Chapter 12 Returns as Farmers Burn Out

Debt, tariffs and labor shortages squeeze the farms

In Missouri, bankruptcy lawyers who used to get one farm case a year are now seeing seven. And it's barely August.

Nationwide, there were 88 Chapter 12 bankruptcies in Q1 2025, nearly double last year's 45.

The numbers tell one story but Adam Birk tells another: these farmers are just tired. They've been rolling debt for years, trying every angle, racking their brains for a way out. Then commodity prices crater while diesel stays high and suddenly the only road left runs straight to the courthouse.

Chapter 12 isn't Chapter 7. Nobody's liquidating the combine and walking away. These farmers file a three-to-five year repayment plan, keep operating, try to claw their way back. Congress made this permanent in 2005 after the 80s farm crisis destroyed entire communities. Smart move. Except now the safety net is catching more people than it was ever designed for.

Corn down 4 percent. Soybeans down 6 percent. Production expenses stuck near $450 billion. Interest rates at decade highs pushing debt service to $29.5 billion. Total farm debt climbing toward $562 billion.

What those numbers don't show is the 802,000 foreign-born workers who have vanished from agricultural labor since April. Oregon cherry farmers lost half their workforce. Nobody wants to pick fruit for $15 an hour when Amazon warehouses pay $22 with air conditioning.

Economists at Kansas State call it a "margin squeeze." Farmers call it getting crushed between a rock and Chinese tariffs.

Trump's trade war already cost ag exports $23 billion annually. Last time he did this in 2019, bankruptcies hit 599. Then he threw $23 billion in Market Facilitation Program money at the problem. This time the USDA stays quiet while farmers check their mailboxes for relief payments that aren't coming.

Arkansas filed 15 bankruptcies in Q1 alone, nearly matching their entire 2024 total. California's dairy operations are bleeding cash. The Midwest row crop guys who expanded in 2021 when corn was $7 are now staring at $4 corn and wondering how they'll make the land payment.

Not 2019 Yet (But Getting There)

The Fed officials in Kansas City want everyone to calm down. "Still less financial stress than 2019," they say. True. We're at 88 quarterly filings versus 150 quarterly at the 2019 peak.

But here's what they're missing: the government threw $42 billion at farmers during COVID. CFAP payments, disaster relief, PPP loans that became grants. That sugar high is gone. The older farmers who owned their land outright banked those payments and are fine. The 28-year-old who leveraged everything to rent 2,000 acres in 2022 is cooked.

Net farm income looks decent at $180 billion but strip out disaster payments and it's ugly. USDA forecasts already assume massive aid will materialize. It might not.

"The question is: How much can you adapt your way out of this?"
— Jennifer Ifft, Kansas State University

You can't. Not when deportations gut your workforce, tariffs kill your markets, and interest rates eat your operating capital. Some problems don't have adaptation strategies.

Mediation services are seeing record traffic. The first year of bankruptcy is "draining" according to Birk. Every operating decision needs court approval. Want to renew your seed loan, file a motion. Wait for the judge. Miss planting season.

Young farmers who entered during the 2020–2021 boom are discovering what their grandfathers learned in the 80s. Commodity markets don't care about your business plan.

The stalled Farm Bill sits in Congress while representatives debate nutrition cuts. House Ag Chair GT Thompson wants a "skinny" version.

There have been 259 total filings in the 12 months through March 2025. If the current pace holds, we'll hit 350+ by year end. Still not 2019's 599, but moving in the wrong direction. And unlike 2019, there's no trade deal coming to save the day.

The land will keep producing. The people who work it may not.