% of survey respondents reporting lower rates for the fourth quarter of 2024 than a year earlier and zero respondents reporting higher rates,” Oppedahl and Kepner reported. “Non-real-estate farm loan renewals and extensions in the final quarter of 2024 were higher than in the final quarter of 2023, as 31% of survey respondents reported more of them and 1% reported fewer.”

In addition, the Kansas City Federal Reserve’s Francisco Scott and Ty Kreitman reported at the end of March that “as farm debt grew and conditions in the farm economy weakened, delinquency rates increased modestly from historic lows.”

“Delinquency rates for both real estate and non-real estate loans climbed above 1%, reversing the downward trend that began in late 2020,” Scott and Kreitman reported. “While non-accruing debt increased only slightly, the volume of loans that were delinquent for more than 90 days more than tripled compared to the previous year, albeit from historically low levels.”

Iowa Leads the Nation in 2025 Farm Bankruptcies

American Farmland Owner’s Dave Price reported last week that “Iowa, which has been beset with thousands of agriculture layoffs over the past two years due to decreased demand following a drop in farm income, leads other states with 12 bankruptcies this year,” according to research from Quinn Kendrick, general counsel for Iowa-based Peoples Co.

“The (bankruptcy) chart also serves as a reminder about the importance and prevalence of farms in Iowa,” Price reported. “For example, California has more than 12 times as many residents as Iowa, but nearly 25,000 fewer farms. And it has half as many bankruptcies as Iowa so far this year, according to Kendrick.”

“‘Farmer profitability remains a significant concern within the farmland sector,’ Kendrick posted on LinkedIn,” according to Price’s reporting. “Kendrick sees further economic hardship for farmers unless the Trump administration and Congress provide support. ‘Unless additional ad hoc support payments are introduced this year, I anticipate that the number of filings will continue to rise,’ he wrote.”

Farm Bankruptcies on the Rise Again in 2025 was originally published by Farmdoc.