A significant change to the Endangered Species Act (“ESA” or the “Act”) was proposed on April 17, 2025 which could significantly change the landscape to which ESA is applied, quite literally. The U.S. Fish and Wildlife Service (“FWS”) and National Oceanic and Atmospheric Administration (“NOAA”) (collectively the “Services”) propose to eliminate the current regulatory definition of “harm” under the Act. The ESA declares it unlawful for any person to “take” an endangered or threatened species. The Act defines a “take” as acts which “harass, harm, pursue, hunt, shoot, wound, kill, trap, capture, or collect, or to attempt to engage in any such conduct.”[i]In 1995, the Services, through the regulatory rulemaking process, defined “harm” to include significant habitat modification or degradation which actually kill or injure protected species by affecting behavior patterns.[ii] This definition has proven problematic for energy producers, agriculturalists, and foresters whose privately owned land may encompass suitable habitat for endangered or threatened species, even though the species itself may not actually be found there.
An extreme example of this came to a head in 2001, when owners of a Louisiana tree farm brought suit against FWS for designating 1,500 acres of the privately owned farm as critical habitat under the ESA because two historical breeding sites of the protected Mississippi gopher frog were located there even though the frog had not been observed there in nearly 40 years. Despite the ESA providing the Services authority to exclude areas from critical habitat designation where the benefits of such exclusion outweigh the designation,[iii]conflict between farmers and ranchers in the southeast and application of the ESA to habitats for protected species such as the whooping crane, eastern indigo snake, gopher tortoise, red wolf, and others has intensified. The Services now propose to rescind the current definition of “harm” under the Act, stating that it is inconsistent with the statutory language, unnecessary, and does not reflect the single best meaning of the statutory text. The Services suggest that the word “harm” in the statute is clear enough without expounding further upon the term as the current regulatory definition does.
Though not yet final, the Services’ proposal to rescind the definition of “harm” is primed for legal challenges. The proposed rule would narrow the scope of the ESA’s reach by removing mention of habitat in consideration of whether one has harmed a protected species. This would have broad implications for energy producers, ranchers, loggers, and developers across the U.S. The proposed rule is open for public comment through May 19, 2025.[iv]
[ii] 50 CFR 17.3. This definition was upheld by the U.S. Supreme Court in Babbit v. Sweet Home Chapt. Comms. for Ore. 51 U.S. 687 (1995). relying on the Chevron doctrine of agency deference which has since been overturned. See Loper Bright Enterprises v. Raimondo, 603 U.S. ___ (2024).
Commodity programs in Title I of the Farm Bill and the Federal Crop Insurance Program (FCIP) are the primary risk management tools available to agricultural producers. In a previous SAT article, Fischer and Biram (2025) discussed the suite of risk management tools available to cotton producers, the intention of Title I programs to supplement tools in the FCIP, and the different combinations allowed for producers to use in a risk management strategy. Notably, they discuss how base acres enrolled in either Price Loss Coverage (PLC) or Agriculture Risk Coverage (ARC) cannot be enrolled in the Stacked Income Protection (STAX) program. Since 87% of historical seed cotton base acres have been enrolled in PLC (USDA-FSA, 2025), with nearly all base acres enrolled in 2019 and 2020, this discussion focuses on the complementary nature of STAX and PLC.
On the surface, STAX and PLC may appear to be similar programs authorized under different pieces of legislation. However, a closer look reveals stark differences. STAX is a tool in the FCIP which provides protection against revenue losses based on a chosen coverage level, a cotton lint futures price, and a county cotton lint yield. PLC is a counter-cyclical target price program under Title I in the Farm Bill which provides only price downside protection determined by the effective reference price (ERP) and a Marketing Year Average Price (MYAP) for seed cotton. The ERP is a function of the statutory reference price determined by federal law and historical market conditions. More specifically, the seed cotton price is a production-weighted average of upland cotton lint and cotton seed prices (see Shurley and Rabinowitz, 2018and Liu, Rabinowitz, and Lai, 2019a). STAX requires a premium to be paid by the producer while PLC requires no out-of-pocket cost for enrollment. STAX pays indemnities based on planted acres and county cotton lint yield and price, while PLC payments are based on base acres and MYAP for seed cotton.
