As crop prices have dropped since 2022 and input expenses have risen during that same time, the downturn in the ag economic cycle has many asking if it’s a crisis or should we focus on resiliency. And recent Chapter 12 bankruptcy data shows a significant uptick in filings.
Focus on Resiliency
This was echoed in a recent report from the Federal Reserve Bank of Kansas City economists. They put the spotlight on how the combination of lower crop prices and persistently high production costs means sharply lower profit margins for most row crop producers.
Despite the above factors, the economists at the KC Fed point to a relative stability in the ag economy. For example, the debt-to-asset ratio of the U.S. farm sector is expected to increase slightly in 2026 to 13.8 percent but remains near historical norms. Three additional points of resiliency include:
- The distribution of leverage across individual farms is also near historic norms
- liquidity is strong for many operations
- farm real estate values have been a primary factor limiting the increase in debt-to-asset ratios
So Where do Farm Bankruptcies Stand?
While the banking sector remains confident, the raw data shows that some operations are already reaching a breaking point.
Chapter 12 filings in the first three months of 2026 were slightly below last year—86 filings this year compared to 88 last year through March. Top states included Minnesota (8), Arkansas (7), Texas (6), Georgia (4), Oregon (4).
However, according to Epiq AACER, there have been 62 Chapter 12 filings in April 2026 alone. This is the highest monthly total since February 2020, and it’s a 130% increase from April 2025.
In 2025, there were 315 Chapter 12 filings, according to the U.S. Courts website. In the past decade, the highest farm bankruptcy count was in 2019 — after President Trump’s trade war with China — which saw 599 filings. But since then, farm bankruptcies were trending downward.
Bridge the Disconnect, Plan for Long-term Success
The KC Fed economists warn of a disconnect between the economic data and the near term decisions being made by farmers and ag lenders alike.
Alan Hoskins, President of American Farm Mortgage, says that banks anticipated challenges, leading to proactive management and continued strength. And Hoskins reassures that the current situation does not resemble the 1980s crisis, attributing this to improved safeguards and protections in the rural banking system.
“Ultimately, the bankers that go out and have discussions with the producers with what was coming on the horizon last year, and fortunately we were coming out of a period where working capital had been built because of some good years. There were conversations that occurred talking about what the projections for ‘25 look like, and ultimately going into ‘26 and most producers I think have done a good job in managing through the times of challenge,” he says.
Hoskins says producers have relied on traditional financing methods, with minimal shifts to non-traditional lenders.
“What I see producers are still utilizing the traditional methods of financing for their primary operating lines, particularly,” he says.
Hoskins advises farmers to proactively discuss their financial conditions with banks and ensure complete financial disclosure. He says it’s a two-way street for the farmer to feel confident in their lender, and for the lender to have greater confidence in the farmer.
“I think it’s a great question for a farmer to look at a banker and say, help me understand how your institution is dealing with the challenges, and tell me about the overall financial condition of your institution. The great news about that is there’s public data available where farmers can go online and look at the bank’s balance sheet, they can look up the composition of agricultural loans to their overall lending portfolio,” he says.
And he continues for farmers to, “make sure that there are no items that are inadvertently left out of the financial statement, and most of the time over my banking career what I have seen is when there is an item left out, it is truly an inadvertent omittance. Historically we’ve not specifically talked about maybe credit card balances, but here’s where credit card balances are. I think that’s a good example of making sure that there’s not an item inadvertently omitted, and just being forthright where they say I’m dealing with some challenges that I’ve not dealt with in a good period of time, and I really want your thoughts and your ideas on what you see that the challenges are.”
