Category: Farm Management

As mentioned in previous Southern Ag Today (SAT) articles (Martinez and Ferguson 2022, Martinez 2023), monitoring Non-Real Estate Farm Debt provides insight into debt health. At the time of this article, harvesting is on many people’s minds, producers are baling hay, tariffs are a constant conversation, and livestock prices are at all-time highs. Last month’s reports offer the most recent snapshot of 2025 debt health. As a refresher, every commercial bank in the U.S. submits its quarterly Reports of Condition and Income, which are known as call reports. Within these call reports are totals of agricultural loans and the status (on time or late) of the loans. Figure 1 displays the total loan volume (yellow line) and loan volume for three late categories (30-89 days late, 90+ days late, non-accrual) for the last 17 quarters (4.25 years). The totals are for all the Southern Ag Today States. 

In the first quarter of 2025, non-accrual (blue line) loans increased 80% from 2024 Q4. This makes the total amount the highest since 2021 Q4. Loans that are 90+ days late (grey line) remained relatively the same as 2024 Q4. The most concerning statistics are the loans that are 30-89 days late (orange line), which increased to $108.9 million in the SAT states. While this loan type seasonally increases in Q1, the amount increased 196% compared to 2024 Q4, and 146% compared to 2024 Q1. All states increased in these bad loan types, except for Louisiana (decreased by 20%). Due to the varying size of states, measuring the percentage of 30-89 days late loans compared to total loan volume is a good way to compare the SAT states and the impacts of these bad loan types. In 2024 Q1, the quarterly average of 30-89 days late loans to total loan volume was 0.3% (which is stable), with the highest being Oklahoma and Tennessee at 0.5%. In contrast, the 2025 Q1 quarterly average increased to 0.7% (which is still stable), with Alabama (3.1%) and Arkansas (1.4%) being the only two states above the average. For perspective, in 2024 Q1, Arkansas and Alabama were 0.3% and 0.1%, respectively, thus their 2025 Q1 measures lead to them not only increasing in bad loan types, but they are also the only states to have year-over-year increases above 1%. When comparing the percentage of total loan debt (non-accrual, 30-89 days late, and 90+ days late) compared to total loan volume, the quarterly average was 1%. Florida, North Carolina, and South Carolina were the only three states below 1%. Alabama (6%) and Arkansas (2%) were the only two states above the quarterly average. Total loans (yellow line) are down from the previous quarter, which is expected due to seasonal trends. Total loan volume was up 4% compared to 2024 Q1. 

From a sky-high view, the 2025 Q1 reports provide an indication of overall debt health following a tough profitability year for many row crop operations, and a strong revenue year for livestock producers in the SAT states. The Q1 reports indicate that some states are in stable conditions, but there are some states that have signals of concern. The concern leans towards the row crop side. Price prospects for many row crop operations for the rest of the year, and moving into next, have limited upside potential due to abundant domestic and global supplies. Thus, government payments will play a role in these bank reports moving forward. Last year’s government payments will likely assist in lowering some bad debt in the 2025 Q2 reports and offset some Q1 bad debt. I would expect government payments from ARC and PLC to occur again for this crop year (will not be received until October 2026), but having two consecutive years of being in survival mode strains the balance sheets and cash flow for producers and many will need to begin working with agricultural lenders to secure credit for 2026 earlier than a typical year. In the coming months, it is crucial that producers are mindful of their working capital and continue the positive production and risk management strategies they have implemented thus far. 

