Farm Bankruptcies in 2026: Headlines vs. Reality

If you pay attention to agricultural publications, you likely have seen a headline about farm bankruptcies rising. While this is true, it is important to add some context that often gets lost in the eye-catching headlines and the partisan articles that accompany those headlines.

Chapter 12 bankruptcy protection was first established in 1986 to provide “family farms” protection to avoid liquidation or foreclosure in economic downturns. When analyzing current Chapter 12 bankruptcy filings, it’s important to clarify the differences between Chapter 11 and Chapter 12 bankruptcies in relation to farmland and how that definition has changed in recent years. Chapter 11 filings are open to individuals, partnerships and corporations and there are no debt limits. Chapter 12 filings are specifically geared towards family farmers where at least 50% of the debtor’s gross income and total debt must be tied to the farming operation. Chapter 12 filings are also designed to be faster, more affordable and less complicated than Chapter 11 filings. In August 2019 Congress passed the Family Farmer Relief Act of 2019. This Act raised the debt limit that a farmer may have and still be considered a “family farm” eligible for Chapter 12 bankruptcy protection from $4,411,400 (as of April of 2019, indexed for inflation) to $10,000,000. The result of this change meant that many farmers who had had to previously seek Chapter 11 protection with debts between $4.4 million and $10 million were now eligible for Chapter 12 protection. After the increase in the debt limit, there were a wave of “record farm bankruptcies” headlines in 2019. While 2019 provided financial distress in the farmland sector, the increase was a result of more family farms qualifying for Chapter 12 eligibility. So, with the understanding that Chapter 12 eligibility changed drastically in 2019, you can look at how many Chapter 12s were filed every year since the change in debt limits:

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While it’s factual that Chapter 12 filings hit a 6 year high in April 2026 with the highest monthly total since February of 2020, it’s also important to have context. Conversely, it should also be noted farm bankruptcies declined in a post covid-world of forgivable paycheck protection program loans, market facilitation program payments, low interest rates, and rising commodity prices due to inflation.

Despite Chapter 12 bankruptcy filings now tracking at levels more in line with pre-covid market conditions, it does not take into account agricultural operations with more than $10,000,000 in debt that have to file for protection under Chapter 11. The Midwest row-crop farmer seeking Chapter 12 protection tends to grab more attention than a vineyard seeking Chapter 11 protection, even though the vineyard sector as a whole is much more stressed than Midwest row-crop farming. Both cases are unfortunate for the parties involved, but one has a more systemic problem than the other.

One thing that has become evidently clear is that agriculture is no different than other areas of our market economy. There can be market shock waves that target specific areas within the industry. In the early 2000s I worked on a lot of distressed citrus deals as citrus greening ravaged Florida. At the same time orange juice consumption declined across the world. In the early 2010s I worked on tomato projects that had become distressed as foreign imports undercut the U.S. tomato market. In the later part of the 2010s I worked on multiple distressed dairy operations that were impacted by changing consumer preferences and the availability of milk alternatives such as almond and soy milk, among the ever-growing diverse beverage landscape we are now finding in our fridges. In the low-interest rate environment post covid, capital flowed into the enclosed agriculture arena, such as AppHarvest. In combination with the de facto legalization of marijuana and greenhouses for marijuana / hemp production becoming overbuilt we worked on multiple failed marijuana greenhouse projects including the $37,500,000 sale of the AgTech Scientific facility in Kentucky.

The area with the most pain at the moment is, without a doubt, the adult beverage industry. There have been many articles written about Gen Z not drinking as much alcohol as prior generations. According to the Gallup Poll Social Series on Consumption Habits in 2025, only 50% of adults under 35 report drinking alcohol, a steep drop from 72% two decades ago. This alone would cause pain for wine and hop growers that grow a permanent crop that must be planted well before a commercial crop can be harvested, made into a product, and sold. The shifting alcohol consumption between generations is not the only negative influence on the adult beverage market. The rise of GLP-1s has revolutionized the weight loss industry, however it has also damaged the adult beverage industry. According to the EY-Parthenon GLP-1 Consumer Survey (March 2025), 44% of users drink less after starting GLP-1 and 82% keep those habits even after stopping treatment. Morgan Stanley estimated that GLP-1s can suppress alcohol consumption by up to 75% in patients. There are different surveys on how many adults are on GLP-1s, but most put the number between 8% and 18% of U.S. adults. These drastic changes in demand in a short amount of time in an industry where supply must be carefully planned years in advance is not dissimilar to what we saw in the citrus industry in the early 2000s or the dairy industry in the 2010s. Both the citrus and dairy industries survived the changing consumer demand landscape with consolidation and adjusting to the new supply / demand curve and we expect the same in the adult beverage industry.

With the headlines focusing on farm bankruptcies again, it is important to realize what real stress in a market looks like and understand that we aren’t seeing it in the Midwest row crop sector; even with increased Chapter 12 filings, those filings are reaching expected levels in a normal market.  That doesn’t mean it’s any less stressful for the parties going through the process. Even in 2023 when we hit a low in terms of Chapter 12 filings, that low number still represented 139 families and individuals having to go through one of the toughest points in their life.

Yes, Chapter 12 bankruptcies are on the rise, but our conclusion is that many of the Chapter 12 filings were going to happen in the past 6 years but for unique circumstances relating to the pandemic that made the first half of the 2020s more profitable for U.S. row crop farmers.