Category: Policy

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

Several provisions in the Tax Cuts and Jobs Act of 2017 will begin to expire at the end of 2025. While most of the attention will be on extending the expiring provisions, Congress may wish to consider the inclusion of Tax-Deferred Farm Savings Accounts (TFSAs). Over the last 20 years, a number of different TFSAs have been proposed. The most recent proposal—the Farm Risk Abatement and Mitigation Election Act of 2017—was introduced by Congressman Rick Crawford (R-AR) and referred to the House Ways and Means Committee. Despite dozens of attempts by several Members of Congress, TFSAs have never gained traction.

The premise of past TFSA proposals has essentially been the same: create a mechanism that allows producers to shelter taxable income in a good year to utilize in a future year. In current practice, the common tax management strategy for producers who have made money is to utilize Section 179 immediate expensing. Immediate expensing allows agricultural operations to fully depreciate (or expense) equipment or on-farm structures such as barns or grain storage in the year it is purchased. This sometimes results in producers purchasing equipment or farm structures that are not integral to the operation of the farm but were purchased to limit income taxes. As an alternative, TFSAs would allow producers to deposit (and earn interest on) taxable income and either save it for a rainy day or have time to plan how they will use it moving forward. 

While many different versions of TFSAs have been proposed in the past, we would argue that most of them were needlessly complicated, which likely helps explain why they’ve never been implemented. In our view, these accounts could be quite simple: taxable income generated by the farm could be deposited in an interest-bearing, tax-sheltered account and be treated as taxable income—and subject to ordinary income tax rates—on withdrawal from the account. While policymakers likely would want to weigh in on how much money producers could shelter each year and how long the funds could be held in the accounts, the more complicated they get, the less effective they become (and the less likely they are to become a reality).

Some may ask why now would be an appropriate time to implement these accounts. After all, most row crop producers are more worried about losing money in 2025 than managing income. But, at some point, farm income will recover, and growers will once again find themselves feeling the pressure to purchase equipment to avoid taxation. Imagine a scenario where prices have recovered, net operating losses have been exhausted, and producers make a bumper crop. With a TFSA, they would be able to shelter the income—tax free—and then use the savings in the future to help weather a downturn or to buy equipment when it makes sense for the business. Some may argue that this would result in less income tax revenue for the government, but that ignores the fact that farmers can already avoid taxation by using Section 179. Ultimately, TFSAs could simply be another tool in the toolbox—alongside the farm safety net and current tax management strategies—to help farmers and ranchers weather the extraordinary risks they face.

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Nelson, Henry, and Bart L. Fischer. “Is Now the Time for Tax-Deferred Farm Savings Accounts?” Southern Ag Today 5(11.4). March 13, 2025. Permalink

Crop insurance sales closing dates for the 2025 crop year are fast approaching for much of the country.  On top of multi-peril crop insurance (MPCI) decisions, producers have supplemental policies to consider such as the Supplemental Coverage Option (SCO) and the Stacked Income Protection Plan for upland cotton (STAX).  STAX and SCO are area-wide crop insurance tools that serve as complements to underlying MPCI policies but have implications for other safety net programs: Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC).  Enrollment of seed cotton base acres on a farm in ARC or PLC makes the farm ineligible for STAX.  Enrollment in SCO makes a producer ineligible for ARC.  Therefore, producers have the following options:

• Purchase STAX (upland cotton only), with or without a companion policy;
• Purchase SCO, with an underlying policy, and enroll base acres in PLC;
• Enroll base acres in ARC only;
• Enroll base acres in PLC only. 

Producers must consider these options carefully, as risk management decisions may significantly impact a farm’s bottom line.  A July 2024 Southern Ag Today article by Stiles and Biram took a closer look at the case of STAX for upland cotton.  They illustrated that STAX generally provides more protection against an area yield loss or a revenue loss due to both area yield and price effects rather than a price decline alone.  Both STAX and SCO indemnities are triggered by loss in area revenue (or a loss in area yield for SCO if the underlying MPCI policy is a yield protection policy).  Findings highlighted in this article along with other available research may help guide producers as they decide if they prefer more protection against price loss, yield loss, or revenue loss.  Producers should always evaluate their individual situations and consult their crop insurance agent or other trusted professionals to ensure they are fully informed of all available policies and products.