Figure 1. Non-Real Estate Farm Debt from 2021 Q1- 2025 Q1 

References

Martinez, Charley, and Haylee Ferguson. “Current Non-Real Estate Farm Debt“. Southern Ag Today 2(30.3). July 20, 2022. Permalink

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Martinez, Charley, and Parker Wyatt. “Current Non-Real Estate Farm Debt for Quarter 1 of 2025.” Southern Ag Today 5(36.1). September 1, 2025. Permalink

Do you ever think that you might be the only one who worries about their farm? It might be useful to recognize that other people have worries too and that they can be strikingly similar to your concerns. Over the past several months, we have been collecting data from farmers and ranchers in four states spread across the country to better understand the factors that cause stress and how they view risk in their operations. The data were gathered from one-on-one interviews where producers were asked to characterize their daily lives on the farm, goals for themselves and their business, and how they perceive the stressors and risks that they face. The key question asked of all the producers was, “What keeps you up at night?” The answers differed based on the commodity produced and the area where they lived, but there were several themes that arose, revealing common stressors:

1. Uncertainties regarding farm succession and the farm/family balance – the future of the farmland and farm operation passing from one generation to the next, plus the health and well-being of the family.

“Communication around succession planning, I think, is sometimes a rock wall.” 

The long-term social and familial sustainability of the farm operation is a key stressor for producers. This stress includes anything from communication with family members on short-term management decisions to long-term strategy and succession planning. Talking to family about issues, small and large, can be stressful and is often avoided, risking further complications down the road.  Additional issues that were addressed by the participants in the interviews included concerns about life-altering injuries, how to take a break from the farm when you are a one-person operation, to name a few. 

2. Concerns over the reputation of agriculture and their specific farm, both in the local community, the broader industry, and society at large.

“What does [the future related to ag] look like and what’s my role in that?”

Farmers care deeply about producing a quality commodity product and being valued members of the community. As urban centers grow in rural states, farmers express concerns about land affordability and the public’s lack of understanding about the role of agriculture in their community. Producers also expressed that it is stressful to see the way the industry is portrayed at times in the media. 

3. Unpredictable events – this includes weather changes, extreme weather, natural disasters, crop failures, herd or flock problems, excessive market fluctuations, etc.

“Drought. (laughs) Like that’s just the reality now.”

For many producers, they view these unpredictable events outside of their control as central factors in daily and long-term stress. The view that weather is a primary source of risk and unpredictable stress didn’t appear to be mitigated by insurance products or government payments. Rather, it is a constant that farmers have little control over and often worry about.

4. Difficult farm management choices – making the daily and long-term strategic decisions that impact the financial viability of their farming operation.

“Every input’s up – diesel, seed, fertilizer – you name it.”

Rising costs necessitate producers making new farm management choices, resulting in new stressors related to finances and viability. These include, but aren’t limited to, management choices related to labor, interest rates, maintaining production contracts, or losing or expanding landholdings. Many farms, no matter their size or stage of life, deal with tough management choices related to financial viability, sometimes many at one time.

Of note is that these four key stressors are both daily and long-term. Recognizing that farmers and ranchers often have these stressors in common helps to put in perspective the everyday challenges of agriculture. For those supporting the farming industry through education and policy making, it prioritizes the need to help farmers understand and use risk mitigation products and programs to help manage stress on the farm. 

U.S. agricultural producers use hired farm labor for field crops, livestock, and nursery operations, for grading and sorting of agricultural products, for supervisory roles, and other areas. According to USDA’s Economic Research Service (ERS), mechanization led to greater productivity and a reduction in the need for labor, both self-employed farm operators (including family members) and hired workers, from 1950 to 1990. Since 1990, however, U.S. employment of agricultural workers has stabilized. For the 1950 to 1990 period, labor from self-employed and family members experienced a greater decline (74 percent) than hired farm labor (51 percent reduction). Even though hired farm labor comprises only one percent of all U.S. wage and salary workers, hired labor is important for agriculture to succeed (USDA/ERS, 2025).

Table 1 contains census of agriculture data for the number of hired farm laborers and farms with hired farm labor from 2012 to 2022, along with the ten-year average change for the southern states. There should be no surprise that all southern states have witnessed a decrease in both workers and farms with hired farm labor (for Maryland, the number of farm workers is essentially flat, but farms with hired labor are declining). Kentucky leads in the loss of hired farm labor over the ten-year average at -23.2%, followed by Oklahoma (-18.1%). Kentucky also leads in the decrease in the number of farms with hired farm labor at -18.7%, followed by Mississippi (-16.6%). For Kentucky during this timeframe, there was a shift away from tobacco production, a highly labor-intensive crop. Florida and Georgia have lost the fewest workers as measured by the ten-year average (USDA/NASS, 2025a). The prevailing reasons for the decrease in hired farm labor are the aging of the farm workforce, the lack of new immigrants entering agriculture, the displacement of labor by technology and machinery, costs, a lack of interest, and a preference for a better life-work balance.