While STAX and PLC both provide price risk protection, it is in different markets and under different conditions. STAX provides price risk protection against declines in the futures market between planting and harvest with different regions of the country facing different price determination periods – and only to the extent that those declines are not offset by yield gains (see Liu, Chong, and Biram, 2024). PLC provides price risk protection against declines in the cash market within a crop marketing year which is August 1st through July 31st of the following calendar year (USDA-FSA, 2023). PLC protection is triggered when the MYAP falls below the ERP with the PLC payment rate being the difference between the ERP and MYAP.
Since these two risk management tools provide different forms of price protection, it is no surprise that STAX indemnities based on price losses (i.e., in excess of any offsetting yield gains) differ from PLC payment rates. In the period authorized for risk protection in the 2018 Farm Bill (i.e., 2018-2024P), there was only one year in which both programs triggered, with 2024 projected to trigger at current prices. In 2019, the PLC payment rate for seed cotton was $0.0612/lb (see Figure 1) while the cotton lint STAX indemnity for price loss would have been $0.0310/lb (see Figure 2) which only would be for the 90% coverage level. There were three years when one program would have triggered when the other did not (2018, 2020, and 2022). The remaining two years saw no payments triggered by either program.
We acknowledge that these payment rates are based on different triggers (i.e., weighted average seed cotton price versus cotton lint price) and refrain from discussing the magnitude of the differences. Instead, we emphasize the fact that these programs often do not trigger in the same year, reinforcing the idea that these differences imply the need for risk protection in both the cash and futures markets, mitigating basis risk (see University of Arkansas fact sheet). As a result, Congress may wish to consider making both PLC and STAX available for a producer to use in the same crop year since they meet different risk management needs.
Figure 1. Historical Performance of Price Loss Coverage (PLC) for Seed Cotton (2018-2024P) This figure shows the years in which a seed cotton PLC payment triggered. The orange bars show the MYAP, while the yellow dashes show the ERP. The triangles denote the PLC payment rate recorded that year. When the orange bar is the below the yellow dash, a PLC payment triggers, and the triangle depicts the payment rate.
Figure 2. Historical Performance of Stacked Income Protection (2018-2024P) This figure shows the years in which a STAX payment would have triggered in a county with constant yields. That is, if the county yield did not fall, it depicts what the Harvest Price would have to fall to in order for an indemnity (i.e., insurance payment) to trigger. The blue and green bars show the price guarantee based on 85% and 90% coverage levels of STAX, respectively, while the red dashes show the RMA Harvest Price. The blue and green triangles denote the STAX indemnity recorded for the 85% and 90% coverage levels, respectively, in a given year. When the blue or green bar is below the red dash, a STAX indemnity triggers, and the triangles depict the payment rate.
References
Biram, H.D. and Connor, L. (2023). Types of Federal Crop Insurance Products: Individual and Area Plans. University of Arkansas System Division of Agriculture, Cooperative Extension Service Fact Sheet No. FSA75. https://www.uaex.uada.edu/publications/pdf/FSA75.pdf
Fischer, Bart L., and Biram, H.D. “STAX and PLC: Should Cotton Producers Have to Choose?” Southern Ag Today 5(15.4). April 10, 2025. Permalink
Liu, Y., Rabinowitz, A. N. & Lai, J. H. (2019). Understanding the 2018 Farm Bill Effective Reference Price. Department of Agricultural and Applied Economics, University of Georgia. Report No. AGECON-19-02PR. July 2019.
Liu, Y., Rabinowitz, A. N. & Lai, J. H. (2019). Computing the PLC and ARC Safety Net Payments in the 2018 Farm Bill. Department of Agricultural and Applied Economics, University of Georgia. Report No. AGECON-19-13PR. November 2019.
Shurley, D. & Rabinowitz, A. N. (2018). MYA Prices and Calculating Payments with the Seed Cotton PLC. Department of Agricultural and Applied Economics, University of Georgia. Report No. AGECON-18-03. February 2018.
International markets support U.S. agriculture, especially in the Southern states. Exports make up a significant portion of cash receipts for many major commodities produced in the Southern states (Figure 1). From 2010 to 2023, an average of 84% of cotton receipts came from exports, underscoring the crop’s reliance on global trade. Wheat and soybeans also depend heavily on international markets, with exports accounting for 64% and 55% of their respective receipts. In contrast, corn is less export-oriented, with just 19% of receipts linked to foreign buyers[1]. This level of exposure makes Southern agriculture especially sensitive to tariff changes and trade policy shifts. During periods of uncertainty, a well-informed marketing and risk management strategy is often the best defense producers have against market volatility.
