California Ag Network

Category: Non-Video

  • 2025 Results of Pre-Emergent Herbicide Demonstration Trial for Walnut

    The 2025 UCCE walnut pre-emergent herbicide demonstration trial is completed, and the results show strengths and weaknesses of 19 different herbicide treatments, applied either in February or March.

    Takeaways:

    1. All treatments were applied with a strong post-emergent mix, but hairy fleabane and white clover were not adequately controlled with post-emergent treatments alone. Control was dependent on the addition of an ALS inhibitor herbicide (products like Craze, Matrix, or Mission).

    2. Summer annual weeds were best controlled by products with long residuals (products like Alion, Chateau, Brake On! (not registered in CA), and Prowl.

    3. Yellow nutsedge was controlled by treatments with Zeus or Craze.

    4. Conclusion: Pre-emergent treatments in late winter must account for winter annual weeds that have already emerged and perennial weeds while also maintaining good residual control further into the summer.

    Introduction

    Winter pre-emergent herbicide applications are critical to get right if yearly weed management operations are going to be successful in walnut orchards. Poor selection of herbicides or missed timing could make the difference between good control and battling an overwhelming infestation of weeds. In walnut orchards I have regularly heard two comments concerning pre-emergent herbicide applications in walnut orchards:

    1. Those who apply pre-emergent herbicides in the fall, just after harvest, tend to have the cleanest orchards.

    2. February or March are the most common times to apply pre-emergent herbicides in walnut orchards.

    Maybe my perception is incorrect, but these weed control strategies seem to be at odds. When it comes to winter annual weeds, it is likely safest to apply pre-emergent herbicides before germination due to several common weed species with herbicide resistance issues (hairy fleabane, Italian ryegrass, annual bluegrass). Applications later in the winter will have to deal with emerged weeds, potentially resulting in more escapes and misses.

    However, herbicide treatments in February or March are common, and many growers have been successful with these treatments. Why is this, and what is the key to achieving good control later in the winter? Success at later timings depends on how much post-emergent activity you are getting out of your tank mix. Some pre-emergent herbicides can contribute to your post-emergent activity. Common pre-emergent herbicides like Goal, Chateau, Matrix, Pindar, and others add some extra post-emergent activity to tank mixes when used in winter months. Dr. Brad Hanson (UCCE Weed Specialist at UC Davis) discussed this topic when he addressed tank mixes of Alion and Matrix in his UC Weed Science Blog article (linked here). My recent work with rimsulfuron on established johnsongrass also explored this subject (linked here). These prior discussions focused on rimsulfuron products as tank mix partners for pre-emergent applications, but I wanted test a broader range of products applied in February and March. This year’s walnut preemergent herbicide demonstration made some progress toward that goal.

    I will discuss my findings next, and at the end of this article I have included results tables. All products except one are currently labeled for use in walnut orchards, though with some restrictions on orchard age. The one unlabeled product in this study was Brake On!, manufactured by SePRO, currently pending registration in CA. This is not an exhaustive list, and the data provided here does not constitute a recommendation of any product.

    Trial design

    In 2025, I arranged my pre-emergent demonstration trial to evaluate individual products and tank mixes for weed control efficacy when applied in February and March. This trial was installed in the Loybas Hill region of Tehama County, in a 4-year-old walnut orchard with Tehama silt loam soil. A post-emergent mix of 2 qt/A Roundup Powermax 3 and 2 qt/A Rely 280 was added to every plot in February, and pre-emergent herbicides were applied either in the mix, or one month later in March. The tables at the end of this article show the full list of treatments and when they were applied. The first table represents weeds that were present at application, hairy fleabane and white clover. The second represents weeds that grew to be prominent in May and June, so their control depended on residual activity from my herbicide treatments lasting long into the summer.

    Results overview

    White Clover and Hairy Fleabane (Table 1): Both weeds were controlled by all three group 2 herbicides tested: Craze, Revolt, and Mission. Revolt was weaker on fleabane while Craze was weaker on clover and these differences also showed up in the tank mix treatments with both products applied with Prowl. February and March treatments with these three herbicides produced very similar results. The 12 fl oz/A rate of Chateau also effectively suppressed both species.

    Summer annual weeds (Table 2): The primary weeds in the categories recorded here were grass weeds (jungle rice and large crabgrass) and broadleaf weeds (prostrate knotweed, spurge, and pigweed). Many herbicides provided good control until June (3-4 months after treatment) but only Alion, Brake on! (not currently labeled for CA), and March-applied Mission maintained “good” control of broadleaves through July. Only Alion and Prowl maintained “good” control of grasses through July.