Table 1. Number of Hired Farm Laborers (Workers) and Farms with Hired Farm Labor for Selected Southern States
	2012		2017		2022		2012-2022 Ave Δ
State	Workers	Farms	Workers	Farms	Workers	Farms	Workers	Farms
Kentucky	68,586	19,586	52,701	16,530	40,464	12,939	-23.2%	-18.7%
Oklahoma	51,119	18,108	42,431	16,794	34,323	13,181	-18.1%	-14.4%
Mississippi	32,307	10,581	27,166	9,105	21,936	7,345	-17.6%	-16.6%
N. Carolina	78,012	14,469	67,496	12,492	55,536	10,464	-15.6%	-14.9%
Virginia	46,561	12,718	39,657	10,954	33,719	8,969	-14.9%	-16.0%
Alabama	32,948	11,216	26,136	9,881	24,228	7,850	-14.0%	-16.2%
Texas	160,392	56,401	143,763	50,892	120,468	40,327	-13.3%	-15.3%
Tennessee	42,737	15,071	40,056	14,170	32,240	11,222	-12.9%	-13.4%
Louisiana	26,632	7,838	23,019	6,789	20,863	5,951	-11.5%	-12.9%
S. Carolina	23,398	5,851	20,938	5,254	18,730	4,449	-10.5%	-12.8%
Arkansas	33,104	11,715	29,047	10,373	28,162	9,051	-7.7%	-12.1%
Georgia	51,156	12,258	48,972	11,737	44,537	9,891	-6.7%	-10.0%
Florida	107,192	13,291	96,247	12,207	96,588	11,680	-4.9%	-6.2%
Maryland	14,705	3,536	15,143	3,410	14,820	2,992	0.4%	-7.9%
Source: Censuses of Agriculture

The 2022 agriculture census indicates that hired farm labor ranked third in a ranking of production expenses for southern states, preceded by feed purchases and livestock and poultry purchased/leased (see Menard SAT “Census of Agriculture Production Expenses for Southern States, 11/11/24). For all farms, data from the most recent agriculture census indicate that wages and salaries plus contract labor are 12 percent of production expenses. However, this percentage increases to 42 percent for greenhouse and nursery operations and 40 percent for fruit and tree nut operations. For immigrant labor costs in dairies and nurseries, costs as a share of gross revenues are near their 20-year highs. Hired farm labor wages vary by state and farm region. For 2024, the hourly wage rates for hired farm labor in the southern states range from $15.25 (Arkansas, Louisiana, and Mississippi) to $19.15 per hour (Maryland). For that same timeframe, hired farm labor ranges from $14.86 to $18.13 per hour for crop operations and $14.73 to $17.51 per hour for livestock operations (USDA/ERS, 2025; USDA/NASS 2025a & 2025b).

For 2022, the most common agriculture operation type for each state where hired farm labor was utilized is indicated in Table 2. The table also provides information for each state on the operation type having the largest hired farm labor production costs. For example, beef cattle (NAICS 112111) farming was the most common operation type for hired farm labor in Alabama, Kentucky, Oklahoma, Tennessee, and Texas. Greenhouse, nursery, and floriculture production operations had the highest hired farm labor production costs for Alabama, Florida, Maryland, North Carolina, South Carolina, Tennessee, and Virginia.

