By Bauyrzhan Zhaxylykov
After several strong years, financial pressure is returning to Michigan farms.
Rising input costs and flat crop prices have tightened margins, which led nine Michigan farms to file for Chapter 12 bankruptcy protection in 2025.
“Bankruptcy occurs when a farm can’t meet its debt payments and owes more than its assets are worth,” said Bill Knudson, a Michigan State University professor of agricultural, food and resource economics.
“Farmers may negotiate with lenders or file Chapter 12 to create a plan to pay down debt over time,” Knudson said.
The trend reflects broader national pressures. Chapter 12 farm bankruptcies climbed for the second straight year, reaching 315 filings in 2025, a 46% increase from 2024, according to the American Farm Bureau Federation’s Market Intel report.
“These are nationwide problems, although the situation appears slightly worse in the Midwest due to its dependence on major export crops and purchased inputs such as fertilizer,” Knudson said.
Michigan filings fell from 12 in 2024 to nine in 2025, but that is still higher than in 2023, when there were none, according to the Farm Bureau report.
Even so, economists say bankruptcy totals do not always reflect the level of financial stress on farms.
“Bankruptcies aren’t a great indicator of financial stress on farms,” said Alan Ker, a Michigan State professor and Elton R. Smith Chair in Food and Agricultural Policy.
He said rising fuel, fertilizer and equipment costs are squeezing farmers’ profits.
As financial pressure builds, experts say financial planning is more important than ever.
MSU Extension programs help farmers track finances and plan ahead.
“Programs like TelFarm, which helps farmers keep financial records and analyze profits and losses, make farmers more secure in tough times,” Ker said, adding that Extension cannot prevent difficult years but helps farmers prepare.
Farm Bureau data show filings were highest in the Midwest and Southeast, with 121 and 105 cases, more than in other regions.
By comparison, Michigan’s nine filings were far fewer than in states such as Arkansas, which led the nation with 33 Chapter 12 cases in 2025.
Still, Michigan officials say financial pressure remains and they are working on solutions.
“We’re engaged with federal partners at several levels on what can be done,” said Tim Boring, the director of the Department of Agriculture and Rural Development.
“Here in Michigan, we’re looking at ways to improve farm profitability and help growers add value to their products,” he said.
Some sectors are under more pressure than others, experts say.
Beef producers remain profitable, but fruit and vegetable growers face labor shortages. Row crop farmers appear to be in the most difficult situation, especially those growing corn and soybeans, as they deal with weaker export demand and lower prices.
“Labor availability is a major issue for hand-picked crops, and rising input costs combined with weaker commodity markets are hurting profitability,” said Boring.
Officials say they are expanding programs to help farmers adjust to changing markets.
“We’re continuing programs such as the Farm to Family Program to help farmers diversify into new product streams,” said Boring.
“These aren’t silver bullets, but they offer paths forward to address broader profitability challenges, and it will take time for those changes to take effect,” he said.
Economists say the situation is not as bad as in the mid-1980s or late 1990s, but farmers may still need support through another difficult year or two before conditions improve.