Chapter 12 Bankruptcies Jump 46% as Farm Debt Hits Record

Family farmers filed for Chapter 12 bankruptcy protection at levels not seen since before the 2008 financial crisis. In 2025, 315 farms filed for bankruptcy compared to 216 the prior year — a 46% jump that underscores the deepening economic squeeze on American agriculture.

The crisis is most acute in the Midwest, where farmers face the tightest margins. Bankruptcy filings jumped 70% in the region, with Illinois alone seeing a 55% surge. In April alone, 62 farms filed for Chapter 12 protection — the highest monthly total since February 2020 and a 130% increase from April 2025.

The numbers reflect a brutal squeeze: real estate debt is forecast to reach $404.3 billion in 2026, with interest expenses expected to hit a record $33 billion across the entire farm economy. Meanwhile, commodity prices remain depressed and input costs — seed, fertilizer, fuel, labor — stay elevated.

Total farm debt is forecast to hit a record $624.7 billion in 2026. Much of that is borrowed against land that has only gotten more expensive and harder to access, pushing younger and smaller operators toward the exit.

The bankruptcies are hitting at a moment when federal policy is either indifferent or actively worsening farmers’ position. H-2A farmworker wages were cut sharply this year, forcing farmers to absorb higher labor costs just as their own debt service balloons. Poultry farmers face rollbacks of payment protections that once offered price floors. And most beginning farmers are forced to work off-farm just to stay solvent — a warning sign that the next generation is being priced out.

What’s driving the crisis is straightforward: costs are rising faster than farm income. High interest rates have made borrowing more expensive. Land rents and real estate taxes remain high. Commodity prices have not rebounded. And the farm economy, already skewed toward large operations with access to capital and scale, is shedding smaller operators who can’t weather the downturn.

Agricultural worker protections remain under threat at the federal level, and consolidation in input industries continues unchecked, giving farmers fewer choices and less leverage on price.

The bankruptcy surge suggests that the structural pressures on family farms — debt, consolidation, climate volatility, and policy indifference — are not temporary headwinds but a permanent condition. Without intervention, the next few years will see more farmers exit and their land absorbed into larger operations or held by outside capital.