Category: Policy

Along with most Southern cattle producers, Southern Ag Today has been tracking the movement of the New World Screwworm (NWS).  An article last November (linked here) provided a history of NWS and discussed implications of import restrictions on feeder cattle from Mexico.  A second article (linked here) continued the discussion as the U.S. closed and re-opened the border to Mexican cattle throughout the spring and summer. 

Earlier this week, an NWS case was detected 70 miles south of the Texas border in Nuevo Leon, Mexico, approximately 370 miles closer than the previous northernmost case detected in Veracruz, Mexico in July.  As the threat of NWS reaching the U.S. grows, the need for eradication efforts and producer preparedness grow more urgent.  Last year, the USDA estimated an NWS outbreak would result in a $732.6 million loss to Texas producers and a $1.8 billion loss to the Texas economy (APHIS, 2024).  Losses for producers would come from animal deaths, decreased production, additional labor and vehicle costs for animal inspection and treatment, and additional medication and insecticide costs.  Additionally, an NWS outbreak may prompt producers to make production practice changes to minimize NWS infestations.  Recall, NWS cause harm by burrowing into open wounds of live animals.  To minimize open wounds, producers may need to skip standard practices like dehorning, castrating, branding, and ear-tagging.  They may also alter calving season to avoid calving during warm months when the NWS is more prevalent.  The effects on marketing calves under these conditions is unknown. 

The best and highly supported path forward is eradication. To that end, in June USDA laid out a 5-pronged plan to address NWS (USDA, 2025a).  In summary, the plan included:

1. Prevention of NWS spreading in Mexico through enhancements to sterile fly production in Mexico; improvements of Mexico’s NWS surveillance; an audit of Mexico’s animal health controls; and limitations on movement of animals. 
2. Protecting the U.S. border by collaborating with border personnel to gather strays, intercept illegally introduced livestock, and monitor wildlife; preparing laboratories to test for NWS; and continuing live animal inspections at ports of entry. 
3. Preparing for an outbreak through emergency management plans; training of federal and state responders; and stockpiles of treatment supplies. 
4. Moving eradication efforts forward by:
   • Building an $8.5 million sterile insect dispersal facility at Moore Air Base in South Texas – to be completed by the end of 2025. 
   • Exploring the possibility of a domestic sterile fly production facility.
   • Investing $21 million in the renovation of Mexico’s sterile insect facility – to be completed in 18 months. 
5. Planning for the future by exploring new treatments and preventatives; improving sterile insect production and technology; and strengthening partnerships with states and land grant universities.  

In August, Secretary Rollins announced that USDA would be building on the 5-prong plan, in part, by investing $100 million to identify new innovations for tackling NWS and that USDA will construct a sterile fly production facility in Edinburg, TX, at Moore Air Force Base (USDA, 2025b).

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Animal and Plant Health Inspection Service (APHIS). 2024. New World Screwworm, Ready Reference Guide – Historical Economic Impact. https://www.aphis.usda.gov/sites/default/files/nws-historical-economic-impact.pdf

USDA. 2025a. New World Screwworm Domestic Readiness and Response Policy Initiative. https://www.usda.gov/sites/default/files/documents/nws-visit-policy-brief.pdf

USDA. 2025b. USDA Announces Sweeping Plans to Protect the United States from New World Screwworm.https://www.usda.gov/about-usda/news/press-releases/2025/08/15/usda-announces-sweeping-plans-protect-united-states-new-world-screwworm

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Graff, Natalie. “Threat Looms and Urgency Grows as New World Screwworm Inches Closer to the Texas-Mexico Border.” Southern Ag Today 5(39.4). September 25, 2025. Permalink

From 2015 to 2023, crop insurance programs played a critical role in protecting American farmers from financial risk, particularly in the face of increasing climate volatility. By combining basic policies—such as Actual Production History (APH), Yield Protection (YP), Revenue Protection (RP), and RP with Harvest Price Exclusion (RP-HPE)—with supplemental options like the Supplemental Coverage Option (SCO) and Enhanced Coverage Option (ECO), producers saw substantial improvements in both revenue stability and risk reduction.

Under baseline conditions, the integration of these supplemental insurance layers resulted in a 27.9% increase in the chance to receive insurance funds that offset weather revenue losses, compared to farming without insurance. This revenue loss reduction comes from both subsidized premiums and indemnity payments that compensated for losses. More importantly, the variability in farm revenue dropped by nearly half—49.05%—and downside risks were dramatically reduced. Relative downside risk fell by 83.6%, while absolute downside risk declined by 80.98%. These figures reflect a significant buffer against income shocks, achieved at a relatively low cost: an actuarially fair premium rate of just 12.34 cents per dollar of liability, with 63.67% of that cost covered by federal subsidies. Farmers paid only 4.35 cents per dollar out of pocket.

