Arkansas leads U.S. in farm bankruptcies as rice losses grow

 

 

• Arkansas farmers, especially rice growers, are facing significant financial strain as farm bankruptcies rise.
• Chapter 12 farm bankruptcies increased by 46% nationwide in 2025, with Arkansas filings more than doubling.
• Industry leaders warn that up to one-third of the state’s row crop farmers could be forced out of business.
• Rising production costs, record farm debt, and falling commodity prices are key factors driving the financial pressure.

Arkansas farmers, particularly rice growers, are facing mounting financial pressure as farm bankruptcies nationwide rise sharply, underscoring what industry leaders warn could be a turning point for agriculture in the state.

New data from the American Farm Bureau Federation shows Chapter 12 farm bankruptcies climbed to 315 filings in 2025, a 46% increase from the previous year and the second consecutive annual rise. Arkansas, the nation’s leading rice-producing state, recorded 33 of those filings, more than double its 2024 total and the highest number in the state this century.

The increase comes as rice farmers are projected to lose more than $200 an acre, even after supplemental assistance, reflecting a broader downturn in commodity prices and rising production costs.

While Arkansas is grouped within the Southeast region, which reported 105 bankruptcies, a roughly 65% year-over-year increase, the state’s high number of filings highlights the disproportionate strain on its agriculture sector.

Industry leaders say the numbers reflect deeper problems that extend beyond individual farms.

“A lot of people who keep up with the news and economy know about the situation that the farmers are in at this time,” said Kenneth Graves, chairman of the Arkansas Rice Growers Association. “The reason for that is the drop in market prices in the crops that they grow.”

Graves said conversations with agricultural lenders suggest as many as one-quarter to one-third of row crop farmers in Arkansas, including rice, soybean and corn producers, could be forced out of farming if conditions do not improve.

“That number is very real,” Graves said, noting it was confirmed by multiple banks across different regions of the state.

Such losses could ripple far beyond the fields.

If farmers exit the industry, Graves warned, the effects would cascade through rural economies — impacting equipment dealers, fuel suppliers, fertilizer providers, and small-town businesses that rely on farm income.

“The farmer problem goes much deeper than what no one is talking about,” he said.

Farm bankruptcies are often considered a lagging indicator, meaning they reflect prolonged financial stress rather than sudden downturns. According to Farm Bureau economists, years of declining farm income combined with rising input costs — including fuel, fertilizer and equipment — have pushed many operations to rely more heavily on credit.

That reliance is growing more costly. U.S. Department of Agriculture estimates show total farm debt is expected to reach a record $624.7 billion in 2026, while interest expenses could climb to $33 billion.

At the same time, many family farms may not qualify for Chapter 12 bankruptcy protection, which is specifically designed for agricultural operations. To be eligible, farmers must earn the majority of their income from farming — a requirement that excludes many who rely on off-farm jobs to stay afloat.

For those operations, the options may be even more limited.

“They may have to sell land, limit production or close their farm altogether,” the Farm Bureau report noted, pointing to more than 160,000 U.S. farms that shut down between 2017 and 2024.

Graves said the current situation is compounded by the structure of agriculture, which prevents farmers from setting their own prices.

“A farmer buys retail, sells wholesale and pays the freight both ways,” he said, echoing a long-standing industry refrain.

Weather challenges have added to the strain. Excessive rainfall in parts of northeast Arkansas left some rice fields unplanted this year due to flooding, further reducing potential income.

Although federal relief is expected in the future, Graves said many farmers need immediate assistance to survive the current season.

“Farmers need something this year, and now,” he said.

As Arkansas agriculture navigates another uncertain year, rising bankruptcies among rice growers are increasingly seen as a warning sign, not just for one crop, but for the broader farm economy across the state and regions like the River Valley that depend on it.