California Ag Network

Category: Ag Economics

  • Changes Proposed to National Organic Crops and Livestock List

    On March 23, 2026, the USDA Agricultural Marketing Service (AMS) National Organic Program (NOP) published a proposed rule in the Federal Register to amend the National List of Allowed and Prohibited Substances (National List). The National List is a section of the USDA organic regulations that identifies synthetic substances that are allowed, and natural substances that are prohibited, in organic production and handling.

    The Organic Foods Production Act of 1990 (OFPA) prohibits synthetic substances in organic production unless they meet specified criteria, are recommended by the National Organic Standards Board and are added to the National List. This rule would implement several recommendations from the Board from their public meetings, held in October 2021, October 2022, and October 2024:

    • Allow carbon dioxide in organic crop production.
    • Allow meloxicam as a pain treatment in organic livestock.
    • Remove restrictions on the use of methionine in organic poultry feed.
    • Affirm that natural sodium nitrate is allowed in organic crop production, with certain conditions to protect soil quality.

    A complete description of the proposed amendments to the National List is available in the Federal Register proposed rule.

    More information on the National List, including how and why substances are added, modified, or removed, is available on the National List webpage.

    Submit an Effective Public Comment

    USDA welcomes comments on the proposed changes published in the
    Federal Register. The public comment period will close 60 days after publication.

    See NOP’s Organic Integrity Learning Center microlearning module
    Writing an Effective Public Comment to learn how to submit an effective public comment. This module helps members of the organic community more effectively participate in the process of developing organic standards. Effective commenting lets us hear your voice and helps USDA better balance the needs of everyone impacted in the organic market. — By the United States Department of Agriculture

  • Lower Global Harvest Benefits American Pistachios

    Pistachio growers are having a hard time keeping up with skyrocketing global demands despite a record crop, but down years in Iran and Turkey may keep buyers from going elsewhere. Meanwhile, American Pistachio Growers has seen unprecedented opportunities for marketing and exports. At the annual APG Conference, Vice President of Global Marketing Scott Fryer discussed these latest developments with Matthew Malcolm from Pacific Nut Producer. Watch this quick interview and read more in Pacific Nut Producer Magazine.

    Please thank this video’s sponsor Kingman Ag for their industry support.

  • Fertilizer Supply Could Impact CA Growers Soon

    With the ongoing conflict with Iran, supply issues have emerged due to shipping obstructions in the Strait of Hormuz. This includes fertilizer, with The Fertilizer Institute reporting U.S. import prices up 30% between February 27 and March 6.

    Matt Morelli, a crop advisor for Nutrien, says the situation right now is not critical, but they are starting to feel the impact — and things could become more serious if not resolved soon.

    “It’s not too severe as of right now, but we definitely could experience some supply issues coming up,” Morelli said. “And we could even see some pricing issues with things moving forward, but it’s hard to say this early.”

    Morelli believes there could be issues with getting important fertilizers like UAN-32. As planting begins in the Midwest, there is the possibility that demand could outpace supply if the Strait is not reopened in time. This will also mean higher prices and lower availability for growers in California.

    “If availability becomes an issue, pricing goes up,” Morelli said. “It will get difficult for growers and we’ll have to look at other options. Once UAN-32 becomes tight, it creates issues for everyone.”

    — By Donald Promnitz, Editor

  • At Farm Bureau Convention in California, Secretary Rollins Announces Dairy Margin Coverage Expansion and Section 32 Purchases of Specialty Crops

    This week at the 107th American Farm Bureau Federation Convention in Anaheim, CA, U.S. Secretary of Agriculture Brooke L. Rollins announced expanded enrollment for 2026 Dairy Margin Coverage (DMC) program and new Section 32 commodity purchases that will result in more healthy, U.S. grown food in the hands of Americans. Following the convention, Secretary Rollins also met with specialty crop producers at a local strawberry farm to discuss workforce needs and the Trump Administration’s recent wins related to significantly cutting the cost of H-2A labor for California farmers.

    Secretary Rollins and former California Ag Secretary A.G. Kawamura at his strawberry farm in Irving, California.

