The second quarter of this year saw a notable increase in farm bankruptcies, with 93 filings reported by the Federal Reserve Bank of Minneapolis. This marks a rise from 88 filings in the first quarter and nearly doubles the 47 filings recorded at the end of 2024. Despite this surge, the current numbers remain significantly lower than the peak of 169 filings seen in early 2020, and the trend of declining filings continued for two years thereafter. However, since 2022, we have observed a troubling upward trend in farm bankruptcies, largely attributed to escalating production costs and a sharp decline in crop prices.
For context, the price of corn has plummeted by approximately 50% since 2022, while soybean prices have dropped around 40%. Recent developments, particularly President Donald Trump’s trade war this year, have compounded these challenges by preventing China—a historically significant buyer of U.S. soybeans—from making any purchases from American farmers. This has left many farmers facing an uncertain harvest season as they navigate these economic pressures.
According to the Minneapolis Fed, crop prices have remained weak for most of the past decade, with only a brief spike during the pandemic. While the Agriculture Department has projected an increase in farm incomes for this year, it is noted that roughly three-quarters of this anticipated growth will stem from increased government payments. This financial landscape is further complicated by a recent survey from the Federal Reserve, which indicates that deteriorating income levels have decreased liquidity among farmers, leading to a heightened demand for financing.
Moreover, credit conditions have worsened, with about 30% of respondents in the Chicago Fed and Kansas City Fed districts reporting lower repayment rates compared to the previous year. In contrast, the Minneapolis Fed reported around 40%, while the St. Louis Fed had a staggering 50% of respondents in a similar situation. Despite the alarming uptick in bankruptcies, the Minneapolis Fed emphasizes that such filings do not necessarily signal an end to farming operations. A Chapter 12 filing can serve as a lifeline, allowing farmers to avoid complete liquidation and continue their operations, albeit potentially on a reduced scale following necessary restructuring.
In light of the ongoing crisis within the farm economy, agricultural trade groups are urging the Trump administration to take action to boost demand for U.S. crops. This includes negotiating a trade deal with China to resume soybean purchases and mandating higher ethanol fuel blends, which can be produced from corn. The American Soybean Association conveyed this urgency in an August letter to Trump, stating, “Soybean farmers are under extreme financial stress.” They highlighted the dual challenges of falling prices and rising costs for inputs and equipment, warning that U.S. soybean farmers cannot endure a prolonged trade dispute with their largest customer.
The recently signed One Big Beautiful Bill Act includes approximately $66 billion allocated toward agriculture-focused initiatives, with about $59 billion designated for enhancing farm safety nets. In addition, Trump has suggested that tariff revenues could be redirected to assist farmers. Sources indicate that the administration is contemplating a bailout ranging from $10 billion to $14 billion, with potential distributions beginning in the near future. This follows a precedent from Trump's first term, during which farmers received $23 billion amid an earlier trade conflict with China.
However, Stephen Censky, CEO of the American Soybean Association, expressed concerns regarding the long-term efficacy of government assistance. In a recent statement to Farm Journal’s AgWeb, he remarked that such payments tend to be “capitalized” over time, resulting in limited relief for farmers who then face increased rents and other escalating costs. “It’s tough, and I can hear it in the stress in our members’ voices,” Censky noted, emphasizing the growing anxiety among farmers and their leadership. “Some say if things don’t turn around soon, if we don’t regain markets or secure economic assistance—which is not our first choice—this could be their last year in farming. That’s pretty scary.”
