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  • Threat Looms and Urgency Grows as New World Screwworm Inches Closer to the Texas-Mexico Border

    Threat Looms and Urgency Grows as New World Screwworm Inches Closer to the Texas-Mexico Border

    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).

    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

    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

  • China’s Pivotal Role in the Global Cotton Market

    China’s Pivotal Role in the Global Cotton Market

    As a leading importer of cotton, China plays a pivotal role in shaping the international cotton market (Figure 1). China’s cotton imports are highly regulated by government policy, with centralized guidance through a tariff-rate quota (TRQ) system. The TRQ allows a specified amount of cotton (quota, currently at 894,000 tons) to be imported at a lower tariff rate (1%). Imports exceeding the quota are subject to a significantly higher tariff rate (currently at 40%). China adjusts these quotas annually in accordance with World Trade Organization (WTO) rules. Through this mechanism, the government can set cotton import policies in coordination with its reserve programs.

    In 2017, just prior to the first round of the U.S.–China trade war, China produced 27 million bales of cotton. This made China the second-largest cotton producer after India, which produced 29 million bales. Despite this high level of domestic production, China still ranked as the world’s third-largest importer in 2017, after Bangladesh and Vietnam. Since 2017, China’s share of global cotton imports has ranged from 12% to 34%, largely due to its cotton reserve programs and the import quota system.

    In 2023, the above-noted China policies prompted a high volume of cotton imports, which significantly influenced global cotton markets. This import surge was driven by favorable (low) cotton prices and anticipation of trade uncertainties in the 2024 marketing year following the U.S. election. As a result of the large imports in 2023, China’s need for cotton imports in 2024 declined substantially, while domestic cotton production was boosted to a high level. A similar period of disruption occurred in 2012–2014, when China responded to the 2011 price spike by building up massive reserve stocks. For the next three years, those reserves were drawn down in place of imports, sharply reducing China’s buying from the world market. This shift put heavy pressure on global demand, and U.S. cotton prices eventually slid from the 80–90 cent range per pound back down to more typical long-run levels. In the 2025 crop year, China is projected to produce 31.5 million bales of cotton, the highest among all producing countries. Nevertheless, it also imported 5.3 million bales, ranking just behind Bangladesh (8.1 million), Vietnam (8.0 million), and Pakistan (5.9 million). 

    China’s role in the global cotton market has important implications for U.S. growers. Even as the world’s largest cotton producer, China continues to import significant volumes of cotton, and these purchases can swing sharply from year to year depending on government policies, reserve levels, and trade dynamics. These swings in demand can create added risk and unexpected price volatility, even during the fall season, when U.S. growers typically anticipate harvest-time pressures. For U.S. growers, keeping an eye on China’s policy changes and trade relations is critical, as these factors directly affect global cotton prices and export opportunities. Ultimately, China’s decisions will remain a key driver of market conditions that shape the fortunes of cotton producers worldwide.

    Figure 1. Top Five Global Cotton Importers by Country and Year

    Data from the U.S. Department of Agriculture, Foreign Agricultural Service, Production, Supply and Distribution Database. 

    Liu, Yanguan, Gopinath Munisamy, and John Robinson. “China’s Pivotal Role in the Global Cotton Market.” Southern Ag Today 5(39.3). September 24, 2025. Permalink

  • Feedlot Placements and Marketings Down Sharply from Year Ago

    Feedlot Placements and Marketings Down Sharply from Year Ago

    The USDA’s latest Cattle on Feed report showed continued tightening of feedlot supplies. Total cattle on feed was down only 1.1 percent from a year ago, but both placements into feedlots and marketings out of feedlots were sharply below year-ago levels.

    As of September 1, feedlots with 1,000 head or more reported 11.1 million cattle on feed. Placements during August were 1.78 million head, a 9.9 percent decline from August 2024. Placements were lower across all weight classes. This was the lowest August placement total since 2015. 

    At 1.57 million head, fed cattle marketed in August dropped 13.6 percent from a year ago. This was the lowest August marketing level since the series began in 1996. Excluding the early months of the pandemic, August 2025 was also the lowest marketings total of any month since 2015. There was one less slaughter day this year, which accounted for some of the difference, but this is still a very low marketings total. 

    Regional differences are stark. The three largest cattle feeding states are Texas, Nebraska, and Kansas, which combine for about 65 percent of total cattle on feed. Despite smaller placements, cattle on feed in Nebraska was up 4.7 percent, and Kansas was up 3.1 percent. Meanwhile, the number of cattle on feed in Texas was 9.1 percent below September 2024, driven by an 18 percent decline in placements into Texas feedlots. The closure of the southern border to imports of feeder cattle due to concerns of New World Screwworm is impacting southern feedlots and could lead to Texas being surpassed by Nebraska as the largest cattle feeding state in the coming months. 