    “President Trump is making historic investments in the farm safety net and today’s announcement is one more action that supports our dairy producers by managing risk and strengthening markets so they can continue to provide wholesome nutrition for Americans,” said Secretary Brooke Rollins. “The Trump Administration will continue to stand with America’s farmers as the farm economy recovers from years of neglect under the last administration. Our mission to Make America Healthy Again continues after the recent release of the Dietary Guidelines for Americans 2025-2030 announcement, with the upcoming purchase of U.S. grown food that will reach those in need, all while benefitting American farmers facing unfair actions from foreign competitors.”

    OBBBA Improves DMC Coverage and Premium Fees

    Secretary Rollins announced the enrollment period for the Dairy Margin Coverage (DMC) program for the 2026 coverage year, an important safety net program that provides producers with price support to help offset milk and feed price differences. Starting January 12, 2026, dairy producers can enroll in DMC. The enrollment period ends February 26, 2026. The One Big Beautiful Bill Act (OBBBA), signed by President Donald J. Trump on July 4, 2025, reauthorized DMC for calendar years 2026 through 2031 and provided substantial program improvements, including establishing new production history and increasing Tier 1 coverage.

    The OBBBA increased DMC’s Tier 1 coverage level increased from five million pounds to six million pounds. All dairy operations that elect to enroll in DMC for 2026 will establish a new production history. Existing dairy operations that started marketing milk on or before January 1, 2023, will use the higher of milk marketings for the years of 2021, 2022, or 2023. New dairy operations starting after January 1, 2023, will use their first year of monthly milk marketings, even for a partial year. Milk marketing statements or production evidence are required to establish a production history.

    Dairy operations also have the option to lock-in coverage levels for six years (2026-2031) with premium fees discounted by 25%.

    DMC offers different levels of coverage, including an option that is free to producers, minus a $100 administrative fee. To determine the appropriate level of DMC coverage for a specific dairy operation, producers can use the online dairy decision tool.

    For more information visit the DMC webpage or contact your local USDA Service Center.

    Agricultural Marketing Service Section 32 Purchases

    Secretary Rollins also announced USDA’s intent to purchase up to $80 million in specialty crops from American farmers and producers to distribute to food banks and nutrition assistance programs across the country. These purchases are being made through USDA’s authority under Section 32 of the Agriculture Act of 1935 and will assist producers and communities in need. With this action, the Trump Administration is bolstering American prosperity by supporting American agriculture, rural communities, and those in need of nutrition assistance.

    The Agricultural Marketing Service (AMS) continuously purchases a variety of domestically produced and processed agricultural products. These “USDA Foods” are provided to USDA’s Food and Nutrition Service (FNS) nutrition assistance programs, including food banks that operate The Emergency Food Assistance Program (TEFAP), and are a vital component of the nation’s food safety net.

    USDA AMS will purchase up to $80 million of the following commodities:

    •Almonds: $20M

    •Grape juice: $20M

    •Pistachios: $20M

    •Raisins: $20M

  • $8.3 Million to Address Trade Barriers and Expand Market Access for Specialty Crops

    The U.S. Department of Agriculture announced it is awarding $8.3 million in funding to help 11 U.S. recipients address trade barriers and expand international market access for U.S. specialty crops.

    The funding is provided through USDA’s Foreign Agricultural Service, which manages the Technical Assistance for Specialty Crops (TASC) program. TASC helps U.S. specialty crop producers combat trade barriers, as well as promote and sell their goods internationally.

    “Our market development programs are bringing the bounty of American agriculture to people around the world, helping millions of hardworking American farmers, ranchers, and producers connect their safe, high-quality products with growing export markets,” said Trade and Foreign Agricultural Affairs Under Secretary Luke J. Lindberg. “Not only does TASC provide the tools they need to overcome technical obstacles, it also chips away at the nearly $50 billion Biden-era agricultural trade deficit which has held back rural America for far too long.”

    Through TASC and similar programs, USDA partners with non-profit U.S. agricultural trade associations, farmer cooperatives, non-profit state-regional trade groups, state agencies, and small businesses to expand market access and conduct overseas marketing and promotional activities on behalf of U.S. agricultural producers and processors.

    The USDA market development programs return an estimated $24.50 for every dollar invested.

    The TASC program makes $9 million available annually to fund projects that address sanitary, phytosanitary, and technical barriers that prohibit or threaten the export of U.S. specialty crops.

    The full list of FY2025 recipients and details about the program is available at: https://www.fas.usda.gov/programs/technical-assistance-specialty-crops-tasc.

