Author: Joe Outlaw

Every once in a while, the stars align and our elected officials, political appointees, and career USDA employees get it right and, in this case, right on time.  On December 21, 2024, President Biden signed the American Relief Act of 2025—the continuing resolution (CR) that funds the government through March 14, 2025, and extended the 2018 Farm Bill provisions through September 30, 2025—into law.  Also included in the CR was $10 billion for economic assistance for farmers and $20 billion to cover losses due to natural disasters.  In a nod to the dire conditions in the countryside, Congress stipulated that USDA had 90 days to get the program developed and the assistance flowing.  Agricultural committee leadership in both the House and Senate kept the pressure on Congressional leadership to include help for our nation’s struggling farmers, and Congress delivered.  All that needs to be said is “well done and thank you.”

Between the time the CR was signed into law and Secretary Rollins was confirmed, career USDA-FSA employees were working on developing implementation details and software updates so they could meet the Congressional mandate of 90 days.  Once confirmed, Secretary Rollins made getting the funding out by the deadline one of her top priorities.  Again, all that needs to be said is “well done and thank you.”

As was reported by every agricultural news outlet, on March 18, 2025—and ahead of schedule—USDA-FSA announced that signup was open for the Emergency Commodity Assistance Program (ECAP), the economic disaster part of the CR that will provide up to $10 billion to eligible producers.  This program provides economic assistance payments to eligible producers of specific commodities to help mitigate the impacts of increased input costs and falling commodity prices during the 2024 crop year.  Specific program details are available from USDA here (https://www.fsa.usda.gov/resources/programs/emergency-commodity-assistance-program).

As my colleagues and I have written in Southern Ag Today multiple times over the past six months, the assistance was badly needed, and I know it is much appreciated.  Now farmers are beginning to email with questions about the timing and potential benefits from the natural disaster program.  I know that the Secretary and USDA are working diligently to finalize this program, but I have a favor to ask in the interim: send a “thank you” email to House and Senate Agricultural Committee leadership (and their staff) and Secretary Rollins thanking them for their hard work on getting this much needed assistance out the door.  All of their emails are easy to find, and if you do that you also deserve a … “well done and thank you.”

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Outlaw, Joe. “Signup for Economic Assistance Announced… Producers Turn Their Focus to Physical Disaster Assistance.” Southern Ag Today 5(13.4). March 27, 2025. Permalink

While on the road doing preplant meetings around the country, one of the questions we’ve been asked the most by farmers is: with reduced farm profitability, why haven’t land values declined?  Over the past year, there have been two Southern Ag Today articles that have addressed different parts of this issue.  Kim discussed the trends in Southern farmland values while Loy and Biram addressed the relative profitability of U.S. farms, looking at the disparity between crop prices received and input prices paid.  Table 1 indicates that, while not very often, Southern state cropland values have occasionally decreased (indicated by numbers in parentheses) over the past nine years. 

The question of why land values haven’t reacted to reduced profits requires a multifaceted answer that most farmers don’t like to hear.  The first part of the answer is that land values should follow farm profitability to a degree, but farm profitability isn’t the only factor. Long-term interest rates – or the cost of borrowing money – also matters.  With current interest rates relatively high, there should be downward pressure on farmland prices.

The part of the answer they like the least is also where we tend to get agreement from them: farmers are not the only people trying to buy farmland.  During almost every one of our Agricultural and Food Policy Center (AFPC) representative farm updates, the farm panel members talk about how hard it is to buy land at prices that can realistically be paid back with expected farm profits.  So, who else is buying land?  Nonfarm real estate investors such as publicly traded farmland real estate investment trusts (REITs), insurance companies, and just about anyone who wants to use real estate as an investment are actively investing in farmland across the United States.  The two farmland REITs that people talk about the most are Farmland Partners and Gladstone Land. Both REITs own land in multiple states.

Farmland values and agricultural profitability are related, but in today’s farmland markets, there are many other factors and players that influence the value of U.S. farmland.

Table 1.  Change in Southern State Cropland Values, Annually from 2016 to 2024.

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Outlaw, Joe, and Bart L. Fischer. “Why Haven’t Land Values Reacted to Reduced Farm Profits?” Southern Ag Today 5(7.4). February 13, 2025. Permalink

The current outlook for the major row crops in the U.S. is pretty dismal.  The Agricultural and Food Policy Center (AFPC) at Texas A&M University has been working with farmers across the country since 1983 to develop representative farms in major production regions.  Currently, AFPC maintains the data to analyze 92 crop (64) and livestock (28) operations in 30 states (Figure 1). From the beginning, the representative farms have been utilized to conduct “what if” policy analyses for the House and Senate agricultural committees to help craft agricultural legislation.  Another use of the farms is to provide policymakers with an early warning system or agricultural barometer under current policy conditions.  AFPC has partnered with and uses price projections from the Food and Agricultural Policy Research Institute (FAPRI) at the University of Missouri to project the financial wellbeing of the representative farms.

