In 2022, the farm bankruptcy rate in the U.S. was the lowest since the Chapter 12 process was made permanent in 2005, according to data from federal bankruptcy records.
This continues a trend of significant declines that began when farm bankruptcies fell more than 50% between 2020 and 2021.
The Chapter 12 bankruptcy process is designed to help family farming and fishing operations pay off debts and keep their businesses. According to the U.S. Courts, Chapter 12 is simpler and more streamlined than chapters designed for corporations.
The 2022 farm bankruptcy rate was 0.84 per 10,000 farms, according to Investigate Midwest’s analysis of federal bankruptcy data and USDA data. This is significantly lower than the 10-year average of 2.07 per 10,000 farms.
The USDA has linked farm income to bankruptcy trends in the past. Notably, farm income increased over the last few years, bolstered by government subsidy programs like the Market Facilitation Program and the Coronavirus Food Assistance Program.
The average bankruptcy rate per 10,000 farms in 2022 among Midwestern states was 0.68, 19% lower than the national rate.
Of the Midwestern states, South Dakota had the highest rate of farm bankruptcies, at 2.04 per 10,000 farms. This is an increase from the state’s 2021 rate, which was 1.7 per 10,000 farms.
In 2022, 169 farm bankruptcies were filed. The 10-year high occurred in 2019, with 599 filed. The chart below shows the national rate of farm bankruptcies per 10,000 farms from 2012 to 2022.
Data analysis
Chapter 12 Bankruptcy data from 2012-2022 was obtained from the U.S. Bankruptcy Courts’ F-2 data tables. These tables provide the number of Chapter 12 bankruptcies at the national and state levels.
To calculate the bankruptcy rate, Investigate Midwest used data from the USDA’s annual Farms and Land in Farms report, which provides yearly estimates for the number of farms in the U.S. and each state. Estimates from the February 2023 report were used for the years 2015-2022, and estimates from the February 2020 report were used for the years 2012-2014. The rate per 10,000 farms was then calculated for each year.
Midwestern states are defined using the census definition, which includes Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, South Dakota and Wisconsin.
A small amount of MFP payments finished delivery in 2021. The years highlighted on the graphic are the main years of payments for each program.
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