  • California Wine, Raisin & Table Grape Industry Well-Represented in Ag Trade Mission to Taiwan

    The U.S. Department of Agriculture will lead a trade mission to Taipei, Taiwan, to expand trade opportunities for U.S. companies and boost U.S. agricultural exports. The mission takes place from September 29 to October 1 and includes 39 agribusinesses, trade organizations, and representatives from three state departments of agriculture working to strengthen U.S.–Taiwan trade relations.

    “With strong economic growth and proven demand for high-quality U.S. food in Taiwan, now is the time for U.S. agribusinesses to expand their presence,” said USDA’s Under Secretary for Trade and Foreign Agricultural Affairs Luke J. Lindberg. “This trade mission will connect U.S. exporters with key buyers and help them forge partnerships to tap into this dynamic market.”

    Taiwan is the eighth largest market for U.S. agricultural exports, with trade growing by 16% between 2019 and 2024. The United States remains Taiwan’s top supplier, accounting for 25% of its agricultural import market, recording a $3.1 billion surplus in 2024. High-value products, such as fresh fruits, pet food, beef, poultry, and dairy products, make up more than half of all U.S. agricultural exports to Taiwan, exceeding $2 billion of the total $3.8 billion agricultural export value.

    Taiwan is a high-income economy of discerning consumers and a major market for U.S. agricultural exports. U.S. products such as soybeans, corn, wheat, fresh fruits, seafood, dairy products, tree nuts, beef, and pork have strong potential for growth in Taiwan. U.S. producers have a proven record as reliable business partners, with quality products, competitive prices, transparent business practices, and a strong record of mutually beneficial trade relationships.

    Participants will engage in business-to-business meetings with buyers from Taiwan, gaining market insights and fostering new partnerships. USDA’s Foreign Agricultural Service staff and regional experts will host market briefings, networking events and site visits to maximize trade opportunities.

    Officials from Idaho, Kansas, and Montana state departments of agriculture will join Under Secretary Lindberg as well as:

    1 Ag Partners Cooperative – Seneca, Kan.

    2 AJC International Inc. – Atlanta, Ga.

    3 Appellations Cellar Winery – St. Helena, Calif.

    4 Bear Fiber – Morganton, N.C.

    5 California Fresh Fruit Association – Fresno, Calif.

    6 Dairy Farmers of America – Mechanicsburg, Pa.

    7 De Lune Corp. – Springfield, Va.

    8 East-West International Group – Moreland Hills, Ohio

    9 Globex International – Atlanta, Ga.

    10 Grove Services – Atlanta, Ga.

    11 Heartland Essentials – Gilbert, Ariz.

    12 Intervision Foods – Atlanta, Ga.

    13 James Farrell & Co. – Bellevue, Wash.

    14 JM Grain – Garrison, N.D.

    15 Kennedy Rice Mill – Mer Rouge, La.

    16 Koch Foods – Park Ridge, Ill.

    17 Mariani Packing Co. Inc. – Vacaville, Calif.

    18 MEM Fairway Inc. – Irvine, Calif.

    19 Minnesota Soybean Research and Promotion Council – Mankato, Minn.

    20 Nestlé Purina PetCare – St. Louis, Mo.

    21 One Vine Wines – Poway, Calif.

    22 Organic Trade Association – Washington, D.C.

    23 Pet Food Institute – Washington, D.C.

    24 Raisin Administrative Committee – Fresno, Calif.

    25 Rumei Global & Co, LLC. – Roseburg, Ore.

    26 Specialty Soya and Grains Alliance – Mankato, Minn.

    27 TAG Enterprise Ltd. – Los Angeles, Calif.

    28 Tedford/Tellico, Inc. – Knoxville, Tenn.

    29 Trident Seafoods Corporation – Seattle, Wash.

    30 Triple Crown Organic BBQ Sauces – Minneapolis, Minn.

    31 United Dairy Ingredients Group, LLC. – Monterey Park, Calif.

    32 U.S. Dairy Export Council – Arlington, Va.

    33 U.S. Grains Council – Washington, D.C.

    34 USA Rice Federation – Arlington, Va.

    35 USA Poultry and Egg Export Council – Tucker, Ga.

    36 U.S. Soybean Export Council – Chesterfield, Mo.

    37 U.S. Wheat Associates – Arlington, Va.

    38 Valley Pride Ag Co – Fresno, Calif.

    39 Wonderful Citrus – Delano, Calif.

    USDA’s trade mission to Taiwan is part of USDA’s broader 2025 export promotion strategy. Recent trade missions to Hong Kong, Thailand, Peru, Guatemala, and the Dominican Republic led to projected 12-month sales of $64 million. USDA will lead an agricultural trade mission to Mexico in November and recently opened recruitment for a trade mission to Indonesia in February of 2026.

