"The number of farm operations filing for bankruptcy remains at historically low levels but has jumped sharply this year as a crisis in the agricultural economy drags on. In the second quarter, there were 93 filings, according to the Federal Reserve Bank of Minneapolis, up from 88 in the first quarter and nearly double the 47 at the end of 2024."
"More recently, President Donald Trump's trade war this year has kept China, traditionally a top buyer of U.S. soybeans, from placing any orders with American farmers, who are facing an uncertain harvest season. But crop prices have been weak for most of the past decade except for brief a spike during the pandemic, according to the Minneapolis Fed."
"And while the Agriculture Department has forecast that farm incomes will increase this year, about three-quarters of that growth will come from an expected boost in government payments, it added. The Federal Reserve's recent survey of farm financial conditions found that weaker income has reduced liquidity for farmers, boosting demand for financing. To be sure, the recent spike in bankruptcies doesn't mean farmers are going out of business, the Minneapolis Fed pointed out."
Farm bankruptcy filings remain historically low but increased sharply this year, with 93 Chapter 12 filings in the second quarter versus 47 at the end of 2024. Filings peaked at 169 in early 2020 and trended lower afterward but have been rising since 2022. Rising production costs and plunging crop prices—corn down about 50% and soybeans about 40% since 2022—have weakened farm incomes. Trade tensions have halted Chinese soybean purchases, adding uncertainty to the harvest season. The Agriculture Department expects higher farm incomes this year, but about three-quarters of the gain stems from anticipated government payments. Weaker income reduced liquidity, increased financing demand, and led to deteriorating repayment rates across several Federal Reserve districts. Chapter 12 filings can enable restructuring rather than liquidation.
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