    Yellow Nutsedge (YNS; Table 2): Zeus was the best tested product for nutsedge control, but Craze also showed some effects in July by keeping nutsedge coverage low. Rimsulfuron products like Matrix and Revolt are also labeled for YNS control, but labels suggest sequential applications, and the application timings used in this trial may not have been ideal to target YNS with this product.

    Summary and cautions:

    This is a single trial only representing one weed population and one soil type, so results may vary by location. However, hopefully this demonstrates the importance of tank mixing to control emerged weeds as well as future emergence. Group 2 herbicides like Revolt, Mission, and Craze can provide good post-emergent control in addition to their pre-emergent activity. But be cautious, this herbicide group is notorious for herbicide resistance. Do not overuse this class of herbicides or you will likely start seeing weeds escaping your treatments.

    Look through the following tables if you are interested in seeing more information on efficacy in these trials. To see weed coverage data, view the report on the UCCE Tehama website here. Thanks to the California Walnut Commission for supporting this work. For any questions or additional information, contact Ryan Hill at 530-527-3101 or rjahill@ucanr.edu. — By Ryan Hill, UCCE Agronomy and Weed Science Advisor, Tehama County

    Weed control tables:

    Control was determined by calculating % reduction in weed coverage, relative to the plot with the worst infestation. Control is summarized by four categories. These categories may not represent each grower’s threshold of tolerance for weed control, but they can still provide relative comparisons between the products tested.

    Poor control is indicated by a “p”, representing control between 0 and 50%.

    Moderate control is indicted by an “m”, representing control between 50 and 70%.

    Good control is indicated by a “g” and highlighted light green, representing control between 70 and 90%.

    Excellent control is indicated by an “e” and highlighted dark green, representing control between 90 and 100%.

    Table 1: The effect of different pre-emergent herbicides on two weeds that were present at application, hairy fleabane and white clover.

    Table 2: The effect of different pre-emergent herbicides on weeds that germinated or sprouted in summer. Summer annual broadleaves included prostrate spurge, knotweed, and pigweed and summer annual grasses were primarily crabgrass and jungle rice.

  • AI Tool to Help Farmers Measure Real-Time Crop Health from the Field

    Leaf Monitor, a new mobile tool backed by artificial intelligence and predictive modeling, could revolutionize how farmers monitor crops and make decisions by providing real-time nutrition and leaf trait information in the field.

    “Having this information is very valuable for the farmers,” said Alireza Pourreza, associate professor of Cooperative Extension and director of the Digital Agriculture Laboratory in the Department of Biological and Agricultural Engineering at the University of California, Davis. “In five seconds, they can have a sense of how much nutrition they have in a leaf.”

    Development of the AI model was funded by the U.S. Department of Agriculture’s National Institute of Food and Agriculture’s HiRes Vineyard Nutrition multistate project and its Animal and Plant Health Inspection Service, as well as the California Table Grape Commission.

    Maha Afifi, director of viticulture research at the California Table Grape Commission, said the tool could be a game changer for the table grape industry if it leads to faster decision-making about fertilizer use. The right amount typically leads to healthier vines that produce more grapes with optimal size, weight and color.

    “The evaluation of vine nutrient status is one of our top priorities,” Afifi said. “At the same time, exploring new technology tools like this project is a high priority for us because they will be important to the future of the table grape industry.”

    Field testing

    The Leaf Monitor tool uses a handheld spectrometer to measure leaf reflectance beyond the range of light visible to the human eye.

    Once a leaf is scanned, its spectral data is uploaded to a cloud-based machine learning system designed to predict leaf traits and nutrient content. This algorithm was developed and trained by the Digital Agriculture Laboratory over five years using a dataset of thousands of leaf samples collected from California’s specialty crops, primarily grapevines and almonds. The samples were chemically analyzed to determine nutrient levels and structural leaf traits, providing the data needed to build an accurate prediction model.

    “Nutrient deficiencies in plants often go unnoticed until late in the season, by which point the damage is already irreversible,” said graduate student Parastoo Farajpoor, who is running the project. “This is why early detection is essential. Spectrometry provides a rapid and reliable way to identify these deficiencies before visible symptoms appear.”

    After a recent demonstration, Bulleseye Farms Irrigation Manager Geoff Klein said the tool could help save money and improve yields. Bullseye grows walnuts, pistachios, tomatoes, corn, wheat, rice and sunflowers in Yolo and Solano counties.

    Tailored crop management

    Currently, farmers typically take leaf samples, dry them, grind them up and send the samples off to a lab for testing, which can take up to two weeks to return results. Bullseye samples leaf tissues about three times a year.