In the 42 years that AFPC has been projecting farm financial performance, the most recent crop outlook for the representative farms is the worst in terms of the number of farms in each of the four commodity types (feed grains, cotton, rice and wheat) that are not currently expected to have a positive cash flow over the next 5 years.  What makes this so troublesome is there is not a crop that producers can switch to from their current crops that would generate a positive return.  In other downturns, we would see producers that can grow several types of crops taking market signals and moving to more profitable crops.  Part of developing representative farms is collecting all of the cost information for the farms.  This makes it possible to develop cost of production data for each of the crops being produced on the 64 representative crop farms.  The bottom line is very few of the representative farms appear to have profitable crops on them at prices that are projected by FAPRI for the 2025/26 marketing year – which is very troublesome.  While the economic and natural disaster assistance provided in the recent American Relief Act of 2025 will help in the near term, the need for a significant enhancement to the farm safety net over the next 5 years is imperative… and the sooner the better.

Figure 1.  AFPC Representative Crop and Livestock Farms.

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Outlaw, Joe L., and Bart L. Fischer. “Why the Current Economic Downturn is So Troublesome.” Southern Ag Today 5(5.4). January 30, 2025. Permalink

The final days of 2024 brought great news and some certainty for our cash-strapped farmers from our nation’s capital.  Disaster and economic losses were included in the continuing resolution that was passed by Congress and signed into law on December 21^st by President Biden. H.R. 10545 (the American Relief Act) extended federal spending and averted a government shutdown through March 14, 2025. It also provided farmers additional certainty by extending the provisions of the 2018 Farm Bill through September 30, 2025.  The bipartisan CR passed the U.S. House and Senate by votes of 366-34 and 85-11 respectively.  With all of this said, we had hoped and expected Congress would act to provide assistance to agricultural producers, and they delivered. Well done and thank you!

The “now what?” is…how will the assistance be implemented?  Since the bill passed, lenders from across the U.S. have been emailing and calling asking how much of the projected economic assistance payments should they realistically be including in producer loan packages. Of the $30.78 billion authorized by the supplemental, $10 billion is set aside for economic assistance with the rest targeted toward physical disaster losses. Congress provided detailed instructions on how the economic assistance should be distributed by USDA.  The final bill was largely the same as we described in a previous Southern Ag Today article.  As indicated in the footnote below the individual commodity payment rates in the previous article, “Commodities estimated to receive minimum payment, either through formula with complete data or based on assumption due to lack of publicly available data, final payment rates may vary”.  

This means that you and your banker probably shouldn’t include the listed payment rates multiplied by your crop acres in your loan as economic disaster loss payments. There is a finite amount of money to be shared among producers of the 21 covered crops, and if USDA’s estimates on the minor crops end up being significantly different, even though the acreages are not large it could lead to somewhat lower payment rates across the board.

In our opinion, based on years of watching programs get implemented by USDA, we would suggest that 85 percent of those rates should be the lowest amount lenders should use.  We can’t imagine payment rates being adjusted more than that. Further, the act called for the economic aid to be distributed no later than 90 days following enactment (or March 21, 2024), so the payment rates should be known before many (though certainly not all) producers start planting.

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Outlaw, Joe, and Bart L. Fischer. “Good News for U.S. Producers… Now What?” Southern Ag Today 5(1.4). January 2, 2025. Permalink

Recent articles in Southern Ag Today have detailed the financial stress that Southern crop producers are having to endure, although the problems are not unique to the South.  In economics, we talk about the “cost price squeeze” that is created by declining commodity prices and high input costs.  Our work at the Agricultural and Food Policy Center (AFPC) at Texas A&M University – with roughly 575 individual producers from across the country that work with us on 90-plus crop, livestock, and dairy representative farms – has given us a good feel for the relative costs of production and profitability across the country.  Those 575 producers are some of the very best from all regions and commodity types.  They also know that working with us provides them a voice in the policy world they would not otherwise have.  Because of this, I often get calls and emails letting me know when pressure is mounting.  In the last three months, there has been a steady stream of calls and emails saying that this is the worst year they have ever had and getting financing for next year has been incredibly difficult.

I have heard from some that if it wasn’t for their lender including an estimated payment from the FARM Act, they would not have been refinanced…which is troublesome to say the least.  Why?  Neither the FARM Act nor any other disaster/economic aid has been moved forward by Congress.  Others have commented that they are having to sell land to pay off carryover debt to get their 2025 financing.  All are saying that without pledging their land as collateral, operating loans for next year would not be happening.  Some might say this is business as usual but consider this: the 2025 crop year is projected to be worse than 2024 by the Food and Agricultural Policy Research Institute (FAPRI) at the University of Missouri, USDA, and our own recent projections for our representative farms. 

Without getting into doomsday scenarios, I just ask the reader to consider the question that I keep getting asked: why should we continue to risk our financial health and continue to see our net worth evaporate when Congress can’t get their act together enough to pass much needed disaster/economic assistance that will help in the short-term or a new farm bill for the longer term?  My answer to that question is one of hope more than fact, but I am very hopeful that Congress will act decisively and soon.