However, the benefits of crop insurance were not evenly distributed across all crops and regions. Cotton emerged as the crop with the highest reduction in downside revenue risk at 88.47%, followed closely by corn (85.91%), canola (83.41%), and wheat (82.42%). Other major crops such as soybeans, peanuts, and rice also saw meaningful reductions, but were lower than the crops above. Geographically, states like Arizona (cotton), Iowa (corn), Indiana (soybeans), Minnesota (corn), and Illinois (corn) led the nation in risk reduction, with rates exceeding 86%. In contrast, states such as Arkansas, California, Vermont, Louisiana, and West Virginia reported lower reductions, often below 71%.

Further analysis revealed a trade-off: programs that delivered the greatest risk protection also tended to involve higher revenue transfers and greater out-of-pocket costs for producers. The One Big Beautiful Bill (OBBB or OB3) that passed in July 2025 included an increase in premium subsidy for SCO and ECO, increasing subsidy rates to 80%. Further, underlying basic policy subsidies increased by 5 percentage points. This balance between security and affordability remains a key consideration for producer decision making going forward.

Together, these results underscore the importance of crop insurance as a cornerstone of agricultural risk management. As climate-related disasters become more frequent and severe, the role of insurance in stabilizing farm income and supporting rural economies will only grow more vital.

Illustration of supplemental coverage combined with an underlying individual policy at 75% coverage level 

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Tsiboe, Francis, Hunter Biram, and Amy Hagerman. “Measuring the Revenue Risk Reduction of Supplemental Crop Insurance Policies.” Southern Ag Today 5(37.4). September 11, 2025. Permalink

A common question we’ve been fielding since passage of the One Big Beautiful Bill: “with all this money coming from the Federal government, why do farmers keep complaining?”  It’s generally followed by: “you just can’t make some people happy.”

There’s no question the Federal government has provided a robust level of assistance. For example, the American Relief Act in December 2024 provided $30.78 billion in relief—$10 billion for economic assistance and $20.78 billion for natural disaster assistance. The recently-passed One Big Beautiful Billprovided approximately $62 billion (10-year total) in improvements to the farm safety net.^[1] While these sound like big numbers—because they are—it’s important to put them in context.

First, for the $10 billion in economic relief from the American Relief Act—implemented by USDA as the Emergency Commodity Assistance Program (ECAP)—Congress required USDA to calculate losses from the 2024 crop year and then limited the amount of assistance to 26% of the loss. In other words, for losses incurred by producers last year, they were required to shoulder 74% of that loss on their own. 

Second, for the $20.78 billion in relief for natural disasters in the American Relief Act—implemented by USDA as the Supplemental Disaster Relief Program (SDRP)—Congress limited USDA to covering no more than 90% of losses incurred in 2023 and 2024. While that certainly sounds like a lot, once the total losses were estimated by USDA, they were only able to cover 35% of the losses based on the funding provided by Congress. So, SDRP effectively covers, at most, just under 32% of the loss (or 35% x 90%).  

Importantly, ARC and PLC also will help cover losses from the 2024 crop year once paid in October 2025, but that assistance is at the old levels last adjusted more than a decade ago in the 2014 Farm Bill. In other words, the relief provided by the American Relief Act was all retroactive for losses already incurred and only covered a portion of the losses.

What about the 2025 crop year?  While the One Big Beautiful Bill made several improvements to the farm safety net—from increasing reference prices from 10-20% to adding up to an additional 30 million base acres nationwide—most of the improvements kick in with the 2025 crop year. Congress stipulated (using the same schedule that has been in place since the 2008 Farm Bill) that payments cannot be made until October 1 of the year following the end of the marketing year for a crop.  Translation: the new assistance won’t go out the door until October 1, 2026. Yes, you read that right. Further, the magnitude of the projected losses to the 2025 crop are such that the assistance will, yet again, only cover a small portion of the loss. Consider the following example:

The estimated national average cost of production for soybeans in 2025 is $639.15/ac.^[2] Using USDA’s August 2025 World Agricultural Supply and Demand Estimates (WASDE), the expected return for soybeans is $535.80/ac (or a planted-acre yield of 53.05 bu/ac x $10.10/bu), for an expected loss of $103.35/ac (or $1.95/bu).^[3] The question is how much of that loss will be covered by the new-and-improved ARC and PLC.  At present, PLC is projected to pay $0.61/bu and ARC—assuming average yields—would pay $0.85/bu.^[4]  Assuming the farm is fully based—where both ARC-CO and PLC use a payment factor of 85%—you effectively receive $0.7225/bu (or 85% of $0.85/bu).  In other words, while the One Big Beautiful Bill provided significant improvements, in the case of soybeans (and virtually every other row crop to varying degrees), it will cover just 37% (or $0.7225/$1.95) of the loss…when it arrives next year. Losses upon losses. Starting to see why folks are concerned?