    “Right now, it doesn’t really make sense to go out and take tissues in every single corner just because it’s expensive,” Klein said. “It’d be really cool if I could just walk out there and test a couple of different places.”

    The Leaf Monitor tool helps farmers tailor management decisions to specific areas rather than an entire field. Calibrating fertilizer use to real-time data can prevent overuse and nitrogen runoff, a financial and environmental challenge that many growers face.

    “I feel like there’s a lot of times we do need to put less [fertilizer] on, where we end up putting more, because that’s what the nitrogen removal formula says,” Klein said. “But with this app we can use less because we know the actual conditions at the time. I think it opens a lot of doors in terms of getting data back in real time and also utilizing the level of control we have with the data.”

    The app can also aggregate the scans and map out spatial patterns over a large area.

    “What we know is every field has variability that is not necessarily visible to the farmer’s eye,” Pourreza said.

    The prototype Leaf Monitor tool is free and included in a set of tools that can be downloaded on the Digital Agriculture Laboratory website. A web-based version of the tool will follow while the team continues to feed new data into the algorithm to refine the predictions. On average, it achieves about 65% accuracy across all traits, with predictions for certain nutrients, such as nitrogen and phosphorus, performing better than the overall average. Users will need to pair it with a spectrometer.

    “We need to produce more food while using less resources so we need to have some kind of monitoring system to give us precise and accurate feedback on our management practice,” Pourreza said. “This technology is growing very fast.” — By Emily Dooley, UC Davis

  • Turning Food Scraps into Opportunities

    For every juicy tomato or crunchy almond California grows, there’s a pile of pulp, hulls or scraps that often goes to waste. A new online tool, created by University of California, Davis researchers, tracks those agricultural byproducts aiming to find innovative ways to put them to use.

    The Byproduct Database, maintained by the AI Institute for Next Generation Food Systems, is an ongoing research project that includes a catalog of byproducts like fruit skins and nut shells, and potential ways to reuse them across different industries.

    Edward “Ned” Spang, principal investigator and associate professor with the Department of Food Science and Technology, said about one third of the food produced worldwide, doesn’t get eaten. The database consolidates information about food waste in one place, detailing what the various leftovers are made of and where they’re available in the state. Spang believes it could help guide decisions on reducing waste by potentially turning these materials into new products for food, cosmetics or pharmaceutical industries.

    “In the food production space, there’s a lot of edible material, or potentially valuable material, that’s been overlooked for a long time as waste,” Spang said. “So, the questions we are trying to understand include: ‘How much of this material is out there? What is it composed of? Where is it? When is it available?’”

    Tomatoes, almonds, pistachios and pomegranates

    The pilot phase of the database currently features four major crops: tomatoes, almonds, pistachios and pomegranates. As the research team continues to gather data, they will update the site to include other crops and byproducts, including wine grapes, stone fruits and citrus. In collaboration with Ilias Tagkopoulos with the Department of Computer Science, Spang is looking into developing and applying AI tools to expand the site faster and with less manual work.

    For pistachios, the website illustrates that the largest byproduct is the hull, which is often discarded, and that undersized pistachios could be a valuable resource if there was a market for it. The website helps outline the various byproducts for potential upcycling, where leftovers are transformed into new ingredients. Local companies are already developing new products using materials such as brewers’ spent grain (a byproduct of beer production), okara (a fibrous byproduct from soymilk production) and grape pomace (leftovers from winemaking).

    Researchers are looking at where food gets lost in the field and at the processing plant. With tomatoes, some get damaged on the vine, others get tossed out for not meeting quality standards. Spang said those leftovers, or side streams, are opportunities for upcycling.

    “It’s a material that’s already been cultivated, harvested and processed, so anything you do that’s economically productive means that all the resources embedded in that material, like fertilizer, water and energy, were not wasted in vain,” said Spang, who also directs the Robert Mondavi Institute of Wine and Food Science. “It is a real win-win opportunity.”

    Finding new uses

    The skin and pulp of a tomato contain lycopene, an antioxidant known for its health benefits. Users of the website can visualize where these leftover tomato parts, and its valuable lycopene, are found, helping to imagine new ways to make use of this healthy compound.

    “We expect our primary user to be entrepreneurs who are looking for new business models in upcycling, or who might have an advanced extraction technology to derive value from some of these overlooked materials,” Spang explained. “But producers and growers would also benefit as new revenue streams deliver value up and down the food supply chain.”

    The database will soon include cost estimates and economic variables to help users make more informed decisions. This will allow them to assess factors like how much lycopene is in a byproduct, its value per milligram and the costs associated with extracting it.

