The American agricultural sector faced significant challenges in 2024, marked by a substantial increase in farm bankruptcies and declining income. According to the latest report from the U.S. Courts, there were 216 Chapter 12 bankruptcy filings last year, representing a 55% rise from 2023. Despite this alarming increase, the number remains 64% lower than the peak of 599 filings recorded in 2019. The surge in bankruptcies signals a concerning shift after four years of downward trends, raising concerns about long-term financial stability for farmers. Cash receipts for major crops like corn, soybeans, and cotton have also seen notable declines, with further drops expected in 2025. Additionally, rising interest rates and increased farm debt have exacerbated financial pressures on agricultural businesses.

The economic landscape for U.S. farmers has been particularly challenging over the past few years. In 2024, the cash receipts for row crops experienced sharp decreases, continuing a three-year trend. Corn and soybean receipts are forecasted to decline by 4% and 6%, respectively, in 2025. Cotton, which saw a nearly 24% drop in cash receipts in 2024, is the only major crop expected to see an increase in receipts next year. These financial difficulties have been compounded by longer-term declines in government payments due to an outdated farm bill, pushing more farmers in the Grain Belt and Southern states to resort to bankruptcy as a last resort.

Regional data reveals varied impacts across different parts of the country. Nearly all regions except one reported increases in Chapter 12 bankruptcy filings in 2024. Notably, territories and states outside the contiguous 48 states saw a tripling of bankruptcies, reaching a five-year high of 14 cases. The Northwest witnessed a doubling of filings, while the Southwest was the only region with a decrease, down 14% from 2023. Weather-related losses in the Southwest were significantly lower in 2024 compared to the previous year, providing some relief to farmers in that region. Other regions such as the Southeast, West, Northeast, Mid-Atlantic, and Midwest experienced double-digit increases in filings, with the Midwest seeing a 69% jump to 71 cases.

Farmers' financial struggles were further intensified by rising interest rates and increasing farm debt. Non-real estate farm loans at commercial banks surged by 25% from the end of 2023 to 2024, accompanied by decade-high interest rates on agricultural loans. Interest expenses climbed nearly 4% to over $29.5 billion, following a 4% increase in farm debt. This growing debt burden has led to deteriorating credit conditions, with more loans rated as "less than acceptable," indicating a higher risk of nonpayment. In the Seventh District of the Federal Reserve, which covers much of the Midwest, loans facing serious default risk reached their highest level since 2020.

The year 2024 was characterized by a combination of factors that strained the U.S. agricultural sector. The significant increase in farm bankruptcies reflects deeper financial issues affecting farmers nationwide. With continued declines in crop receipts and mounting debt, the outlook for 2025 remains uncertain. Addressing these challenges will require comprehensive policy solutions to support the long-term viability of American farms and ensure their resilience against future economic fluctuations.