To pull all of this together: yes, significant assistance has been provided to the countryside, but on average, it only covers a fraction of the past/projected losses.  That is why you are hearing a collective groaning in the countryside.  What to do about it?  Absent new trade deals that spur additional demand, a renewed focus on in-kind food aid, or commodity-specific demand levers (think ethanol for corn)—and perhaps in addition to all of those things—we suspect Congress will begin contemplating yet another round of disaster aid this fall and/or the Trump Administration will begin discussing intervening with trade aid. To those asking us the questions at the top of this article and for the record: we’ve never met a farmer who preferred getting their income from the government…and they can’t wait to break this cycle of praying to simply break even.

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^[1] According to the Congressional Budget Office’s estimates of outlays in Subtitles C (Commodities), D (Disaster Assistance), and E (Crop Insurance) in Title 1 of the One Big Beautiful Bill (https://www.cbo.gov/system/files/2025-07/61570-pl119-21-2025Recon-CLB.xlsx).

^[2] https://ers.usda.gov/sites/default/files/_laserfiche/DataFiles/47913/cop_forecast.xlsx?v=30009

^[3] https://www.usda.gov/oce/commodity/wasde/wasde0825.pdf

^[4] PLC: https://www.fsa.usda.gov/documents/2025-plc-pdf; ARC: 90% of $12.17/bu (or $10.95/bu) less $10.10/bu.

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Fischer, Bart L., and Joe Outlaw. “Why So Much Concern in the Countryside?” Southern Ag Today 5(35.4). August 28, 2025. Permalink

Historically, tobacco has been an important crop in several U.S. southern states. However, due to a variety of factors, including health issues surrounding the crop, international competition, and policy/regulatory changes, the U.S. tobacco industry has declined by nearly 70% over the past 25 years.  

A previous article in Southern Ag Today, highlighted some of the major structural changes following the elimination of the federal tobacco program (better known as the tobacco buyout) in 2004. Another important part of the modern day tobacco story that has not received much attention has been the significant “investment” dollars made available for tobacco farmers and rural communities evolving from tobacco’s  Master Settlement Agreement (MSA). 

In 1998, 46 state attorney generals signed the MSA with the major U.S. tobacco companies to settle state lawsuits to recover health care costs associated with treating smoking-related illnesses. ^[1] To date, the MSA represents the largest civil lawsuit settlement in U.S. history.

Under the MSA, tobacco manufacturers agreed to make annual payments to the settling states into perpetuity, as long as cigarettes are sold in the United States. While encouraged to use these funds for tobacco cessation, tobacco control, and other health-related issues, participating states were given complete control over how to use these settlement funds. Most state governments have used these funds over the past 25 years for at least a portion of public health care expenses, but many states have opted to distribute these funds for other state priorities including funding for education, childhood development, infrastructure investment, and balancing state budgets. Given the significant impact of the MSA on tobacco economies and rural communities, three traditional tobacco-producing states, Kentucky, North Carolina, and Tennessee have elected over the years to use a significant share of their MSA dollars to fund ag diversification in their state’s farm economy.

During the 1990s, tobacco accounted for 24% of Kentucky ag cash receipts, 16% in North Carolina, and 11% in Tennessee – representing the number one cash crop in each state (Figure 1). Since the 1990s, tobacco cash receipts in Kentucky have declined by 72%, compared to a 66% loss in Tennessee and a 47% loss in North Carolina.  However, ag cash receipts have more than doubled in all three states on a nominal basis since 2000 (Figure 2) and are up around 30% when adjusted for inflation. Tobacco now accounts for only around 3% of ag cash receipts in Kentucky and North Carolina and less than 2% in Tennessee.

Given the magnitude of the tobacco losses, the growth in ag cash receipts in these historically tobacco-dependent states has been very impressive. Imagine the outcome of any state’s ag economy losing over half of its top ag enterprise such as a mid-western state experiencing a greater than 50% reduction in their grain sales or a Wisconsin losing over half of its dairy receipts. Not only have ag cash receipts increased substantially in North Carolina, Kentucky, and Tennessee over the past 25 years, but ag sales in these three tobacco states have actually increased on a percentage basis more than the aggregate receipts in the remaining eleven states in the Southern region since 2000. Arguably, access to these diversification funds evolving from the MSA (along with tobacco buyout dollars) have contributed greatly to this growth in the ag economies in these major U.S. tobacco states.

