American farm bankruptcies spiked in 2024 amid worsening financial conditions.
Numbers from the American Farm Bureau Federation on Thursday showed US courts reported 216 farm bankruptcies last year, up 55% from a year earlier. That is still 64% below the all-time high of 599 filings in 2019 but does snap a four-year long downtrend in bankruptcies.
In the key Midwest region where corn and soybean crops are largely grown, there were 71 bankruptcy filings in 2024, a hefty 69% increase from the prior year. On a state-by-state basis, Michigan had the largest increase in filings with 12 cases, up from zero in 2023. Eight other states and territories had double-digit filings in 2024, including Nebraska with 15 and Kansas with 10. Iowa recorded 7 bankruptcies in 2024, while Illinois had 4. California had the most bankruptcies at 17.
Net farm income in 2024 reached a four-year low, decreasing nearly 24% in just two years. Lowered revenues and above-average production costs continue to squeeze farmers and ranchers on both sides of the balance sheet, threatening farm liquidity, the farm bureau said. As such, farm operating loans continue to surge to cover expenses.
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.
Meanwhile, US 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.
An indicator of farm financial health across the country, Chapter 12 bankruptcy provides farmers and ranchers with increased flexibility for paying off debt and is used when all other options have been exhausted. The farm bureau has long followed annual filings of Chapter 12 farm bankruptcies, through good and bad years for the farm economy.