Table 2. Most Common Operation Type for Hired Farm Labor and Largest Hired Farm Labor Production Costs for Selected Southern States, 2022
State	Most Common (NAICS)	Largest Production Costs (NAICS)
Alabama	Beef Cattle (112111)	Greenhouse, Nursery, & Floriculture Production (1114)
Arkansas	Oilseed & Grain Crops (1111)	Oilseed & Grain Crops (1111)
Florida	Greenhouse, Nursery, & Floriculture Production (1114)	Greenhouse, Nursery, & Floriculture Production (1114)
Georgia	Fruit & Tree Nut Farming (1113)	All Other Crop Farming (11194/11199*)
Kentucky	Beef Cattle (112111)	Other Animal Production (1129**)
Louisiana	Oilseed & Grain Crops (1111)	Oilseed & Grain Crops (1111)
Maryland	Greenhouse, Nursery, & Floriculture Production (1114)	Greenhouse, Nursery, & Floriculture Production (1114)
Mississippi	Oilseed & Grain Crops (1111)	Oilseed & Grain Crops (1111)
N. Carolina	Greenhouse, Nursery, & Floriculture Production (1114)	Greenhouse, Nursery, & Floriculture Production (1114)
Oklahoma	Beef Cattle (112111)	Beef Cattle (112111)
S. Carolina	Vegetable & Melon Farming (1112)	Greenhouse, Nursery, & Floriculture Production (1114)
Tennessee	Beef Cattle (112111)	Greenhouse, Nursery, & Floriculture Production (1114)
Texas	Beef Cattle (112111)	Beef Cattle (112111)
Virginia	Greenhouse, Nursery, & Floriculture Production (1114)	Greenhouse, Nursery, & Floriculture Production (1114)
*Hay and peanut farming**Horse/equine productionSource: Censuses of Agriculture

There are a couple of interesting trends moving forward that may affect southern states and the use of hired farm labor.  Long-distance migrations from home to work are declining —farmworkers are more settled.  Fewer farmworkers are pursuing the seasonal follow-the-crop migration. Also, women as farmworkers is an increasing trend. (USDA/ERS, 2025; USDA/NASS, 2025a). 

Reference

USDA Economic Research Service (ERS). 2025. “Farm Labor.” Available at https://www.ers.usda.gov/topics/ farm-economy/farm-labor.

USDA National Agricultural Statistical Service (NASS). 2025a. Census of Agriculture Reports. Available at https://www.nass.usda.gov/AgCensus/index.php.

USDA National Agricultural Statistical Service (NASS). 2025b. “Quick Stats.” Available at https://quickstats.nass.usda.gov/

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Menard, R. Jamey. “Hired Farm Labor Trends.” Southern Ag Today 5(34.1). August 18, 2025. Permalink

Producers across the United States, particularly in the Southern states, are increasingly adopting the Livestock Risk Protection Program (LRP) despite a strong market and high premiums. Originally designed to protect ranchers against declining cattle prices, the LRP has experienced significant growth. The number of head covered under the program has increased from just 71,000 in 2017 to 7.5 million by July 2025. In 2024, ranchers insured prices for 6.2 million head, a notable increase from 4.97 million in 2023. This increase corresponds with changes made to the LRP program by the USDA and the substantial improvement in market prices for feeder and live cattle (see Figure 1).

The increase in cattle prices, coupled with the narrowing margins for stockers and feedlot operations, highlights the need to implement effective price risk management strategies. The LRP helps minimize financial losses, secure profit margins, and reduce the risk of business failure, especially considering higher investment levels. The higher adoption of the LRP indicates a growing number of ranchers are integrating price risk management plans to protect their operations. By establishing a floor price for their cattle, these ranchers significantly lower the risk of business failure.

Figure 1: LRP Usage and Prices

In the summers of 2019 and 2021, the USDA implemented several modifications to the Livestock Risk Protection (LRP) program that contributed to this growth. These changes not only reduced the premiums ranchers had to pay but also allowed them to defer premium payments until the end of the endorsement period, making the program more accessible across all states and counties. 

While LRP can be used to hedge many beef cattle categories, not every LRP animal category has increased at the same rate. Steer Weight 2 is the most commonly used category for price hedging. This category had an average weight of 854 pounds per head insured. So far in 2025, this category accounts for 42% of all transactions, which is slightly below the historical average of 46%. The second and third largest categories are Fed Cattle Steers & Heifers, which have a historical average weight of 1,480 pounds per insured head, and Heifers Weight 2, which have a historical average weight of 826 pounds. These two categories account for 20% and 17% of the historical transactions, respectively.