    For more information on USDA trade missions, visit https://www.fas.usda.gov/topics/trade-missions.

  • USDA Reveals 3-Point Plan to Support U.S. Farmers, Ranchers and Exporters

    Secretary of Agriculture, Brooke L. Rollins and Under Secretary for Trade and Foreign Agricultural Affairs, Luke J. Lindberg, has announced an aggressive three-point plan that will support American agricultural producers and exporters.

    “President Trump is putting American agriculture first by negotiating fair, reciprocal deals that benefit U.S. producers, farmers, and ranchers,” said Under Secretary for Trade and Foreign Agricultural Affairs Luke J. Lindberg. “Secretary Rollins is focused on expanding market access, enforcing trade commitments, and boosting rural prosperity. Market promotion support, rapid response to reciprocal trade agreements, and better financing programs will translate to progress in chipping away at the $50 billion agricultural deficit.”

    The three-point plan was announced during remarks at the annual meeting of the National Association of State Departments of Agriculture.

    America First Trade Promotion Program

    The One Big Beautiful Bill Act authorized an additional $285 million per year for trade promotion programs beginning in fiscal year 2027. USDA will kickstart that program one year early with $285 million in FY26 and launch the American First Trade Promotion Program.

    T.R.U.M.P. Missions (Trade Reciprocity for U.S. Manufacturers and Producers).

    USDA will launch a new model of trade missions — as a supplement the current model — targeting reciprocal trade deal countries and new market access opportunities. The focus of these will be determined country-by-country to maximize high-return, low-risk agricultural export prospects and connect buyers and sellers.

    Revitalize export finance opportunities

    The GSM-102 credit guarantee program is authorized to offset $5.5 billion in market risk for purchasers of American commodities. Currently, the program has only $2 billion in liabilities on its books. USDA will reinvigorate this program to ensure it is best aligned to facilitate American exports to new markets. The GSM-102 program provides credit guarantees to encourage financing of commercial exports of U.S. agricultural products. By reducing financial risk to lenders, credit guarantees encourage exports to buyers in countries that have sufficient financial strength to have foreign exchange available for scheduled payments.

    “Advancing these programs, as supplements to our existing programs, ensures the health, prosperity, and security of rural America, our farmers, ranchers and producers,” said Lindberg. “Restoring the United States to the Golden Age of the American farmer is an exciting journey and will once again culminate in our status as the breadbasket to the world.”

  • 2025 California Walnut Industry Crop Estimate Up from Last Year

    The USDA’s National Agricultural Statistics Service (NASS) released the official 2025 California Walnut Industry Objective Measurement Report on Wednesday, September 4, 2025. The 2025 California walnut production is forecasted at 710,000 tons (644,101 MT), up 18% from 2024’s production of 603,000 tons (547,032 MT). The forecast is based on 365,000 bearing acres, down 1% from 2024’s estimated bearing acreage of 370,000 acres.

    The September 4th announcement from NASS provides the industry with an objective crop volume estimate. Using scientific methodologies, USDA field staff counted, measured, weighed, and evaluated thousands of walnuts from major growing regions in July and August for use in a statistical acreage model to establish the annual walnut crop estimate.

    In addition to the updated crop estimate, the California walnut industry is nearing the close-out of the 2024 crop year. Early evaluations are encouraging, suggesting it will be one of the lowest unsold carry-in inventory volumes the industry has seen in years and much of this inventory will be sold in September and October before the new harvest is ready to ship.

    “The estimate of 710,000 tons is in-line with what the industry was projecting,” said Robert Verloop, Executive Director and CEO of the California Walnut Board and Commission. “Combined with virtually being sold out of the 2024 crop, the industry is well positioned to start shipping new harvest California walnuts immediately, providing seller and buyer confidence and stable markets.”

    “Moreover, walnut quality is exceptional, the result of careful farming, ideal spring and summer conditions and replenished soil moisture, with a consistent nut set. Growers have been opening walnuts and have commented that the walnuts kernels are completely filling the shells and have exceptionally light color for this time of the year. This crop may exceed the excellent quality we have seen in the last two years. I think international markets will be very pleased.”