A well-developed marketing and risk management plan is essential for producers facing today’s volatile markets. While trade uncertainty is a significant source of price swings, volatility is a constant in agriculture—driven by weather, input costs, and global events. Trade is one of the dominant factors right now. Regardless of the cause, producers should expect uncertainty and be ready to manage price risk each crop year. A strong marketing and risk management plan is the best tool for navigating uncertainty. Crucially, the plan should be written down and shared with everyone involved in the operation to ensure clear communication and timely decisions. Growing a crop and marketing a crop involve two completely different skill sets, so communication between those in charge of production and those in charge of marketing and risk management is essential.
The most significant value of a marketing plan is determining sales timing, which should coincide with when production risk is reduced, and what action should be taken at different price points. Trying to time price peaks in markets shaped by unpredictable trade shifts is often ineffective and can be risky. Instead, a solid marketing plan sets decision dates, creating structure around when and how much to sell if markets achieve price targets. Dates should be tied to when production risk is reduced and be informed by realistic price targets, helping producers stay disciplined and focused on financial goals while taking some of the emotion out of pricing decisions. The key is to make sales when prices meet or exceed profit objectives at strategic points in the production/marketing year—even if prices might rise later. Especially in tight-margin years, locking in profits when available can be critical to the operation’s financial success.
Producers may benefit from a more proactive sales strategy in today’s challenging market environment when profit opportunities arise. For instance, a summer weather rally that pushes prices higher could present a good time to forward contract or price additional bushels before harvest. While aggressiveness in pre-harvest marketing will vary depending on each producer’s risk tolerance, defining that comfort level in advance is essential. The best marketing decisions are those made with forethought—not in the heat of the moment. In years with tight margins, relying on chance is a risk most operations can’t afford.
Figure 1. Export Contribution to Southern Ag Receipts, Observed and Average Share by Commodity, 2010-2023
[1] Estimates do not include by products for crops such as ethanol, dried distiller grains (DDGs), soybean oil, and soybean meal.
Last week, the 5-area market weighted average fed steer price topped $220 per cwt for the first time on record. This was a $35 increase from a year ago and up $20 per cwt since the start of the year. The CME June Live Cattle futures contract closed above $213 per cwt on Monday – also a record high for that contract. Looking across a longer time frame, the trends of fed cattle weights and beef quality grades over time are interesting. As shown on the dressed weight chart, fed cattle dressed weights have increased over time. Technological advances in raising cattle have allowed the sector to produce more beef per head. The chart shows a few years of declining weights and seasonal patterns within years, but the general trend is increasing fed steer weights over time. Assuming a 62.5 percent average dressing percentage, a 950-pound dressed weight would equal a 1,520-pound live weight. Larger weights in 2024 boosted beef supplies to offset fewer head processed.
Another interesting (and related) trend is that of quality grades over time. The grading percent chart shows the percentages of fed cattle grading Prime, Choice, and Select weekly since 1998. Choice carcasses represented about 50-55 percent of the cattle in the 2000s but have more recently been hovering in the 75 percent range. Meanwhile, the percentage of cattle grading select has declined from roughly 35 percent in the early 2000s to less than 15 percent in recent years. Genetic improvements, cow-calf and stocker management practices, and feedlot technologies have played roles in this increase. It is also worth noting the more recent increase in carcasses grading prime. For the past few weeks, more cattle have graded prime than select. About 3-4 percent of cattle graded prime in the 2000s compared to 10-12 percent in recent years.
Limited labor availability has been a constant challenge for many American farmers. While labor shortages impacting the agricultural sector have been well documented by economists and highlighted by the popular press, the focus has been on the need for workers in labor-intensive sectors, like the production of fruits and vegetables. The emphasis on these industries is well deserved. According to data from the USDA, labor costs can be as high as 35% for fruit and nursery farmers, and their dire need for workers has been reflected in their growing reliance on foreign temporary workers coming under H-2A visas. Less attention has been paid to the labor demand of other producers, like animal sector farmers.
