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  • Developing Rural Economic Opportunities Through Agritourism

    Developing Rural Economic Opportunities Through Agritourism

    Over the span of two centuries, the economic structure of the United States has evolved from a predominantly agrarian base to an industrial and, more recently, a service-oriented economy. As these transitions happened, many urban and suburban residents in the U.S. became increasingly disconnected from agriculture, as employment in the agricultural sector declined from approximately 8 million in 1950 to about 2.3 million at the end of 2024 (U.S. Bureau of Labor Statistics, 2025). According to the 2020 census, about 80% of the U.S. population live in urban areas, a slight decrease from 2010. Yet, despite this urban shift, the public’s interest in understanding where food comes from remains strong given the growth in farm participation in agritourism over the years and the revenue generated from these activities. The development and expansion of agritourism, creates opportunities for individuals to engage with farms and experience agriculture firsthand. Agritourism encompasses a range of farm-based activities, including educational tours, U-pick operations, farm-to-table events, and guided visits to crop and livestock farms, such as petting zoos. 

    Agritourism has been an important segment of the agricultural economy in the U.S., contributing $1.26 billion in agricultural revenues in 2022, and is expected to grow in the coming years (USDA NASS, 2025). This growth, while expected nationwide, is also evident in southern United States, where agritourism is gaining traction. The southern region contributed about 35% of the total U.S. agritourism and recreational services income (Table 1). Moreover, over 40% of the farms indicate this level of income activity is from the southern region. To emphasize the importance of agritourism on the economy, recent studies have undertaken economic impact assessments for states like Tennessee and Georgia. In Tennessee, Dhungana and Khanal (2023) estimated a total industry output of approximately $119 million, driven by $65 million in direct spending on agritourism farms. Georgia’s agritourism-related activities were estimated to have generated a total economic impact of $109.8 million in 2022, increasing from $88.2 million in 2021 (Kane, 2024). 

    Most southern states experienced an increase in agritourism and recreational income and farm participation between 2017 and 2022 (Table 1). Louisiana and Tennessee had the highest increases in farm participation of 23.3% and 11.0%, respectively. Unsurprisingly, the bulk of farm participation occurred in Texas with 4,816 farms in 2022, down from 5,723 in 2017. Despite this decline in farm participation in Texas, the state saw an 18% increase in revenue to about $192 million in 2022. All states, except Kentucky, recognized increases in income, with South Carolina (125.6%), Mississippi (99.6%), Oklahoma (70.7%), and Tennessee (68.4%) showing increases above sixty percent. Despite a 9.2% increase in farm participation in Kentucky, its income decreased by 15.5% to $14.4 million.

    Beyond its broader economic contributions, agritourism serves as a critical farm diversification strategy, allowing producers to generate additional revenue streams while mitigating enterprise risks associated with a non-diversified income stream, such as market price fluctuations. As consumer demand for local foods continues to rise, the willingness to pay price premiums for these products will create ongoing opportunities for farms engaged in direct sales. Agritourism also fosters economic development through indirect channels, including job creation in hospitality and food retail sectors that support local foods and agricultural sectors. Additionally, visitor spending in agricultural communities bolsters rural economies, enhancing their economic resilience. Beyond economic impacts, agritourism strengthens cultural heritage and reinforces rural identities. Educational components of agritourism facilitate partnerships between farmers, local organizations, and schools, fostering deeper community engagement. As agritourism continues to expand, its role in supporting both agricultural viability and rural economic development will remain significant.

    Table 1. Agritourism and Recreational Income for Southern U.S.

    State/RegionNo. of FarmsIncome ($000)
    2017202220172022
    AL             481              507 $6,793$9,848
    AR             295              316 $4,705$6,000
    FL             761              784 $27,047$39,924
    GA             736              742 $28,058$31,052
    KY             651              711 $17,013$14,372
    LA             215              265 $2,567$3,058
    MS             321              346 $6,564$13,104
    NC             995              982 $23,785$30,399
    OK             761              736 $6,525$11,139
    SC             505              516 $6,219$14,032
    TN             644              715 $14,519$24,457
    TX          5,723           4,816 $162,567$191,793
    VA             863              833 $40,933$52,047
    United States        28,575         28,617 $949,323$1,259,261
    Southern Region        12,951         12,269 $347,295$441,225
    Southern Region 
    (% of U.S. Total)    		45.342.936.635.0
    Source: USDA NASS 2022 Census of Agriculture
    Note: Income is not adjusted for inflation.