    Harvest begins in September with early varieties and may extend into early November, harvesting the crop at its peak quality and full development.

    The California walnut industry foresees a promising season ahead. The California Walnut Board and Commission continue its focus to build long-term demand and increase sales for California walnuts by implementing programs that drive consumers to eat more walnuts, more often, and in more ways. With a strong commitment to delivering excellent quality, the highest food safety standards, consumer appeal and a reliable supply, California walnuts are well-positioned to meet the evolving needs of the global market — today and into the future.

    About the California Walnut Board and Commission

    The California Walnut Board (CWB) and California Walnut Commission (CWC) represent more than 3,700 California walnut growers and approximately 70 handlers, grown in multi-generational farmers’ family orchards. California walnuts, known for their excellent nutritional value and quality, are shipped around the world all year long, with more than 99% of the walnuts grown in the United States being from California. The CWB, established in 1948, promotes usage of walnuts in the United States through publicity and educational programs. The CWB also provides funding for walnut production, food safety and post-harvest research. The CWC, established in 1987, is involved in health research with consuming walnuts as well as domestic and export market development activities.

    To explore recipes and learn more about California walnut growers, industry information and health research, visit walnuts.org.

  • September USDA Lending Rates for Ag Producers

    The U.S. Department of Agriculture (USDA) announced loan interest rates for September 2025, which are effective Sept. 1, 2025. USDA Farm Service Agency (FSA) loans provide important access to capital to help agricultural producers start or expand their farming operation, purchase equipment and storage structures or meet cash flow needs.      
           

    Operating, Ownership and Emergency Loans      
    FSA offers farm operating, ownership and emergency loans with favorable interest rates and terms to help eligible agricultural producers obtain financing needed to start, expand or maintain a family agricultural operation.      

    Interest rates for Operating and Ownership loans for September 2025 are as follows:

    FSA also offers guaranteed loans through commercial lenders at rates set by those lenders. To access an interactive online, step-by-step guide through the farm loan process, visit the Loan Assistance Tool on farmers.gov.

    Commodity and Storage Facility Loans
    Additionally, FSA provides low-interest financing to producers to build or upgrade on-farm storage facilities and purchase handling equipment and loans that provide interim financing to help producers meet cash flow needs without having to sell their commodities when market prices are low.  Funds for these loans are provided through the Commodity Credit Corporation (CCC) and are administered by FSA.

    More Information

    To learn more about FSA programs, producers can contact their local USDA Service Center. Additionally, producers can use online tools, such as the Loan Assistance Tool and Debt Consolidation Tool to explore loan options.

  • Shrinking Labor Force Threatens US Economic Growth

    Declining labor force participation, lower birth rates and a collapse in net migration are combining to squeeze the U.S. labor supply. The looming labor shortage could begin to weigh on businesses and strain economic growth as soon as later this year, according to a new quarterly report from CoBank’s Knowledge Exchange. With the labor supply about to get tighter, businesses and industries operating in rural America should be increasing their focus on technology to overcome labor availability challenges.

    “Barring an unforeseen change in labor force participation rates or immigration policies, the pool of available workers is set to shrink precipitously in the next few years,” said Rob Fox, director of CoBank’s Knowledge Exchange. “The problem will be even more acute in states with lower population growth in the Upper Midwest, Corn Belt and the Central Plains. Increased adoption of technology, namely AI and robotics, will likely be at the core of any strategy to address the oncoming labor squeeze.”

    The labor force participation rate has trended downward since 2000, and the trend may be accelerating. Nearly 2.5 million working-aged people dropped out of the labor force in the past eight months alone. The U.S. fertility rate has plummeted since the Great Financial Crisis in 2008, reducing the number of native-born citizens entering the workforce. The loss of those new workers coincides with baby boom generation retirements, amplifying the impact on the overall labor supply. Those two factors, combined with more restrictive immigration policies and aggressive deportation efforts, will put significant stress on the U.S. labor supply with the potential to impede economic growth.