Remarkably, the Unborn category has experienced significant growth this year. Unborn cattle represent 11% of the total number of head insured, well above the historical average of 6%. Historically, the Steers and heifers Category 1, including the Unborn category, accounts for 17% of all head insured. This past year, that proportion increased to 22%, thanks to the growth in unborn cattle.

Figure 2: Beef LRP Usage per Animal Category

Ranchers in the Southern region have also increasingly adopted the Livestock Risk Protection (LRP) program as an essential tool for managing price risks over the past five years (see Figure 3). As of July 2025, ranchers insured approximately 1.3 million head of cattle annually through the LRP program, with Texas and Oklahoma accounting for 47% and 30% of the total, respectively. However, in the past year, participation from Texas and Oklahoma has decreased compared to other Southern states. So far in 2025, these two states represent 77% of the total head insured in the Southern region, down from 88% participation in 2024.

Figure 3: LRP Usage in the Southern States

For more information on the LRP, consult the USDA Fact Sheet on Livestock Risk Protection for Fed Cattle. If you’re considering purchasing price insurance through this program, you can find a list of approved livestock agents and insurance companies on the USDA website.

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Abello, Pancho. “USDA’s Livestock Risk Protection Program Use Keeps Increasing.” Southern Ag Today 5(33.1). August 11, 2025. Permalink

Much has been written recently about the strength of the current cattle market. With beef cow inventory at a 60+ year low and demand being very strong, cow-calf operations are clearly in the driver’s seat. Calf values are more than double what they were three years ago, which speaks to considerable opportunity for cow-calf operators to invest in their cowherds. Expansion is often the first opportunity that comes to mind in a strong calf market, and there is likely merit in expansion, if doing so is consistent with the goals of the operation. However, some producers may not be interested in growing the size of their cowherds due to land constraints, management limitations, or other reasons. The following are a few other investment opportunities worth consideration.

Genetics – Some producers may choose to use the current increase in cow-calf revenues to improve the genetics of their herds. Investment in genetics often has long-run implications, resulting in more valuable calves to sell over multiple years. Sires certainly come to mind, but the current calf market combined with the strong cull cow prices may provide an opportunity to cull a bit harder and also purchase some higher quality females.

Facilities – Working facilities are crucial resources for cow-calf operations for numerous reasons. Value-added opportunities such as health protocols, post-weaning programs, castration, implants, etc. are made much easier with quality working facilities. The same is true for receiving, sorting and loading of cattle. If facilities have historically been a constraint, the current market may be providing an opportunity to make improvements and position the operation to sell higher value calves in the future.

Grazing systems – Winter feeding days are typically the most expensive days for cow-calf operations as stored feed (hay) is being fed. Improved grazing systems (interior fencing, additional water sources, portable mineral feeders, etc.) allow for more efficient use of existing forage during the grazing season. This has the potential to increase the number of grazing days and reduce the number of hay feeding days. In most cases, this results in lower costs per cow per year and puts an operation in a better position when calf prices fall.

Debt service / financial management – Strong markets also provide an opportunity to make financial moves that set an operation up for the long run. Increased revenues may allow an operation to pay down some debt and thereby lower their cost structure going forward. Similarly, it may provide an opportunity to build some working capital and lower dependence on operating loans. In both cases, future interest expenses are reduced, which has implications for profitability.

To be clear, the purpose of this article was not to discourage expansion. There are likely operations that need to do just that. But I also live in an area where land constraints are real and know that expansion is not always feasible. Plus, I have seen situations where operations expanded during strong markets and wished they had not done so a few years later. The main point is that the current calf market provides a significant opportunity for a cow-calf operation to position itself for the long-run, and that will look different for each one of them.

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Burdine, Kenny. “Cowherd Expansion is Not the Only Way to Capitalize on a Strong Calf Market.” Southern Ag Today 5(32.1). August 4, 2025. Permalink