As Tuberville predicted, 2025 has seen an increase in farm bankruptcies

July 20, 2025 - In the first three months of 2025, more farms filed for bankruptcy than in the entirety of 2024-a sobering milestone that has sent shockwaves through rural communities and agricultural markets nationwide. According to data from the University of Arkansas System Division of Agriculture, 259 Chapter 12 bankruptcy filings were recorded between April 2024 and March 2025, marking a 70% year-over-year increase.

Chapter 12 of the federal bankruptcy code, created during the 1980s farm crisis, is tailored to help family farmers reorganize their debts while continuing operations. But the recent surge in filings suggests that many producers are now facing financial pressures reminiscent of that earlier era.

Senator Tommy Tuberville (R-Alabama) had predicted the loss of the farms.

In a December 2024 interview, Tuberville warned: "We're going to lose 50,000 farms in the next probably six months. 50,000 more, and we lost 150,000 in the last three or four years." He blamed the Biden administration for failing to deliver timely disaster aid and for prioritizing unrelated spending.

In a November 2024 press release, he stated: "Many of our family farmers had to make the difficult decision to put their combines and tractors up for good because of their inability to make ends meet." He criticized Senate Democrats for dragging their feet on Farm Bill negotiations for over 400 days.

Commodity Prices and Input Costs: A Perfect Storm

At the heart of the crisis is a brutal economic equation: commodity prices have dropped to levels last seen in 2018–2019, while input costs-such as seed, fertilizer, diesel, and pest control-remain stubbornly high. Scott Stiles, an economist with Arkansas State University, described the situation as a "financial pressure cooker," noting that farmers are increasingly delaying capital purchases and cutting back on equipment investments.

The Association of Equipment Manufacturers reported a 13% decline in tractor sales and a staggering 48% drop in combine sales year-over-year, underscoring the ripple effect across the agricultural supply chain.

Cash Reserves Depleted, Credit Conditions Tighten

Many farmers entered 2025 with depleted cash reserves, having burned through working capital in previous seasons. Ashley Arrington of Ag Resource Management noted that some producers "kicked the can down the road" in 2024, hoping for a rebound. Instead, they now find themselves "too far upside down" to secure new financing.

The Federal Reserve Bank of Chicago reported that repayment rates for non-real-estate farm loans hit their lowest point since 2020, with 39% of bankers observing lower repayment rates compared to the previous year. Meanwhile, the availability of agricultural lending funds has declined for eight consecutive quarters.

Regional Disparities and the Role of Weather

While the Midwest has borne the brunt of the downturn-particularly in row crop sectors-some Southeastern states like Alabama and Mississippi have fared slightly better due to strong poultry and egg markets. However, even in these regions, small-scale row crop farmers are struggling. Arkansas, for example, saw 15 Chapter 12 filings in Q1 alone, nearly matching its total for all of 2024.

Weather challenges have compounded the crisis. Floods, droughts, and unpredictable growing conditions have disrupted planting schedules and reduced yields, further squeezing margins.

Policy Paralysis and Delayed Relief

The absence of a new Farm Bill has left many producers without updated safety nets. The current legislation, now more than two years overdue, includes subsidy mechanisms that have been rendered ineffective by inflation and market volatility.

In September Sen, Tuberville said, "Even if a Farm Bill is passed today, producers wouldn't receive any commodity program support until 2026. Game, set, match before 2026 for our farmers."

He warned that delays in passing the bill could permanently damage the agriculture sector, citing a 23% drop in farm income over two years.

Although Congress recently passed the "Big Beautiful Bill" to update farmer protections, economists warn that payments won't arrive until 2026, leaving many farmers to "float what they have" in the meantime.

The Human Cost: Communities at Risk

Beyond the balance sheets, the surge in bankruptcies is taking a toll on rural communities. As farms shutter, input suppliers, equipment dealers, and service providers lose business. Schools and clinics in farming towns face declining enrollment and revenue. And the emotional strain on farmers-many of whom are working land passed down through generations-is profound.

Jonesboro bankruptcy attorney Joel Hargis, who specializes in Chapter 12 cases, said he's filed more farm bankruptcies in the past six months than in any full year prior. "You might as well cut off an arm than sell their pasture or crop land," he said.

Looking Ahead: Consolidation or Collapse?

If current trends continue, experts fear a wave of consolidation that could reshape American agriculture. Large corporate farms may absorb smaller operations, leading to fewer independent producers and a loss of local control over food systems.

Quinn Kendrick of Iowa-based Peoples Company warned that unless Congress and the administration introduce ad hoc support payments, the number of filings will continue to rise.

Conclusion

The rise in farm bankruptcies is more than a financial statistic-it's a warning bell for rural America. Without swift policy intervention, targeted relief, and structural reforms, the nation risks losing not just farms, but the communities and traditions that sustain them.

(Brandon Moseley contributed to this report.)