    U.S. Economy

    While the economy appears to be running well as evidenced by low unemployment and easing inflation concerns, consumer sentiment remains historically low. A major reason for the sour mood among consumers is the escalating cost of housing. The monthly cost of homeownership in the U.S. rose 60% between 2021 and 2024 and there is little hope of improvement anytime soon. Rising unaffordability of homes has driven the homeownership rate lower for the first time since the aftermath of the 2008 subprime mortgage crisis. For homebuilders, the economic situation and outlook are equally painful. New single-family housing starts have dropped by 16% over the last three months and the index of publicly traded homebuilders is down about 30% since late 2024.

    U.S. Government Affairs

    President Trump scored a major legislative victory with the passage of the One Big Beautiful Bill Act. As with all budget reconciliation efforts, politics took center stage – and this one may have caused the deepest political rift in a decade. Fights over the farm program policy and funding addressed in the OBBBA left the traditional farm bill coalition in Congress fractured, and longstanding industry alliances in doubt. Farmers and ranchers still walked away with significant wins. But rural economic development programs were cut or left out entirely, and domestic food assistance received its largest funding cut in history. In all, total farm bill program funding took a nearly $200 billion hit.

    Grains, Farm Supply & Biofuels

    Favorable growing conditions in the U.S. and South America are pressuring corn prices, which fell 7% last quarter on the prospects for a record U.S. harvest this fall. Export demand for old-crop U.S. corn and soybeans remains strong, but new-crop export sales are sluggish amid ongoing trade uncertainty. Sales of new-crop soybeans are historically low due to the lack of Chinese demand. The U.S. winter wheat harvest on the Plains has been hampered by heavy rains, but crop yields are set to be the best in years. U.S. wheat stocks available for blending were up 22.1% year-over-year as of June 1.

    Agriculture retailers and farm supply cooperatives enjoyed strong spring agronomy sales due to good weather conditions and increased corn acres. However, pre-sales for the 2026 growing season are projected to soften due to tariff uncertainty, higher interest rates and farmer profitability constraints. As farmers look to minimize losses, many may choose to limit chemical applications. Agriculture retailers are delaying buying decisions and inventory builds due to higher input prices. USDA’s latest cost of production estimates show no relief in sight and a slight increase from 2025 into 2026.

    Lingering uncertainty surrounding U.S. biofuels policy continues to cast a shadow on the outlook for production and demand. Renewable volume obligations, small refinery exemptions and the 45Z Clean Fuel Production Tax Credit are the three legs the biofuels industry will be balancing on as the year progresses. Soybean oil may be the winner in EPA’s proposed RVO change, as it likely shifts more domestic soybean oil to be used for biofuels. EPA indicated it would make its determination of small refinery exemptions by release of the final RVO rule at the end of October which will also impact overall biofuels demand.

    Animal Protein & Dairy

    Record high beef cattle prices continue to support strong margins for cow-calf producers and feedlot operators, while squeezing packers. Calf prices hit a record $405 per cwt. in May, up 25% year-over-year. Tight supplies have pushed feeder and fed cattle futures up at a similar pace. Feeder cattle futures for the nearby August contract were trading at $302 per cwt., up 18% from a year ago. The supply of Prime and Choice graded beef is at its highest level since 1988, as U.S. beef producers have focused on improving meat quality to effectively boost demand.

    Domestic and international demand for pork is gaining momentum with the start of grilling season and lower cold storage inventories. Hog prices have jumped significantly through June. Lean hog futures on the CME surpassed $112 per cwt. in June, the highest since July 2022. The pork carcass cutout value rose to average $103 per cwt. in the second quarter. Inventories of pork in cold storage were down 7% year-over-year, signaling strong international demand for U.S. pork. Domestically, new marketing campaigns are promoting pork’s taste and flavor, encouraging an upward move in prices for producers.

    The U.S. broiler sector entered 2025 well positioned to serve the restaurant industry’s desire to show consumers an inflation-busting animal protein offering. Promotional activity and new chicken menu items throughout the quick service restaurant sector are meeting consumer demand for a value-added meal. Production of eggs and broiler meat are improving and setting new records to help meet the growing demand. Broiler prices have seen an extraordinary boost from value-added product interest. Seasonal market pressure is likely as the year progresses, but demand should remain relatively stable.

    The U.S. dairy herd is continuing to grow with 90,000 cows added since January. Most of that growth has occurred in Texas, Idaho, Kansas and South Dakota, all states with new dairy processing assets coming online. Producer margins have been favorable enough for dairy farmers to retain cows for milk production rather than sending them to slaughter to capture record beef prices. U.S. milk production increased by 1.6% year-over-year in May, the highest monthly growth in over two years. Strong production has pushed butter exports to reach 87% of last year’s total through May.

