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  • Understanding Trade Barriers: Tariff and Non-Tariff Measures

    Understanding Trade Barriers: Tariff and Non-Tariff Measures

    Over the past few decades, international trade has undergone significant transformations as countries strive to lower barriers and create a more interconnected global economy. While reductions in tariff rates have been a welcome advancement, the complex landscape of non-tariff measures (NTMs) has added new layers of challenges to achieving freer trade. Understanding how these policies impact trade dynamics is essential for navigating the ever-changing world of global commerce.

    Since 1996, the average most favored nation (MFN) tariff rate for World Trade Organization (WTO) member countries has fallen by nearly half, from 13.2 percent to 7.4 percent in 2021. MFN rates are given to all WTO members unless an agreement allows for a lower rate to be given, this would be the trade-weighted effective rate or preferential rate. When comparing simple average rate to the trade-weighted MFN rate there was a 3.7 percent spread in tariff rate during 2021. The trade-weighted effective rate brings the world average down even further, to 2.5 percent in 2021. While the overall reduction of tariff rates is good news for reducing trade barriers, non-tariff measures (NTMs) play a major role as well.

    Applied tariffs are the actual rates charged on products whereas bound tariff rates are the maximum upper bound that can be applied on a product without having to compensate the affected party. All rates discussed throughout this article are applied and include both ad valorem as well as ad valorem equivalents for non-ad valorem tariff rates. 

    NTMs are policy measures other than tariffs that can affect international trade such as regulations, standards, and procedures, impacting quantity traded, prices, or both. In 1994, a total of 293 NTMs were in place between all WTO countries. These included 264 anti-dumping policy lines and 29 countervailing lines. These have grown drastically over time with the largest increase being the growing number of Sanitary and Phytosanitary (SPS) policies. While SPS measures are tracked through 2021, limited data exist on NTM.  In 2021 a total of 20,726 SPS measures were in place for WTO markets, a 134 percent increase from 2010.  In addition, in 2018 there were 1,858 dumping reported. This rapid increasing trend of NTMs should be a concern for those of us that support freer trade.

    In recent decades, the reduction of tariffs has significantly opened up opportunities for U.S. trade. However, the increasing prevalence of NTMs highlights the need for continuous monitoring and policy adjustments to foster a truly free trade environment.

    Source

    Snoussi-Mimouni, Monica and Edvinas Drevinskas. “Tariffs applied by WTO members have almost halved since 1996”, World Trade Organization. April 2023.

    World Trade Organization. WTO Stats. https://stats.wto.org/. Online public database. Accessed March 2025.

    Ribera, Luis, and Landyn Young. “Understanding Trade Barriers: Tariff and Non-Tariff Measures.“ Southern Ag Today 5(14.4). April 3, 2025. Permalink

  • Key Takeaways of the 2025 Prospective Plantings Report and Revisiting Reliability

    Key Takeaways of the 2025 Prospective Plantings Report and Revisiting Reliability

    On Monday, March 31st, USDA released the Prospective Plantings report. These acreage estimates are based primarily on surveys conducted by the National Agricultural Statistics Service (NASS) from February 18 to March 18. Principal crop acres planted were projected nationally at nearly 310 million acres, down roughly 1.3 million acres compared to last year. Corn acres are estimated at 95.3 million, up 4.7 million from last year and the third highest in modern history. Soybean planted acres are estimated at 83.5 million, down almost 3.6 million from last year.  Cotton acres are projected to be down 12% from last year, at 9.867 million acres, the lowest since 2015. Peanut acreage is projected at 1.95 million acres, up 8% from last year, and rice acres are projected at 2.895 million, down 1% from last year. All wheat acreage is projected at 45.35 million, down 2% from last year. The forecasts in the Prospective Plantings report confirm recent projections released at the February USDA Outlook Forum which had 2025 corn acres increasing by 3.4 million, a 3.1-million-acre reduction in soybeans, and 1.18 million fewer acres of cotton. 

    In fact, the USDA indicated in the Prospective Plantings report an even larger increase in corn acres compared to last year. Throughout the first quarter of 2025, new crop corn-soybean futures price ratios heavily favored corn over soybeans ranging from 2.20 to 2.31, driven by tightening U.S. and World corn stocks.  In fact, the price ratio averaged 2.24 during the window of the 2025 March Prospective Plantings survey compared to 2.49 in the same time frame last year. Cotton was expected to cede acres this year due to struggling demand, intense export competition with Brazil, and lower prices compared to other commodities. All states except Arizona and Kansas are projected to reduce cotton acreage from last year. Rice acres are also expected to decline on lower prices, static input costs and fierce export competition from Asian origins.  Seed availability for long-grain rice is an additional factor reducing acres. Futures price reaction from the March 31 report was subdued, with the findings in the Prospective Plantings report mostly in agreement with pre-report industry estimates.  New crop (i.e., Fall 2025) corn settled one-half cent lower, soybeans 9 ¾ cents lower, cotton 17 points ($0.0017) lower, and rice 1 ½ cents per cwt. lower.

