The agricultural sector is experiencing a notable rise in bankruptcy filings, despite overall numbers remaining at historically low levels. In the second quarter of this year, the Federal Reserve Bank of Minneapolis reported 93 farm bankruptcy filings, marking an increase from 88 in the first quarter and nearly doubling the 47 recorded at the end of 2024. While this rise indicates a troubling trend, it is still significantly below the peak of 169 filings noted in early 2020, a period followed by a sharp decline over the subsequent two years. However, since 2022, bankruptcy filings have trended upwards, reflecting ongoing challenges within the agricultural economy.
The situation is exacerbated by escalating production costs and declining crop prices. Since 2022, corn prices have plummeted by approximately 50%, while soybean prices have decreased by about 40%. These setbacks are compounded by the impacts of President Donald Trump’s trade war, which has resulted in China—historically a major buyer of U.S. soybeans—ceasing its purchases of American agricultural products during an uncertain harvest season.
According to the Minneapolis Fed, crop prices have remained weak for most of the last decade, with only a brief spike during the pandemic. The U.S. Department of Agriculture has forecast an increase in farm incomes for this year; however, nearly three-quarters of this anticipated growth is expected to stem from increased government payments.
A recent Federal Reserve survey on farm financial conditions highlighted that decreasing income has limited liquidity for farmers, leading to greater reliance on financing options. Credit conditions have shown deterioration, with around 30% of respondents in the Chicago and Kansas City Fed districts reporting lower repayment rates compared to a year earlier. This figure increases to 40% for the Minneapolis Fed region and reaches 50% in St. Louis.
Despite the spike in bankruptcy filings, the Minneapolis Fed reminds that Chapter 12 filings do not necessarily indicate a complete exit from farming. This legal framework allows farmers to avoid total liquidation, enabling them to restructure and potentially continue operations on a smaller scale.
In response to these pressing issues, agricultural trade groups are urging the Trump administration to implement measures to boost domestic crop demand. This includes negotiations with China to resume soybean purchases and mandates for higher ethanol blends in fuel, which can utilize corn.
The American Soybean Association expressed urgent concerns in an August letter to Trump, stating that soybean farmers are under severe financial pressure with continuing price drops coupled with rising input costs. They cautioned that a prolonged trade dispute with their primary customer could jeopardize the survival of U.S. soybean farmers.
Amidst these challenges, the One Big Beautiful Bill Act, signed in July, allocates about $66 billion for agriculture-related support, with a significant portion aimed at enhancing farm safety nets. Furthermore, discussions regarding the potential use of tariff revenue to aid farmers have emerged, with speculation about a bailout ranging from $10 billion to $14 billion, with distributions possibly starting soon. This follows the administration’s prior provision of $23 billion in assistance during earlier trade disputes.
However, American Soybean Association CEO Stephen Censky noted that government assistance tends to be “capitalized” over time, meaning while immediate payments may offer some relief, they could inadvertently lead to increased costs for rents and other expenses.
Censky highlighted the stress existing within the farming community, with some members expressing concern that if conditions do not improve or if economic assistance does not materialize, this could be their last year in farming, presenting a stark and worrying outlook for the future of the agricultural sector.
