With 216 filings, farm bankruptcies were up 55% from 2023.
Declining farm receipts, primarily in crop markets, led to an increase in the number of U.S. farms filing for Chapter 12 bankruptcy in 2024.
Based on data from the U.S. district bankruptcy courts, Chapter 12 filings increased to 216 in 2024, up 77 (55%) from 2023. This marks the end of a four-year downward trend in farm bankruptcies since it last peaked at 599 filings in 2019.
Chapter 12 was introduced in bankruptcy law as a temporary measure in 1986 and became permanent in 2005.
Among the 24 major dairy states (Table 1), Chapter 12 filings totaled 120 for the year ending Dec. 31, 2024, up from 85 in 2023. The total does not necessarily mean the filings were by dairy operations. Among those states, 2024 filings were highest in California (17), Michigan (12), Georgia (11), Kansas and New York (each 10) and Florida (eight).
Chapter 12 bankruptcy does not mean the loss of the farm. Designed for family farmers with “regular annual income,” Chapter 12 bankruptcy allows financially distressed farmers to restructure financials and propose a repayment plan – usually over a three- to five-year period.
The number of U.S. farms filing for Chapter 12 bankruptcy during 2024 is still quite low compared to previous years, when filings hit 599 in 2019 and 560 in 2020. Previous high filings hit 723 in 2010, 712 in 2003 and 637 in 2011.
The USDA’s Farms and Land in Farms report, released on Feb. 14, estimated the number of farms in the U.S. for 2024 at 1,880,000, down 14,950 farms from 2023. In 2024, 48.1% of all farms had less than $10,000 in sales, down slightly from 48.3% in 2023, and 78.9% of all farms had less than $100,000 in sales, also down slightly from 79% the prior year. In 2024, 9.8% of all farms had sales of $500,000 or more, up slightly from 9.7% in 2023.
Looking ahead to 2025, U.S. dairy producers are expected to have more money to invest and spend in 2025. The USDA’s 2025 Farm Sector Income Forecast was released on Feb. 6. Specific to dairy, 2025 cash receipts from milk sales were forecast at $52.1 billion, up $1.4 billion from the 2024 cash receipts, due to higher prices and quantities sold. The 2025 estimate is up $6.2 billion from the $45.9 billion in 2023 milk cash receipts. Cash receipts from milk sales averaged $51.31 billion from 2022-24 and $40.89 billion in 2019-21.
The Farm Sector Income Forecast projected 2025 Dairy Margin Coverage (DMC) program payments at $68 million, which is $8.9 million lower than in 2024 and much lower than the record high of $1.2 billion in 2023.
Lower cash receipts are expected to be offset some from higher direct government farm payments. The USDA also forecasts declining feed costs but higher outlays for livestock purchases in 2024.
Across the entire agricultural sector, debt-to-asset levels are forecast to improve slightly from 12.8% in 2024. Working capital is forecast to increase 3.9% in 2025 relative to 2024.