    We now provide a 2025 update to a 2023 Southern Ag Today article addressing the reliability of the Prospective Plantings report (Biram and Maples, 2023). The NASS planted acreage projections across the U.S. continue to hold well with low predictive error and hold especially well for corn and soybeans over the 2016-2024 time span (Figure 1). There still remains a relatively small predictive error for rice and cotton over the same time span. The larger variance can be due to (1) the smaller sample size of farms and (2) the alternative crops available to plant in place of corn and soybeans. Most of the U.S. corn and soybean acreage is grown in the upper Midwest but tends to take up acreage across the entire U.S. which allows for a larger sample of farmers and less variance. In the south, farmers rotate corn and soybean crops with cotton, peanuts, and even some vegetables.  This makes it more difficult to project acres that may shift based on rotational needs, commodity prices, input costs, and weather.  

    We re-investigate the difficulty in projecting acreage by choosing the subsample of southern states to see if 1) there is more variance across the changes in corn and soybean acreages given a smaller sample and 2) the pattern of acreage changes across cotton and rice still holds in the subsample. We find this to continue to hold (Figure 2). We see more differences each year between prospective and actual planted acreages in corn and soybeans across southern states, and the general pattern of differences each year for cotton and rice still holds between the full U.S. sample and the southern subsample. This implies that we should generally not expect any significant changes in harvest price expectations driven by differences in planted acreages but rather look to future market-moving events. The continuation of drought conditions in West Texas has implications for the cotton market, while prolonged drought in the western Corn Belt has implications for corn and soybean production, as evidenced in 2023 (Gardner and Biram, 2023). Looking globally, we turn to weather-related impacts to the second Brazilian corn crop, as well as a future path on trade talks with our top trading partners (i.e., Mexico, Canada, and China). 

    Figure 1. Comparison of Prospective vs. Actual Planted Acreage across the U.S. (2016-2025)

    Figure 2. Comparison of Prospective vs. Actual Planted Acreage across Southern[1] States (2016-2025)

    [1] States included are Alabama, Arkansas, Florida, Georgia, Kentucky, Louisiana, Mississippi, North Carolina, Oklahoma, South Carolina, Tennessee, Texas, Virginia.

    References:

    Biram, Hunter, and William E. Maples. “Key Takeaways and Reliability of the 2023 Prospective Plantings Report.” Southern Ag Today 3(14.1). April 1, 2023. Permalink

    Gardner, Grant, and Hunter D. Biram. “USDA Acreage Report Results: Price and Crop Insurance Impacts.” Southern Ag Today. July 3, 2023. Permalink

    NASS/USDA. Prospective Plantings. National Agricultural Statistics Service, U.S. Department of Agriculture, March 2025. Retrieved from: https://release.nass.usda.gov/reports/pspl0325.pdf

    Stiles, H. Scott, and Hunter Biram. “Key Takeaways of the 2025 Prospective Plantings Report and Revisiting Reliability.” Southern Ag Today 5(14.3). April 2, 2025. Permalink

  • Record Cow Prices!  It’s Not April Fools! 

    Record Cow Prices!  It’s Not April Fools! 

    Spring is here and not only are calf and fed cattle prices record high, but cull cow prices have joined the action.  Cow prices typically increase from late in the previous year until about May-June.  Both supply and demand factors contribute to higher cull cow prices in the Spring.  On the supply side, total cow slaughter tends to decline until the middle of the year.  On the demand side grilling season is starting and that means more demand for ground beef.  

    Cull cow prices in the Southern Plains have increased from $121 to $145 per cwt since the first of the year.  Auction prices a year ago in those markets averaged $134 per cwt.  On the meat side, the cow-beef cutout climbed to $297 per cwt.  At the same time, wholesale 90 percent lean boneless beef hit $382 per cwt.  Pretty clearly tight supplies and Spring grilling season demands are sending prices higher.  

    On the supply side, cow slaughter, typically, slowly declines until mid-year.  That is about where we are through March, maybe a small downward trend in weekly average slaughter.  While the pattern of slaughter is pretty normal, the numbers going to slaughter are sharply lower.  Through mid-March, beef and dairy cow slaughter are down 20 percent and 6.6 percent, respectively.  The decline amounts to 16,000 fewer total cows going to packers per week than last year. 

    It’s worth noting that beef cow and dairy cow slaughter exhibit different seasonality throughout the year.  Beef cow slaughter tends to decline in Spring, have a mid-year increase, then a peak late in the year.  Dairy cow culling peaks early then declines to seasonal lows in mid-year.  Production systems across the country largely explain these seasonal peaks and valleys.

    While cow slaughter is lower than last year reducing lean beef supplies, imports are adding lean beef trimming supplies.  Beef imports in January totaled a monthly record of 608 million pounds.  Imports from Brazil were almost a third of total beef imports for the month at 198 million pounds.  Brazilian beef imports normally decline after January so total beef imports should decline over the next few months.  

