April 15, 2025

FCS Provides Quarterly Ag Economy Update

The Farm Credit System says the U.S. economy entered 2025 with key indicators in favorable positions. Expectations for first quarter growth have been reduced, however, by weaker personal consumption, higher imports, and uncertainty around changes in global trade. FCS says the U.S. farm sector enters the uncertain trade environment and spring planting season with strong balance sheets and favorable liquidity. Farm income in early 2025 is being supported by payments to crop producers authorized under the American Relief Act as well as generally favorable returns for livestock producers. But, extended periods of lower commodity prices, particularly for cash grains and tree nuts, are evidence of increasing risk. Negative retaliatory tariffs on U.S. agricultural products will depend on tariff levels and duration and present additional uncertainty for the sector. Farmland values are showing signs of weakness and increased volatility, particularly for lower-quality land and in regions producing the commodities currently at weaker prices.  

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Ag Retailers Need Predictable Trade Policy

The Agricultural Retailers Association understands the desire of the Trump administration to stop unfair trading practices in the global marketplace that lead to artificial trade imbalances. Some of the countries singled out by the White House have lengthy patterns of putting their proverbial thumbs on the scale to the disadvantage of U.S. producers and exporters. The ARA says global supply chains can’t adjust overnight, nor can they function in an unpredictable tariff environment. It takes years to build new production capacity anywhere in the world. Many of the products and ingredients that are used in agricultural inputs in the U.S. are only available in commercial quantities from offshore sources. Immediate-effect tariffs that allow no adjustment period to complete current contracts and arrange for new supply sources will only result in higher costs and less product availability for U.S. farmers in the short term. Damage to export relationships can also be long-lasting. 

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Thousands Accept Buyouts at USDA

Thousands of workers have accepted the Trump administration’s buyout offers at the USDA. E & E News says employees who’ve seen the internal numbers at USDA say the count has reached 3,100 at the Forest Service, 1,200 at the Animal and Plant Health Inspection Service, and possibly up to 12,000 people through the entire agency. That’s over 10 percent of the department’s 100,000 employees. The buyouts are deferred resignations with paid leave through September and are said to be preludes to firings expected to hit USDA in the weeks ahead. An employee at the Natural Resources Conservation Service who took the buyout offer said the numbers are subject to change if workers clicked on the offer but don’t sign the resignation agreement. Another report says the USDA is planning to relocate a sizable number of employees that it doesn’t lay off to one of three locations around the country.

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Governors Ask EPA for More Renewable Fuels

Four state governors sent a letter to Lee Zeldin, administrator of the Environmental Protection Agency, asking him to set higher Renewable Volume Obligation levels. “Over the past several years, the biofuels industry made significant investments to expand domestic production capacity and strengthen feedstock supply,” the governors wrote. “Unfortunately, the Renewable Volume Obligation levels set by the previous administration failed to reflect that growth.” Because of the inadequate levels, an increasing number of biofuel producers have been forced to slow or cease operations, costing rural communities jobs and weakening key markets for American farmers. The governors asked the EPA to establish a 2026 RVO of no less than 15 billion gallons for conventional ethanol and 5.25 billion gallons for biomass-based diesel. These higher volumes would be reflective of the growth within the U.S. biofuels industry and would create long-term stability. Governors from South Dakota, Iowa, Missouri, and Nebraska signed the letter. 

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Breakthrough in Water Dispute Between the U.S. and Mexico

USDA Secretary Brooke Rollins is turning up the heat on Mexico over a growing water crisis squeezing farmers struggling with drought in south Texas. She said late last week that high-level negotiations with Mexican officials may be about to lead to a breakthrough. Rollins said a post from President Trump’s account on Truth Social about Mexico “stealing our farmers’ water” led to a quick phone call from Mexican officials to schedule talks on the subject. The President led his post with “Mexico owes Texas 1.3 million acre-feet of water under the 1944 Water Treaty, but Mexico is unfortunately violating their treaty obligation.” The treaty requires Mexico to send 1.75 million acre-feet of water to the United States every five years from tributaries that feed the Rio Grande. Rollins spoke about the pending discussions as frustration continued to build over Mexico falling short on its water deliveries under the 1944 Water Treaty.

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Dems Want Information on How Tariffs Affect Farmers

Senator Amy Klobuchar (D-MN) and 18 colleagues are asking U.S. Trade Representative Jamieson Greer for information on how the Administration’s tariff taxes will impact farmers across the U.S. “We write with great concern about the impact of the Administration’s reckless tariff agenda on our nation’s farmers,” the senators wrote. “Farmers not only have billions of dollars in commodities from last year waiting to be sold but also have started spring planting and rely on stable markets for their planning.” They also said farm organizations and economists have pointed out for months that key trading partners will continue retaliating against U.S. agricultural products as a result of President Trump’s tariffs. “The direct economic impact and uncertainty on America’s farmers stand to change the future of agricultural trade relationships for generations,” the letter added. “Farmers are already facing tighter margins resulting from declining commodity prices and rapidly increasing input costs.”

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