    References

    Dhungana, P., and A. Khanal. 2023. “Spending on farms ripples into the region: agritourism impacts.” Frontiers in Environmental Economics 2. https://doi.org/10.3389/frevc.2023.1219245.

    Kane, S. 2024. “2024 Ag Snapshot.” Center for Agribusiness and Economic Development, University of Georgia Extension. https://extension.uga.edu/publications/detail.html?number=AP129-2&title=2024-ag-snapshots.

    U.S. Bureau of Labor Statistics. 2025. https://www.bls.gov/ (Accessed March 17, 2025).

    USDA, National Agricultural Statistics Service (NASS). 2025. “2022 Census of Agriculture.” https://www.nass.usda.gov/Publications/AgCensus/2022/.

    Britwum, Kofi, and Chrystol Thomas. “Developing Rural Economic Opportunities Through Agritourism.” Southern Ag Today 5(12.5). March 21, 2025. Permalink

  • Rethinking Tariffs: Tequila Shows There’s More to Imports Than Competition

    Rethinking Tariffs: Tequila Shows There’s More to Imports Than Competition

    To say that international trade has dominated the news in recent weeks would be an understatement. Last month, President Trump followed through on his promise to impose 25% tariffs on Canada and Mexico, and an additional 10% on China. While Mexico—and to a lesser extent, Canada—received another temporary reprieve, the threat of tariffs still looms.

    It is crucial to understand the potential impacts of these tariffs on U.S. agriculture. In his recent State of the Union Address, as well as in subsequent social media posts, President Trump claimed that the new round of tariffs would result in increased domestic agricultural sales. There is an element of truth to this claim. According to economic theory, tariffs can lead to a rise in domestic sales—if the imported product directly competes with a similar domestic product. However, this does not apply to commodities like soybeans or cotton, as the U.S. exports far more of these products than can be consumed domestically. For example, more than 70% of U.S. cotton production is exported. In fact, these sectors are particularly vulnerable because they are often the target of retaliatory tariffs. Also, any increase in domestic sales resulting from tariffs has less to do with firms facing less competition and more to do with the fact that tariffs lead to higher domestic prices. These higher prices, in turn, encourage more domestic producers to sell their products. While this benefits producers, it unfortunately disadvantages importing firms and consumers, with the disadvantages far outweighing any gains. 

    Imports should not be regarded solely as competition to American production. This perspective neglects the essential role imports play in meeting demands that exceed domestic capabilities. International trade is far more complex than the simplistic notion that “exports are good, imports are bad.”

    Tequila, an agricultural product imported entirely from Mexico and cannot be produced elsewhere, serves as a prime example for examining the harmful impacts of proposed tariffs. U.S. imports of distilled spirits have soared by over 300% since 2000, largely driven by the extraordinary growth in tequila imports. Between 2000 and 2024, tequila imports skyrocketed by 1,400%, rising from $350 million to $5.4 billion (Figure 1). In 2024, U.S. agricultural exports totaled $176 billion, while imports reached $214 billion, resulting in an agricultural trade deficit of $38 billion. Remarkably, tequila alone accounts for over 14% of this deficit, despite being a single, highly differentiated product. Over the past decade, our growing taste for tequila has driven a more than five-fold surge in demand and imports. Imagine the outrage if tequila imports were banned simply to address the agricultural trade deficit.

    I recently conducted research on the impact of a 25% tariff on Mexico and Canada on U.S. imports of distilled spirits (https://doi.org/10.1002/agr.22034). My findings indicate that such a tariff would reduce imports by over $1 billion, far outweighing any potential tariff revenue gains. This overall decline is primarily driven by a significant drop in tequila imports, though imports of other spirits would also decrease due to complementarities in importing.

    It could be argued that these losses would primarily impact the exporting country—Mexican tequila companies. However, this perspective overlooks the fact that U.S. tequila consumption also supports American bars, retailers, wholesalers, and distributors. When factoring in the downstream economic impact, the losses become even more substantial. Clearly, it would be difficult to prove that American largess is enriching Mexican agave farmers at the expense of U.S. agricultural producers.