North Carolina has had two entities that have accessed MSA funds over the past 25 years to support agriculture and its tobacco-dependent rural communities —  the North Carolina Tobacco Trust Fund and the Golden LEAF Foundation. The Kentucky Agricultural Development Fund (KADF) also recently celebrated 25 years of existence of providing 50% of their MSA dollars to agriculture, while the Tennessee Agriculture Enhancement Program )TAEP) have utilized a portion of these MSA funds to support ag diversification since 2005. In aggregate, these entities have invested more than one billion dollars of MSA dollars among tobacco producers and their rural communities over the past 25 years, covering more than 100,000 projects. These projects are all over the board, including  funding alternative ag enterprises, farm and rural community infrastructure, programs supporting beginning farmers, improving crop and livestock marketing/management, investing in regional and local food markets, agritourism, food processing,  ag education, workforce development, leadership and ag promotion programs along with a host of other initiatives to help offset  tobacco incomes in tobacco-dependent regions in the South. 

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^[1] Florida, Minnesota, Mississippi, and Texas were not signatories to the MSA as they had their own individual settlements with U, S. tobacco companies.  

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Snell, Will. “Tobacco Master Settlement Agreement Investment in Diversification of Southern Agriculture.” Southern Ag Today 5(33.4). August 14, 2025. Permalink

Last summer, we wrote about a novel new concept for adding base acres to farms that had been proposed in the House Ag Committee-passed version of the 2024 Farm Bill (Farm, Food, and National Security Act of 2024). While that farm bill never came to fruition, the concept ultimately was adopted in the One Big Beautiful Bill (H.R. 1) that was recently signed into law by President Trump.   The provision will allow up to 30 million additional base acres across the nation. Today’s article addresses some of the questions we’ve been asked, while providing an overview of the mechanics. 

• What will happen to my existing base acres?  Nothing. 

• If this doesn’t affect my existing base acres, then what does it do?  For those farms where recent plantings (described below) exceed the number of existing base acres on the farm, it allows the landowner to add additional base acres. 

• How does it work? There are essentially two simple components to the additional base provision that address acres planted to both covered and non-covered commodities:
  • Covered Commodities:  If the average number of acres of covered commodities planted (or that were prevented from being planted) on a farm from 2019 through 2023 exceeds the number of existing base acres on the farm, you are eligible to add the difference as additional base acres.
  • Non-Covered Commodities:  You can also add the number of acres of eligible non-covered commodities planted (or that were prevented from being planted) on a farm from 2019 through 2023 as additional base acres, so long as the total does not exceed 15% of the total acres on the farm.

• If I get additional base acres, what crops will they be assigned to?  They will be assigned in proportion to the covered commodities you planted from 2019 to 2023.

• If I have “unassigned crop base” from previous changes to U.S. cotton policy, is it eligible to be included in the allocation of additional base acres?  Yes.

• Will I get these new base acres in time for the 2025 crop year (i.e., the crop I harvest in 2025)? No. The OBBB clearly stipulates that the new base will be in effect for the 2026 crop year.

• What happens if USDA discovers there are more than 30 million acres of eligible new base?  If the total number of eligible acres across the country exceeds 30 million acres, the Secretary would be required to apply a pro-rata, across-the-board (i.e., no progressive factoring) reduction to all farms to reduce the number of eligible acres to equal 30 million. For example, if USDA determines there are 60 million acres of eligible new base, everyone would see their additional base acres factored by 50% (i.e., 30 million divided by 60 million). 

• I’ve read that this concept wasn’t vetted and that it was designed to only help one region of the country. Is that true?  No, that’s just political nonsense. Yes, the OBBB was a partisan process—reconciliation is notoriously partisan and has been repeatedly used by both political parties—but as we noted above, this provision went through a full committee mark-up last summer and has been thoroughly discussed/vetted over the last year. Finally, while this will certainly provide more benefit to areas like the Northern Plains where more covered commodities are being planted than in the past, we see no evidence that this was done to provide special benefit to any single region.  In fact, it seems obvious to us that it was designed to address repeated complaints from all corners of the country to help landowners who—for whatever reason—have land that is not fully based.

• Do I need to reach out to my county office?  No. Congress is requiring USDA to go through a notification process with landowners. Further, producers already report their plantings to USDA’s Farm Service Agency (FSA), so in theory, FSA already has the data it needs to automate this process. With that said, the bill also provides an opportunity for a landowner to opt out of receiving additional base acres if they wish. Also, for purposes of assigning the new base to crops, for acreage that has been planted to a subsequent crop (other than a covered commodity produced under an established practice of double cropping), the owner gets to elect the covered commodity (but not both) to be used for that crop year in determining the 5-year average. In other words, there will be cases where the process cannot be completely automated.

Bottom line: this is a significant change from previous law that can only help producers (i.e., there is no downside).  As always, the information above is provided for educational purposes only and is subject to change.  USDA is the final authority on how this provision will be implemented, so be on the lookout for details in the weeks and months ahead.

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Fischer, Bart L., and Joe Outlaw. “Addressing Questions about Additional Base Acres in the One Big Beautiful Bill.” Southern Ag Today 5(31.4). July 31, 2025. Permalink