Trump Tariffs and Rising Expenses Blamed for Spike in Family Farm Bankruptcies

Bankruptcies involving family farms have skyrocketed the past two years after a record low number of filings in 2023, signaling added pressure to Capitol Hill lawmakers working on a farm bill to replace the one that expired and has been extended for three years running.The number of farms using the Chapter 12 bankruptcy code jumped 46 percent last year to 315. Filings in 2024 were up 55 percent from a record low in 2023, according to the nation’s largest farm member organization, the American Farm Bureau Federation.Chapter 12 is designed for families who earn the majority of their income from farming. It enables financially distressed family farmers and fishermen to continue operating while repaying all or part of their debts. Chapter 12 is set up to let farmers recover and not permanently close. It started as a temporary measure in 1986 but became a permanent option in 2005.Bankruptcies are geographically scattered. The Midwest and Southeast regions had the most overall filings while the highest percentage increases were in the Southeast and Southwest. The Northeast and Northwest experienced a decline in filings. Arkansas had the most filings with 33, twice the number from the year prior followed by Georgia, with 27, a 145 percent increase over 2024. The Farm Bureau said increases in the cost of production span all types of crops and livestock while prices charged per acre are declining. Rice farmers in Arkansas, the nation’s leading rice-producing state, for instance, are expected to lose over $200 per acre this year, even after supplemental assistance from the federal government.With 1.865 million operating farms in the United States — down by 15,000 in 2024, according to the U.S. Department of Agriculture — the number of bankruptcies is only a small percentage of the total closures. But that bankruptcies are not a leading indicator of the overall farm economy offers an additional warning sign to lawmakers. “Farm bankruptcy filings are a lagging indicator that spike when prolonged financial pressures push farms to explore last resorts,” reads the report published by the federation’s news agency, the Farm Bureau.The Department of Agriculture’s annual Farms and Land in Farms report notes that more than 158,000 farms have closed since 2018, the last time Congress passed a comprehensive farm bill. However, the average size of farms has increased to 469 acres from 444 in that time, a 5.6 increase in size. In the past year, the top 10 percent of farms in America — those with sales of $500,000 and accounting for 50 percent of all farmland — increased by 0.1 percent while the number of small farms — the 48 percent that earn less than $10,000 per year, dropped 0.1 percent. While the number of farms going out of business is a major concern for family farmers, many farm supporters are also looking to President Trump’s tariff policies. “Interesting chatter here in Middle Georgia this morning,” conservative commentator Erick Erickson posted on X on Monday. “The number of farm and ag industry bankruptcies is increasing, largely because of the tariffs. Farmers weren’t able to sell their soybeans last year, and the government bailout isn’t enough.”“USDA data confirms what farmers already know: Trump’s policies are killing family farms. In Ohio, we lost 400 farms last year. Yet Trump still wants massive tariffs – unacceptable,” wrote Representative Shontel Brown, a three-term Democrat who serves on the House Agriculture Committee.While Congress works on a new farm bill — with the House markup postponed to next week due to inclement weather — a bipartisan group of former America’s agricultural officials and association leaders is issuing a stark warning about the deteriorating state of the farm economy, calling current conditions a potential “widespread collapse of American agriculture.”In a letter to the leadership of the House and Senate agriculture committees, the 27 signers put a part of the blame on Mr. Trump’s tariffs on fertilizer, farm chemicals, and machinery parts. The letter also claims a loss of export markets due is the result of trade wars and a withdrawal from trade agreements. They urged Congress to exempt farm inputs from tariffs.“There are few tragedies greater than the loss of a family farm, representing not just a loss of livelihood but a loss of a way of life for rural families,” the leaders wrote. “And when American farmers suffer, the entire rural economy is impacted – from schools, to churches, to main street businesses.”According to the USDA’s 2026 Farm Sector Income Forecast, released on February 5, net farm income is expected to drop slightly, though direct government farm payments are forecast to increase by $13.8-billion year over year.“Farmers don’t want government handouts — they want markets,” the agricultural leaders added.Though the past two years have had big jumps in family farm bankruptcy filings, the total numbers are still lower compared to other recent years. In 2019, 599 farms filed for bankruptcy, in a year when 142,600 more farms existed.

Trump Tariffs and Rising Expenses Blamed for Spike in Family Farm Bankruptcies

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