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- In 2025, the number of Chapter 12 farm bankruptcies nationwide will increase by 46%, with the number of filings in Arkansas more than doubling.
- Rising production costs, record agricultural debt and falling commodity prices are the main drivers of fiscal pressure.
Arkansas farmers, particularly rice farmers, are facing increasing financial pressure as farm bankruptcies spike across the country, highlighting what industry leaders are warning could be a turning point for the state’s agriculture.
New data from the American Farm Bureau Federation shows that there will be 315 Chapter 12 farm bankruptcies in 2025, an increase of 46% from the previous year and the second consecutive year of increase. In Arkansas, one of the nation’s leading rice-producing states, the number of such notifications was 33, more than double the number reported in 2024 and the highest number in the state since the beginning of this century.
The price increases come as rice farmers are expected to lose more than $200 per acre even after additional support, reflecting widespread declines in commodity prices and rising production costs.
The high number of bankruptcy filings in Arkansas, which falls into the Southeast region and reported 105 bankruptcies, an increase of about 65% from last year, highlights the disproportionate burden on the agricultural sector.
Industry leaders say the numbers reflect a serious problem that extends beyond individual farms.
“Many people who follow the news and economic information know the situation that farmers are in right now,” said Kenneth Graves, president of the Arkansas Rice Growers Association. “The reason is the decline in market prices of the crops they grow.”
Graves said conversations with agricultural lenders suggest that one-quarter to one-third of Arkansas’ row crop farmers, including rice, soybean and corn producers, could be forced out of farming if conditions don’t improve.
“This number is very real,” Graves said, noting it was confirmed by multiple banks in different regions of the state.
Such losses can have ramifications far beyond the sector.
Graves warned that if farmers leave the industry, the effects will cascade through the rural economy, impacting equipment dealers, fuel suppliers, fertilizer suppliers and small-town businesses that depend on farm income.
“The farmers’ issue is much deeper than what no one is talking about,” he says.
Farm bankruptcies are often considered a lagging indicator, meaning they reflect long-term financial stress rather than a sudden economic downturn. Farm Bureau economists say years of declining farm incomes and rising input costs, including fuel, fertilizer and equipment, have made many businesses more reliant on credit.
That dependence is becoming increasingly costly. Total farm debt is expected to reach a record $624.7 billion in 2026, with interest payments potentially reaching $33 billion, according to U.S. Department of Agriculture estimates.
At the same time, many family farms may not qualify for Chapter 12 bankruptcy, which is specific to agricultural operations. To qualify, farmers must derive the majority of their income from farming, but this requirement excludes many who rely on off-farm work to make ends meet.
Your options may be more limited for these operations.
The Farm Bureau report noted that more than 160,000 U.S. farms closed between 2017 and 2024, and noted that “lands may have to be sold, production limited, or farms closed entirely.”
Graves said the current situation is made worse by the structure of agriculture, which doesn’t allow farmers to set their own prices.
“Farmers buy retail, they buy wholesale, and they pay freight both ways,” he said, repeating the industry’s long-held reluctance.
Weather challenges also added to the burden. Excessive rainfall in parts of northeastern Arkansas this year left some rice fields unplanted due to flooding, further reducing potential income.
While federal relief is expected in the future, many farmers need immediate help to get through this season, Graves said.
“Farmers need something this year and now,” he says.
As Arkansas agriculture enters another year of uncertainty, the rise in rice producer bankruptcies is increasingly seen as a warning sign not just for a single crop but for the broader agricultural economy across states and regions that depend on it.