    Figure 1. U.S. Imports of Tequila and Other Spirits: 2000 – 2024

    Source: U.S. Department of Agriculture, Foreign Agricultural Service (2025)

    For more information:

    Muhammad, A. (2025), Trump Tariffs 2.0: Assessing the Impacts on US Distilled Spirits Imports. Agribusiness. https://doi.org/10.1002/agr.22034

    Muhammad, Andrew. “Rethinking Tariffs: Tequila Shows There’s More to Imports Than Competition.” Southern Ag Today 5(12.4). March 20, 2025. Permalink

  • Estimating the Impact of Low Mississippi River Levels on Soybean Basis in the Midsouth

    Estimating the Impact of Low Mississippi River Levels on Soybean Basis in the Midsouth

    Extreme weather events, like drought, jointly impact agricultural production and rural infrastructure, including transportation infrastructure. An important part of this transportation infrastructure is the Mississippi River. It serves as one of the most critical networks for moving agricultural commodities from production to consumption areas, including export markets. In 2020, U.S. agricultural exports totaled $146 billion, increasing 7 percent year over year (U.S. Department of Agriculture’s Foreign Agricultural Service, 2021). Approximately 46 percent of grain exports were moved by barge in 2020. Soybeans, the leading U.S. agricultural export, rely heavily on barge transportation, with 53 percent of exports and 28 percent of total supplies moved by barge in 2020.

    Despite this reliance on barges for moving U.S. grain, little is known about the link between extreme weather, rural transportation infrastructure, and crop prices. In 2022 and 2023, the Lower Mississippi River reached historic lows. In October, the U.S. Geological Survey (USGS) Memphis stream gauge read -12.0 feet and -10.8 feet in 2023 and 2022, respectively. The previous record was set in 1988 when the USGS Memphis stream gauge read -10.7 feet. These record-low water levels increased transportation costs and barge freight rates as documented by previous Southern Ag Today articles (Biram, et al., 2022; Gardner, Biram, and Mitchell, 2023; Biram, Mitchell, and Stiles, 2024). Higher transportation costs are transmitted to row crop producers through lower cash bids or a weakening of local crop basis (calculated as the cash price minus the futures price). Historic lows in Mississippi River levels during the fall harvest of the last three years have highlighted the need to measure the impact of these low river levels on rural infrastructure and communities.

    Mitchell and Biram (2025) measure the impact of low water levels on the Mississippi River using Arkansas soybean basis data across 12 regional grain markets from USDA’s Agricultural Marketing Service and stream gauge data from USGS. They use a “low river” status measure that affects a grain market once the river gauge height falls below negative five feet and is weighted by the distance between a grain elevator and the closest public Mississippi River port.  They find that when the river stream gauge in Memphis, Tennessee reads -5 feet, Arkansas soybean basis weakens (widens) by $0.58 per bushel, $0.29 per bushel, and $0.12 per bushel for grain markets that are 5 miles, 10 miles, and 25 miles from the closest Mississippi River port, respectively. Similarly, they find that Mississippi soybean basis weakens (widens) by $0.55 per bushel, $0.28 per bushel, and $0.11 per bushel for the same distances to grain markets. Figure 1 below shows the degree of the impact of low river levels on soybean basis in Arkansas with markets near the river experiencing weaker basis than of those further from the river.

    Figure 1. Impact of Low Mississippi River Levels on Soybean Basis in Dollars per Bushel in Arkansas

    Note: Each line represents a different stream gage height threshold. The term “marginal effect” denotes the change in Arkansas soybean basis, measured in dollars per bushel, for every additional mile between a grain market and a river port.

    References

    Biram, Hunter, John Anderson, Scott Stiles, and Andrew McKenzie. “Low Water Levels in the Mississippi River Result in Abnormally Weak Soybean Basis“. Southern Ag Today 2(45.1). October 31, 2022. Permalink

    Biram, Hunter, James L. Mitchell, and H. Scott Stiles. “Low Rivers Levels on the Mississippi River: Not the Three-Peat We Want.” Southern Ag Today 4(39.3). September 25, 2024. Permalink

    Gardner, Grant, Hunter Biram, and James Mitchell. “Low River Levels, Barge Freight, and Widening Basis.” Southern Ag Today 3(39.1). September 25, 2023. Permalink

    Mitchell, J. L., & Biram, H. D. (2025). The effects of extreme weather on rural transportation infrastructure and crop prices along the Lower Mississippi River. Applied Economic Perspectives and Policy.

    Biram, Hunter, and James L. Mitchell. “Estimating the Impact of Low Mississippi River Levels on Soybean Basis in the Midsouth.” Southern Ag Today 5(12.3). March 19, 2025. Permalink

  • COF Report Amid Declining Prices

    COF Report Amid Declining Prices

    This Friday brings the next USDA Cattle on Feed (COF) report.  The March 21st report will include data for February and the number on feed as of March 1st.  This report comes amid cattle market price volatility and declining fed cattle prices throughout February.

