Bankruptcy Is the End of the Road, Not the Beginning of Financial Trouble

Eighteen bankruptcies may not sound like a crisis in a state with tens of thousands of farms. But bankruptcy is the end of the road, not the beginning of financial trouble.

Iowa’s Chapter 12 filings jumped from seven in 2024 to 18 in 2025, an increase of 220%. Iowa had the third-highest number of filings nationally, while Chapter 12 bankruptcies increased 70% across the Midwest.

The more revealing number comes from the 2026 Iowa Agricultural Outlook produced by Iowa State University’s Center for Agricultural and Rural Development and agricultural partners.

At the end of 2025, 19% of the mid- and large-size Iowa farms in its financial sample were classified as financially vulnerable. In 2022, it was just 7.7%.

That’s more than a doubling in three years. The report also found deteriorating liquidity, growing working-capital needs, increased demand for credit and greater concern about farmers’ ability to repay loans.

This Didn’t Start in 2025

That timing is important. Iowa’s agricultural downturn did not suddenly begin when Donald Trump returned to office. Farm finances had already deteriorated significantly during the Biden administration as commodity prices fell from their post-pandemic highs while production expenses remained elevated. But the downturn hasn’t ended either.

Iowa farmers have now endured several years of difficult margins, and the financial cushion that allowed many operations to absorb the first bad year is getting thinner. Iowa State’s latest outlook warns that additional declines in farmland values could create still more pressure for farms carrying significant debt or relying on land equity for operating credit.

Current policies have added new complications. The Iran war has increased fuel and fertilizer costs, while farmers and economists have also raised concerns about trade disruptions and tariffs. One-time federal assistance has provided relief, but agricultural economists interviewed by Harvest Public Media described the larger problem as several consecutive years of poor farm financial conditions.

So this isn’t reasonably described as either a Biden farm crisis or a Trump farm crisis. It is a prolonged farm downturn that crossed administrations. And Iowa farmers are still waiting for a durable recovery.

What About the Small Family Farm?

The 19% figure needs an important qualification: it comes from a sample of mid- and large-size Iowa farms. It does not tell us that 19% of every farm in Iowa is financially vulnerable. Nor does “large” necessarily mean corporate agriculture.

USDA classifies farms primarily by income and ownership. A large operation can still be a family farm. Nationally, family farms account for about 97% of all farms, including many substantial commercial operations.

But the lack of a comparable Iowa vulnerability figure for smaller farms shouldn’t make them invisible.

National USDA data show how precarious the economics of small farming can be. About 86% of American farms are small family farms, defined as having less than $350,000 in gross cash farm income. Those households typically depend on off-farm income for most of their livelihood.

In 2024, median income from farming itself among all farm households was negative $1,830. Intermediate farm households had median farm income of negative $2,799, while households operating so-called residence farms had median farm income of negative $2,748.

That tells us something bankruptcy statistics cannot. A small family farm can be struggling badly without ever entering bankruptcy court.

A farmer may work another job. A spouse may provide the family’s primary paycheck and health insurance. Families can postpone equipment purchases, refinance debt, rent out acreage or draw on savings and land equity. The farm still exists. But that doesn’t necessarily mean the farm itself is economically healthy.

Why 18 Bankruptcies Matter

Iowa is not experiencing another 1980s farm crisis. Land equity remains relatively strong, lender balance sheets remain healthy, and agricultural loan delinquency rates remain well below levels associated with that period. Iowa State specifically cautions against making that comparison.

But waiting until hundreds of farmers are in bankruptcy court would be a terrible way to measure the health of Iowa agriculture.

The warning signs appear much earlier, as farm income deteriorates, working capital disappears, farmers borrow more, loan repayment becomes harder, investment gets postponed, younger generations reconsider taking over the farm, and assets are sold. And eventually, some operations fail.

Iowa Farmers Union President Aaron Lehman has warned that current financial pressure is already causing farmers to postpone bringing the next generation into their operations, which is particularly concerning in a state where the average farmer is over 57. He also points to the effect that losing independent farms has on rural businesses, schools, churches and communities.

That is why the 220% bankruptcy increase matters. Not because 18 bankruptcies constitute an Iowa farm collapse, but because they represent another warning light on a dashboard where several other lights are already flashing.

Iowa411 Take

The most important number in this story isn’t 18. It’s 19%.

Nearly one in five mid- and large-size Iowa farms in the financial sample was considered vulnerable at the end of last year, compared with fewer than one in 13 just three years earlier.

And we should be equally concerned about Iowa’s smaller family farms, even though we don’t have an equivalent Iowa-specific vulnerability rate for them. USDA’s national data show that many small farm households already depend primarily on money earned somewhere other than the farm.

Iowa agriculture isn’t collapsing, but neither is it healthy simply because most farmers haven’t filed for bankruptcy. By the time bankruptcy becomes the measure of a farm economy, we’ve waited far too long to ask what is happening to the people trying to keep the farms alive.