    Nebraska has surpassed Texas in monthly totals only nine times, with most of those instances occurring during 2014-2016 and driven by severe drought reductions in Texas cattle. On September 1, Texas had 70 thousand head more cattle on feed than Nebraska and 150 thousand more than Kansas. This is much tighter than the 430 thousand and 470 thousand differences from a year ago. The 150 thousand head difference between Texas and Kansas is the closest since 1992.

    Overall, this report was pretty telling about the current dynamics of the cattle and beef sector. At the national level, placements and marketings slowed sharply in August. A closer look at state-level statistics shows the shift northward in cattle feeding numbers as southern feeders face even tighter supplies. 

    Maples, Josh, and David Anderson. “Feedlot Placements and Marketings Down Sharply from Year Ago.” Southern Ag Today 5(39.2). September 23, 2025. Permalink

  • Understanding the H-2A Labor Affordability Issue

    Understanding the H-2A Labor Affordability Issue

    Foreign workers hired under the H-2A Guest Farm Worker program are assured of being paid at least the Adverse Effect Wage Rates (AEWRs) determined through a federally designed mechanism.  The AEWR determination process serves a two-fold objective: (1) to look after foreign workers’ welfare by assuring they are paid at just, fair wage levels and (2) to ensure that H-2A wages would not “adversely” affect U.S. farm labor market conditions, which could happen if such workers are paid at very low wages that could depress the domestic workers’ market wage rates.

    Except for AEWRs set monthly for range occupations (i.e. farms engaged in herding or livestock production operations performed on a range), the wages of the majority of H-2A hires are guided by a single annual rateprescribed for 18 farming territories – consisting of 3 states (California, Florida, and Hawaii) and 15 regions (Figure 1).  Under existing H-2A program guidelines, the AEWR for the current year is derived from the average wage data collected by the National Agricultural Statistics Service (NASS) in the preceding year’s Farm Labor Survey (FLS). A singular state/regional AEWR for non-range field and livestock workers (for such farm work positions as graders, sorters, equipment operators, crop/nursery/greenhouse workers, ranch/aquaculture farm workers, packers, and packagers) is derived as the average of the FLS wage data for six Standard Occupational Classification (SOC) codes and titles.

    Despite its economic and market arguments, the AEWR-setting mechanism often drew criticisms. Some contend that state/regional-level AEWRs could be too high.  This especially applies to the last two years, when some farming territories experienced abrupt, radical spikes in their AEWRs.  This year, the prevailing national AEWR is $17.74 per hour, which is 18.01% over the 2022 rate and translates to an annual average nominal growth of 5.68% over the last three years.  This rate exceeds historical nominal AEWR growth trends estimated at only 3.52% between 1991 and 2022.  

    In understanding the H-2A affordability issue, the following issues need to be clarified.  

    • First, AEWR hikes are market-determined and reflect the previous year’s elevated market equilibrium rates.  It follows that higher AEWRs indicate an aggressive farm labor market, where domestic workers are paid higher wages for farm jobs.
    • Second, the H-2A affordability issue under rising AEWRs becomes more concerning when the program’s mandated comprehensive compensation package is accounted for in the compensation equation.  Calvin, Martin, and Simnitt (2022) estimate a 5% wage premium added to the AEWR when calculating total H-2A compensation.  The suggested premium accounts for the mandated additional H2A fringe benefits (including housing, meals, transportation, and insurance) that could add $2.55 per hour in hourly wages but also considers offsetting employers’ benefits realized from non-payment of SS & unemployment taxes.
    • Finally, there is the aggregation issue employed in the existing AEWR determination process.  Geographic aggregation (AEWRs for 18 geographic entities) raises questions on whether an AEWR set for several states in a region accurately captures local labor market conditions at the state level. 

    In this article, we investigate another form of aggregation that sets one AEWR for all types of jobs and industry employers based on wage data collected from a selected core of 6 SOC-classified jobs.  Table 1 shows that the selected six SOC job titles comprise the bulk (96.46%) of all H-2A workers hired in 2024.  The resulting differentials between the national average AEWR for 2024 ($16.98 per hour) and the average hourly wage for each SOC job category are all negative, thus establishing a cheaper H-2A hiring option since AEWR is consistently lower than all six domestic farm wage rates.  When the H-2A mandated comprehensive remuneration package with fringe benefits is included in the equation (“adjusted AEWR” in Table 1), three negative wage differential results are registered (meaning H-2A labor is cheaper than domestic labor).  Notably these negative results apply to three SOC job positions that comprise 91.62% of all H-2A hires in 2024.  

    All told, our analysis makes an important clarification on the affordability of H-2A workers.  Our results indicate that at the national level, most U.S. farm employers of H-2A workers in 2024 find that such employment decisions have not been generally more costly than the domestic farm employment option. However, we qualify our deduction by clarifying that our analysis here is confined only to the aggregation of job categories and farm industries.  Our further research in this area will attempt to validate if such trends in wage differentials and their implications on H-2A labor affordability persist at the state-level under more differentiated, localized farm labor market dynamics and conditions.