    There are three big numbers in the COF report: marketings, placements, and COF.  Last year was leap year so there was one less working day in February 2025 compared to last year.  Marketings should be about 8 percent smaller than last year.  Some of that comes from one less day in the month but, it is also indicative of smaller slaughter rates in February.  Placements are expected to be more than 10 percent smaller than last year.  One factor is that feeder cattle imported from Mexico only just began to trickle in during the first week of the month.  Sharply fewer cattle were reported in the CME feeder cattle index compared to a year ago.  Fewer feeder cattle available should be taking its toll on placements.  Any slowdown in heifer placements will further cut numbers.  Finally, feedlot placements in February 2024 were very large so, normally, smaller February placements will look like a big percentage change from a year ago.  That leaves the number of cattle in feedlots more than 1 percent smaller than last year.  Some sharp reductions in feedlot supplies have to come sooner or later given the cow herd.  This report may provide some evidence of supply contractions.

    From January 30th to March 6th the 5-market fed cattle weighted average steer price declined from $210.10 to $195.00 per cwt.  (the 5-market average price was back over $200 per cwt at the time of this writing).  Falling fed cattle prices certainly contributed to lower feeder prices during February.  Falling fed cattle cash prices and futures prices may have cut some placements too.  February and early March saw swings of about $50 per cwt., down and back up, in 400-500 pounds steer prices.  The weekly average Choice boxed beef cutout declined about $15 per cwt over the same time period.  Fed cattle weights continue to be heavier than last year, supporting beef production even though feedlot marketings are fewer than last year. 

    On balance, it’s going to be an interesting report if the number of cattle on feed declines close to 2 percent.  The tighter supplies will provide more support for higher prices but, also some more opportunity for price volatility.  

    Anderson, David. “COF Report Amid Declining Prices.” Southern Ag Today 5(12.2). March 18, 2025. Permalink

  • Understanding Patronage Distribution of Farm Credit System Association

    Understanding Patronage Distribution of Farm Credit System Association

    Introduction

    When producers need to borrow money, they have several options, including commercial banks, insurance companies, and machinery/equipment financing companies. The Farm Credit System (FCS) has historically been one of the largest agricultural lenders in terms of loan volume, representing 40% of farm production loans and 49% of farmland real estate loans. 

    FCS distinguishes itself from other types of lenders by providing more flexible loan terms that align with seasonal cash flows and the expertise of loan officers who possess deep knowledge of local agricultural markets. One of the largest differences is their patronage refund system, which effectively reduces borrowing costs for its members.

    Patronage Distribution of FCS and Recent Trends

    As cooperatives, FCS associations distribute a portion of their earnings back to their members through patronage dividends. Producers who borrowed money from the FCS receive a portion of the lender’s profits back through patronage distribution. This can take the form of cash payments, allocated equity, or a combination of both. 

    For example, suppose you take out a loan with an 8.5% interest rate from a local FCS association. At a designated time of the year, your lender distributes patronage, and you receive a 1% refund. Your effective interest rate is now 7.5%, after factoring in the refund. This process effectively lowers borrowing costs, strengthens member relationships, and reinforces the cooperative model by ensuring that profits benefit the borrowers who generate them.

    In recent years, several FCS associations have significantly increased their patronage distributions mostly driven by increased loan volume, setting new records for returning earnings to members. For instance, Farm Credit East announced a record $140 million patronage distribution for 2024, effectively reducing borrowers’ interest rates by 1.25%. Similarly, Farm Credit Mid-America plans to return $260 million in 2025, marking the largest distribution in its history and bringing its total patronage returned since 2016 to over $1.5 billion. Other associations, such as AgTrust Farm Credit and Farm Credit Services of America, have also expanded their patronage programs, ensuring that a greater portion of earnings is reinvested into the agricultural economy through member returns.

    The Impact of Patronage on Agricultural Borrowers

    While patronage distribution is a significant benefit, they are not guaranteed, and other loan terms beyond patronage should be considered when evaluating loan options. However, the patronage distribution of local FCS associations should not be overlooked. By reducing effective interest rates, these distributions ease financial burdens on farmers and agribusinesses, allowing them to reinvest savings into operations, expansion, and innovation.

    Additionally, strong patronage programs reinforce borrower loyalty and trust in the cooperative model, distinguishing FCS institutions from traditional lenders. As patronage remains a key component of the FCS structure, its continued growth will play a vital role in supporting American agriculture in an increasingly competitive economic landscape.

    Gladney, Heather, and Kevin Kim. “Understanding Patronage Distribution of Farm Credit System Association.” Southern Ag Today 5(12.1). March 17, 2025. Permalink