The Arkansas farm industry took massive damage last year with the state leading the country in farm bankruptcies with a total of 33 declaring chapter 12 bankruptcies.
In a study conducted by the American Farm Bureau, economist Samantha Ayoub found that of the 315 chapter 12 bankruptcies filed in 2025, Arkansas led the country followed by Georgia with 27 filings.
This shows an increase from 2024, which saw a total of 17 filings for chapter 12 bankruptcies within Arkansas.
The economic status of Arkansas’s agriculture economy comes from a variety of causes.
“If you’re talking about the downturn, it’s kind of, and I hate to use the cliche, perfect storm, but it’s somewhat of a perfect storm,” said Executive Director of the Arkansas Rice Federation Kelly Robbins. “for the first couple of years of the downturn that started about three years ago for … the row crop community in general, which includes soybeans, corn, cotton and rice in Arkansas, but what we saw was a big increase in input costs [the cost of production in agriculture] … and as folks are apt to say, prices like that go up like a rocket and they come down like a feather.”
Along with the input costs, the market prices would greatly affect the status of the agricultural community.
Major crops such as corn, cotton and beans would have their market price fall drastically at the beginning of the economic downturn with rice soon to follow, leading to many not being able to cover the costs that are needed in order to operate.
“Rice is one of the most expensive crops, if not the most expensive crop, as far as in Arkansas, to put in the ground, as far as the row crop commodity family,” Robbins said, “It’s 12 to $1400 an acre and based on the current, again those commodity prices, it’s falling anywhere from 200 to 400, three to $400 per acre loss.”
It’s these costs that are forcing many to file for chapter 12 bankruptcy.
Under standard bankruptcy law, chapter 12 bankruptcy is primarily made for family farmers and family fishermen.
It allows debtors to propose a three-five-year repayment plan that they can use to gradually pay off their debts; however, this system is not perfect.
There are certain requirements for applying for chapter 12 bankruptcy such as the family needing to own at least 50% in the farm stock, the family farmers’ debt cannot exceed an amount of $12,562,250 and most of the funds must come from the farm specifically and the farmers must make at least 50% of their funds primarily from their own farm.
Due to this fact, and the idea that not every farmer can primarily make their money off of farms, the American Farm Bureau proposed the idea in their study that some families might not be able to apply for chapter 12 bankruptcy, meaning that they may be worse off.
According to the Arkansas Division of Agriculture’s official website, the agricultural industry accounts for more than $24.3 billion making it the state’s largest industry.
Nationally speaking, it is the nation’s largest producer of rice with the US Department of Agriculture announcing that (USDA) stating that the state produces roughly 1.43 million acres of rice in 2024 alone.
Robbins highlighted how much this issue can impact Arkansan communities specifically.
“Where this really trickles down … is rural communities … which is where our row crop family community operates is in the rural parts of our state,” Robbins said, “I mean everything from restaurants and coffee shops and parts stores and restaurants and even churches. I mean, when something impacts the big economic force in their community, such as this … it’s gonna impact and ripple throughout those rural communities, when the rural crop community is impacted like this.”