    Figure 1.  State and Regional Adverse Effect Wage Rates, 2025

    Sources:  American Farm Bureau Federation and USDA-National Agricultural Statistics Service

    Table 1.  H-2A Employment, National Average Wages, and Wage Differentials Relative to AEWR under the Standard Occupational Classification (SOC) Codes Used in the AEWR Formula, 2024

    SOC CodeJob TitleNumber of Certified H-2A WorkersPercent of All Certified H-2A Workers (%)National Average Hourly Wage (NAHW)Difference between AEWR and NAHW1Difference between Adjusted AEWR and NAHW2
    $ per Hour
    45-2041Graders and Sorters, Agricultural Products1.2460.3218.35(1.37)(0.52)
    45-2091Agricultural Equipment Operators31,8378.2719.35(2.37)(1.52)
    45-2092Farmworkers and Laborers, Crop, Nursery, and Greenhouse319,54583.0318.30(1.32)(0.47)
    45-2093Farmworkers, Farm, Ranch, and Aquacultural Animals18,0424.6917.45(0.47)0.38
    45-2099 Agricultural Workers, All Other550.0117.75(0.77)0.08
    53-7064Packers and Packagers, Hand5080.1317.40(0.42)0.43
    Notes:  1 The 2024 national AEWR is $16.98/hour.
    2  The 2024 AEWR is adjusted by a 5% incremental factor to account for H-2A’s mandated fringe benefits (housing, meals, transportation, and health insurance, among others)
    Sources:  USDA National Agricultural Statistics Service and Department of Labor

    Table 1.(Image Format) H-2A Employment, National Average Wages, and Wage Differentials Relative to AEWR under the Standard Occupational Classification (SOC) Codes Used in the AEWR Formula, 2024

    References:

    Calvin, L., P. Martin, and S. Simnitt. (2022). Adjusting to Higher Labor Costs in Selected U.S. Fresh Fruit and Vegetable Industries. EIB-235, Economic Research Service, U.S. Department of Agriculture, Washington, DC.

    Escalnate, Cesar L., Naimul Bhuiyan, and Joshua Emmanuel. “Understanding the H-2A Labor Affordability Issue.” Southern Ag Today 5(39.1). September 22, 2025. Permalink

  • Federal Estate Taxes, Succession Planning and the One Big Beautiful Bill

    Federal Estate Taxes, Succession Planning and the One Big Beautiful Bill

    “In this world nothing can be said to be certain, except death and taxes” – Benjamin Franklin, 1789. 

    On July 3rd, 2025, the passage of H.R. 1, commonly known as the One Big Beautiful Bill, made several changes to federal spending that directly impact American agriculture, including a permanent increase to the unified credit to $15 million per individual starting in 2026 and indexed to inflation moving forward. Why does this matter to American agriculture? Without the change to the unified credit in H.R.1, the credit would have sunset back to the 2018 amount of $5 million per individual adjusted for inflation which would have been around $7 million. For estates over the amount of the unified credit, the maximum estate tax rate is 40% of the net worth that exceed the current unified credit. As a simplified example, if a farmer owns a tractor worth $100,000 and has already used their unified credit, then their estate would need to pay $40,000 in taxes for that tractor at their death.

    While $7 million sounds like a tremendous amount of money to an individual, in an economic reality where farm equipment can cost more than $800,000 per piece of equipment and land can bring more than $20,000 per acre in certain parts of the country, this credit can be rapidly expended. The net worth over this amount would be subject to the estate tax. A popular saying amongst producers is that farmers are “asset rich and cash poor.” This means that succeeding generations could be forced to sell off land or equipment to meet estate tax obligations. This has not been the case over the past several years because of the high unified credit, so the estate tax has only been an issue for some of the larger farms in the country. There is also the issue of portability, which is combining the unified credits of married couples with some simple estate and tax planning. Portability essentially allows the surviving spouse to double the unified credit in many cases. With a high unified credit and portability, this makes the likelihood of the vast majority of farming operations paying estate taxes remote for the immediate future.

    So, does this solve the problem? H.R. 1 resolves one problem centered on the estate tax; however, a larger problem is looming for American agriculture, and that is the lack of succession planning. Suppose the principal operator of a farming operation is incapacitated in the immediate future. Do other members of the farming operation have the necessary experience and knowledge to keep the farm economically viable? Has the older generation planned and prepared for a transition in a way that may not fracture relationships between members of the younger generation? Because farms and families are unique, this means that succession plans are also going to need to be carefully tailored to meet their specific needs. Attorneys and CPAs have not done a good job of convincing their farm clients of the importance of succession planning, and farmers are more than willing to put off the issue to a later date. The problem is that Benjamin Franklin was correct when he stated that death was a certainty. Avoiding succession planning does not make the problem go away, it just leaves an even larger burden on the next generation. 

    Rumley, Rusty. “Federal Estate Taxes, Succession Planning and the One Big Beautiful Bill.” Southern Ag Today 5(38.5). September 19, 2025. Permalink