    Cotton, Rice & Sugar

    Expectations for the second smallest U.S. cotton crop in 10 years have lifted cotton prices, but not enough to cover farmers’ cost of production. Following two years of drought and disappointing yields, U.S. cotton farmers on the Plains are expected to enjoy bigger yields this year but on a much smaller planted acreage. U.S. Department of Agriculture expects planted acreage for the 2025/26 crop to fall 9.5% to 10.1 million acres. Persistent pressure from a record Brazilian cotton harvest and uncertainty over trade policy with China, continue to limit prices from climbing to profitable levels for U.S. farmers.

    Inclement weather during planting season in southern parts of the U.S. curbed long-grain rice acres while medium-grain acreage in California rebounded as rejuvenated reservoirs allowed farmers to irrigate more acreage. The shortfall in long-grain rice will impair the U.S. exports program and domestic millers will compete for scarcer bushels. Global rice prices continue to struggle under the weight of a flood of rice released from record Indian stockpiles. Strong U.S. exports of medium-grain rice, particularly to Japan, are a bright spot for U.S. rice farmers.

    Sugar demand faces a multitude of headwinds, including widespread usage of GLP-1 dietary medications reducing consumer demand for snack foods. World and U.S. sugar prices fell last quarter as a result of softening demand. Sugar manufacturers note consumer packaged goods companies have reduced forward bookings, resulting in higher-than-normal inventories. Globally, lower fuel and ethanol prices have caused raw sugar mills to send sugar to the export market rather than to ethanol producers, increasing global sugar supplies.

    Food & Beverage

    Food and beverage brands are reporting less-than-stellar earnings in the most recent quarter, with companies from PepsiCo to Kraft Heinz lowering their fiscal year guidance. Others are taking a wait-and-see approach to the impact of tariffs and higher prices on their overall performance. KPMG’s April 2025 consumer survey found 69% of consumers are eating more at home, with 85% of those citing budget constraints. Restaurants are feeling the shift in consumer spending. Virtually all major chains in the country have experienced notable declines in recent quarters. Restaurants laser-focused on delivering value have had the best success in recent months.

    Power & Digital Infrastructure

    Given geopolitical unrest following the U.S. strikes on Iranian nuclear facilities, U.S. energy security and the strategic petroleum reserve have received surprisingly little attention. The U.S. is now a net oil exporter, leading some to question whether the U.S. should have a strategic reserve at all. However, calls for the dismantling of the SPR are likely misplaced. While the shale revolution offers an important buffer, the nation’s petroleum reserve remains a critical national security asset, providing additional speed and agility when oil supply is scarce. Keeping the SPR at historic low levels limits response options to future events and risks greater consumer price exposure.

    Recent changes to the Broadband Equity, Access and Deployment program mark a shift away from the Biden administration’s “fiber-first” strategy. Under the new rules, fixed wireless and satellite technologies will now have greater access to BEAD funding provided they meet minimum performance benchmarks. This new direction introduces both strategic opportunities and competitive threats for rural broadband providers. Operators that choose not to participate in BEAD may find themselves vulnerable to government-funded fixed wireless competitors. Alternatively, rural internet service providers can go on the offense and pursue BEAD funding to expand their own footprints, especially in areas where fixed wireless is eligible.

    Read The Quarterly. Each CoBank Quarterly provides updates and an outlook for the Macro Economy and U.S. Agricultural Markets; Grains, Biofuels and Farm Supply; Animal Protein; Dairy; Cotton and Rice; Specialty Crops; Food & Beverage industries and Rural Infrastructure.

    About CoBank

    CoBank is a cooperative bank serving vital industries across rural America. The bank provides loans, leases, export financing and other financial services to agribusinesses and rural power, water and communications providers in all 50 states. The bank also provides wholesale loans and other financial services to affiliated Farm Credit associations serving more than 78,000 farmers, ranchers and other rural borrowers in 23 states around the country. CoBank is a member of the Farm Credit System, a nationwide network of banks and retail lending associations chartered to support the borrowing needs of U.S. agriculture, rural infrastructure and rural communities. Headquartered outside Denver, Colorado, CoBank serves customers from regional banking centers across the U.S. and also maintains an international representative office in Singapore.