The following tables highlight sales closing dates and provide the current RMA projected prices (used for STAX for upland cotton and SCO for other commodities) from each price discovery period across Southern states for cotton, corn, soybeans, and grain sorghum.  The tables also include effective reference prices and the most recent marketing year average (MYA) price projections provided by FAPRI for use in the AFPC online ARC-CO/PLC Decision Aid.  These MYA prices are components in both ARC and PLC payment calculations.

Table 1. Cotton – Sales Closing Dates and 2025 Projected Prices

States	Projected Price Discovery Period	Sales Closing Date	2025 Projected Price	Effective Reference Price3	Projected MYA Price3
Southern TX	12/15 – 1/14	31-Jan	$ 0.70	$ 0.3670	$ 0.3402
AL, AR, FL, GA, LA, MS, NC, SC, Central TX	1/15 – 2/14	28-Feb	$ 0.69
OK, TN, VA, Northern TX	2/1 – 2/28	15-Mar	$ 0.691
1. Projected price in discovery
2. FAPRI price projection from AFPC ARC-CO/PLC Decision Aid
3. Effective Reference Price and Projected MYA Prices shown are for Seed Cotton

Table 2. Corn – Sales Closing Dates and 2025 Projected Prices

States	Projected Price Discovery Period	Sales Closing Date	2025 Projected Price	Effective Reference Price	Projected MYA Price
Southern TX	12/15 – 1/14	31-Jan	$ 4.41	$ 4.26	$ 4.282
Central TX	1/1 – 1/31	15-Feb	$ 4.55
AL, FL, GA, LA, SC	1/15 – 2/14	28-Feb	$ 4.66
AR, MS, NC	1/15 – 2/14	28-Feb	$ 4.65
KY, OK, TN, VA, Northern TX	2/1 – 2/28	15-Mar	$ 4.721
1. Projected price in discovery
2. FAPRI price projection from AFPC ARC-CO/PLC Decision Aid

Table 3. Soybeans – Sales Closing Dates and 2025 Projected Prices

States	Projected Price Discovery Period	Sales Closing Date	2025 Projected Price	Effective Reference Price	Projected MYA Price
Southern TX	12/15 – 1/14	31-Jan	$ 10.08	$ 9.66	$ 10.062
AR, LA, MS, Central TX	1/15 – 2/14	28-Feb	$ 10.51
AL, FL, GA, NC, SC	1/15 – 2/14	28-Feb	$ 10.60
KY, TN, Northern TX	2/1 – 2/28	15-Mar	$ 10.571
OK, VA	2/1 – 2/28	15-Mar	$ 10.661
1. Projected price in discovery
2. FAPRI price projection from AFPC ARC-CO/PLC Decision Aid

Table 4. Grain Sorghum – Sales Closing Dates and 2025 Projected Prices

States	Projected Price Discovery Period	Sales Closing Date	2025 Projected Price	Effective Reference Price	Projected MYA Price
Southern TX	12/15 – 1/14	31-Jan	$ 4.43	$ 4.51	$ 3.842
Central TX	1/1 – 1/31	15-Feb	$ 4.57
AL, AR, FL, GA, LA, MS, NC, SC	1/15 – 2/14	28-Feb	$ 4.67
KY, OK, TN, VA, Northern TX	2/1 – 2/28	15-Mar	$ 4.741
1. Projected price in discovery
2. FAPRI price projection from AFPC ARC-CO/PLC Decision Aid

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Nelson, Henry, Natalie Graff, and J. Marc Raulston. “With Sales Closing Dates Looming, Supplemental Crop Insurance Decisions Are Upon Us.” Southern Ag Today 5(9.4). February 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