To better understand the specific workforce needs of livestock farmers, we conducted a survey last year of cattle and dairy producers in Wisconsin, Georgia, and North Carolina. Unlike the case of specialty crop producers, labor inputs represent a significantly smaller share of total production costs for dairy and cattle farmers (Table 1). Almost half of the survey respondents (46.86%) indicated that labor accounted for less than 5% of their total costs. Moreover, almost 96% said labor costs were no more than 25% of their aggregate bills. Animal feed, land, transportation, and fuel likely account for a larger share of total costs. Although dairy and cattle farmers might not be relying on many workers in their current operations, we wanted to know more about their plans and if they were foreseeing a subsequent jump in their need for additional workers. Nearly 60% of farmers indicated they were planning to employ about the same number of workers going forward (Table 2). Only 4.31% said they would hire more people, but 27.59% were not sure about their short-term future labor demand.
Our survey also asked farmers about their preferences towards potential modifications to the H-2A program. Under current rules, only growers of seasonal crops (commodities whose production processes take less than a year) can hire H-2A workers. This has been cited as a major limitation for dairy producers and farmers of agricultural commodities with operations running year-round. Likewise, the increasing minimum wages of H-2A laborers are a major concern among current and potential users of this program, and hiring gaps between sectors have been associated with wage disparities arising from such costs (Escalante et al., 2025). The Farm Workforce Modernization Act has been introduced in Congress multiple times but has not been passed. The proposed legislation would make several changes to the rules of the H-2A program. We shared some of the changes with respondents and asked them to indicate which was the most important for them. Interestingly, about a third cited having the government cover or subsidize housing costs (Table 3). Another third said that creating a yearly quota of H-2A workers allocated specifically to non-seasonal sectors like dairy (which would imply giving access to such farmers to the program) was their top choice. The proposed change chosen the least was legalizing currently undocumented workers (as only 5.88% of the sample selected this option).
Altogether, we document that labor represents a relatively small fraction of total costs for dairy and cattle producers. In addition, most farmers are not planning to hire many more workers in the foreseeable future. These findings suggest that access to labor is less of a constraint to animal sector producers compared to their fruit, vegetable, and indoor plant counterparts. However, the results also show that livestock producers would welcome updates to the H-2A program that would allow them to access this source of foreign legal agricultural workers. This is likely the case, as labor is still a crucial input for these farmers, given the complementarities between labor and capital. Even if labor costs represent a smaller share of their total production costs, dairy and cattle farms still need dependable workers to operate.
Table 1. Labor Costs as a Percentage of Total Production Costs
Freq.
Percent
Cum.
Less than 5%
209
46.86
46.86
5% – 6%
29
6.50
53.36
7% – 10%
61
13.68
67.04
11% – 15%
65
14.57
81.61
16% – 20%
37
8.30
89.91
21% – 25%
26
5.83
95.74
26% +
19
4.26
100.00
Total
446
100.00
Table 2. Plans to Hire Foreign Workers in the Future
Freq.
Percent
Cum.
More
5
4.31
4.31
About the same
68
58.62
62.93
Less
11
9.48
72.41
Don’t know
32
27.59
100.00
Total
116
100.00
Table 3. Top Hypothetical Changes to the H-2A Program
Freq.
Percent
Cum.
Modify rules for determination of minimum hiring wages for H-2A workers
21
6.50
6.50
Allowing H-2A workers to stay year-round
24
7.43
13.93
Allowing H-2A workers to work for multiple employers
52
16.10
30.03
Providing govt support to build and maintain workers’ living facilities
106
32.82
62.85
Legalizing undocumented farm workers
19
5.88
68.73
Creating yearly quota of workers’ visas for non-seasonal sectors like dairy
101
31.27
100.00
Total
323
100.00
References
Gutierrez-Li, A. (2024). Feeding America: How Immigrants Sustain US Agriculture. Research Paper. Center for the U.S. and Mexico. Baker Institute for Public Policy. Rice University.
Escalante, C., Gutierrez-Li, A., and Bhuiyan, N. (2025). Relating crop and livestock H-2A labor decisions to AEWR and sector wage gaps. Southern Ag. Today. Forthcoming.
Farm Labor. (2025). Economic Research Service. U.S. Department of Agriculture. Accessed online in April 2025.