    There is more room for cow prices to increase further over the next couple of months.  Grilling season is just getting started for a lot of the country.  Fewer cows going to market will keep prices above a year ago the rest of the year.  Higher fed cattle prices should help support cull cow prices.  

    Anderson, David. “Record Cow Prices! It’s Not April Fools!” Southern Ag Today 5(14.2). April 1, 2025. Permalink

  • Talking about Transitioning our Farms and Ranches

    Talking about Transitioning our Farms and Ranches

    Agriculture is a multi-generational industry, and it is a source of pride for many people in the sector. However, it is also a challenge we must navigate as we move our businesses from one generation to another. There are several hurdles to transitioning a farm business to the next generation, including legal, financial, and social. Initially, we often turn to lawyers and accountants with our questions. However, perhaps the first and most challenging obstacle is the communication needed to bring our families together for these major decisions. 

    Research in the area of transition planning suggests that there are four stages to go through: (1) development of a retirement plan, (2) identifying a successor, either family or non-family, (3) transferring managerial control, and (4) legal transfer (lawyer and accountant). Many farm transition planning workshops host a lawyer and/or accountant to answer questions and help farm families, but it may be interesting to know that this is the last step in the complete process and that we tend to get stuck on the first step more often than not. 

    The legal barriers to transitioning a farm require expert help and will vary by farm business, as will the tax implications for different asset bases and in different states. The financial barriers can either speed up or slow down transition plans as the available funds may affect the viability of bringing another person or family into the business. The social barriers will also vary and can include things like delaying a transition decision while waiting for a child to make career and/or marital choices. Marriages and divorces can complicate transition planning as well. Finally, it can be very hard for a farmer or rancher to give up their identity as a producer and control of business decisions by handing over the keys to another, even when it is the next generation of their family. The social barriers arise because farms are a unique intersection between families and businesses.

    In conducting qualitative research in Alabama, we have talked to many farmers between the ages of 35 and 50 about their management styles and the issues that challenge them in their operations and lives. We are learning that transition planning is at the top of their minds but approaching the older generations who still own and/or control farm assets is not always easy. They don’t know how to start the conversation in a respectful way that keeps the line of communication open. It may be that encouraging them to attend a transition planning session put on by Extension or at a commodity meeting is one way to start the conversation. Another is asking a family friend to breach the topic, reminding them that time can slip away from them if this gets put off indefinitely. Maybe the first step is as simple as forwarding a copy of this article and asking them to share a conversation over a cup of coffee. Whatever your approach, it is a worthwhile thing to consider and discuss.

    Taylor, Mykel, and Kelli Russell. “Talking about Transitioning our Farms and Ranches.” Southern Ag Today 5(14.1). March 31, 2025. Permalink

  • Understanding Renewable Energy Agreements: Easement, Option, and Lease Phases Explained

    Understanding Renewable Energy Agreements: Easement, Option, and Lease Phases Explained

    As we continue to see rural landowners offered renewable energy leases, it’s important to remember the phases these agreements often include and what may happen during each phase.  If you are presented with a lease agreement for a renewable energy project and are considering it, talk with an attorney with experience in the area before signing.  In many cases, you can go to your state bar association’s website and look for members in your area and talk with them to better understand their experience with these agreements.  At the same time, you can reach out to groups like the American Agricultural Law Association to see if any of their members may have experience in your area.  Working with an attorney early on can help ensure you get a fair deal that protects your interests.

    Wind and solar energy agreements usually have three stages: an easement period, an option period, and a lease period. In the first stage, the easement period, the landowner allows the developer to study the land to see if it’s good for a wind or solar project. The developer may survey the land, place sensors to measure wind and sunlight and study the impact on the environment and wildlife. They will also check if the land is suitable for construction. This stage can last anywhere from one to three years. During this time, the landowner can still use the land if they don’t interfere with the developer’s equipment on the property during the surveying.  At the same time, the landowner will continue to receive rental payments.

    During the second phase, called the option to lease, the developer works on getting permits and funding for the project. For example, in Maryland, they need approval from the Public Service Commission and other permits to start construction. Other states may need different permits from local governments and approval to connect to the power grid. This phase usually lasts two to five years. The developer is not required to proceed with the project during this time. The landowner can still use the land as usual and will also receive rental payments for the land during this phase.

    The third and final phase is the lease. In this phase, solar panels or wind turbines are installed, and the landowner starts receiving lease payments. This phase includes building, operating, possible renewal, and eventually removing the equipment. All told this phase of the agreement may run for 30 or more years with renewals included.  The landowner will have limits on how they can use the land to avoid interfering with the project.

    This agreement could end early in the first phase if the surveys show the property is unsuitable for renewable energy development.  It could also end in the second phase if the permitting is not approved.  As mentioned earlier, it’s important to always talk with an attorney and have the agreement reviewed before signing it.

    Goeringer, Paul. “Understanding Renewable Energy Agreements: Easement, Option, and Lease Phases Explained.” Southern Ag Today 5(13.5). March 28, 2025. Permalink