    New space for agricultural innovation on campus

    The research project is funded by a grant from the Resnick Agricultural Innovation Research Fund, created by a $50 million gift by Lynda and Stewart Resnick, co-owners of The Wonderful Company. Part of that donation also establishes the Resnick Center for Agricultural Innovation, currently under construction on campus, that will include a large space for biomass staging and extraction, a process to pull valuable compounds from fruits, vegetables and grain residues.

    Food waste happens, but this work is helping build a food system that wastes less and supports sustainability, which Spang hopes will excite everyone.

    “We have to be a little more creative with our food system,” he said. “We can make our current food system more productive by investigating novel upcycling ideas and processing systems that create more revenue for producers and hopefully deliver more value to consumers as well.” — By Tiffany Dobbyn, College of Agricultural and Environmental Sciences, UC Davis, tadobbyn@ucdavis.edu

  • California Table Grape Growers Double Impact of Food Bank Donations

    California table grape growers are doubling the impact of each gift made to the Central California Food Bank between October 20-31 to help provide meals for families facing hunger across the Central Valley.

    October is California Farmer and Farmworker Month, a month-long acknowledgement of California’s hardworking farmers and farmworkers. In celebration of the hands that help feed us, every dollar donated during the two-week campaign, up to $15,000, will be matched by California table grape growers. The campaign is designed to raise awareness and provide essential support to sustain food distributions in the San Joaquin Valley. Specifically, funds raised will help strengthen Central California Food Bank’s Farmworker Community Partnership Program across Fresno, Kern, and Tulare Counties.

    Central California Food Bank is the largest hunger-relief organization in Central California, serving Fresno, Kern, Kings, Madera, and Tulare counties. In Central California, 1 in 4 adults and 1 in 3 children face food insecurity, which is the limited or uncertain access to adequate food. Through a network of more than 260 member partner agencies, Central California Food Bank distributes nutritious foods to over 320,000 people each month, including more than 100,000 children.

    The campaign is a demonstration of California table grape growers’ collective commitment to building thriving communities in the table grape growing regions. “The commission is a service-based organization, and this initiative is a reflection of the commitment of California table grape growers to the communities they live and work in,” said Ian LeMay, commission president.

    For more information about the campaign, please visit give.ccfoodbank.org/calgrapes.

  • Assemblywoman Alexandra Macedo Awarded Almond Champion of the Year

    The Almond Alliance is pleased to announce Assemblywoman Alexandra Macedo as the recipient of the 2025 Almond Champion of the Year Award. Assemblywoman Macedo is being recognized for her leadership on key issues affecting California agriculture and the almond industry. She has advanced efforts to address abandoned agricultural properties and invasive species, supported improvements to water infrastructure and wildfire prevention, and worked to reduce fuel costs for Californians. Her practical approach and engagement on agricultural policy reflect a strong commitment to the state’s farming communities.

    “Assemblywoman Macedo has taken a thoughtful, solutions-oriented approach to some of the biggest challenges facing California agriculture,” said Alexi Rodriguez, CEO of the Almond Alliance. “Her focus on abandoned land, water infrastructure, and wildfire prevention demonstrates an understanding of the pressures facing the almond industry today.”

    The Almond Champion of the Year Award is presented annually to individuals who demonstrate leadership in education, coalition building, partnerships, and the advancement of policies that support California agriculture, including the almond industry. Assemblywoman Macedo’s efforts reflect the purpose and spirit of this recognition.

    Past recipients of this prestigious award include Assemblymember Juan Alanis, Department of Water Resources, Assemblymember Adam Gray, Assemblymember Heath Flora, former USDA State Executive Director of Farm Service Agency Connie Conway, Assemblymember Carlos Villapudua, and CDFA Undersecretary Christie Birdsong.

    The award will be formally presented to Assemblywoman Macedo at the California Almond Political Action Committee’s Annual Modesto Fundraiser, taking place at Del Rio Country Club on November 5, 2025, at 5:30 p.m. This event brings together members of the almond community, FFA students, elected officials, and special guests.

    For RSVPs or more information, please contact Annie Romero at 209-300-7140 or aromero@almondalliance.org.

    About the Almond Alliance

    Almond Alliance is the leading authority in state and national policy, championing American almond farmers, industry, and community for the continued global growth, innovation, and success of American almonds and agriculture.

    Established in 1980, the Almond Alliance is a non-profit trade association with a local and international network of almond processors, hullers/shellers, growers, and allied businesses. The Alliance is dedicated to providing resources and solutions for our members, ensuring industry success and growth opportunities. Learn more at almondalliance.org.

  • Inaugural $100,000 Grant Program to Advance Honey Bee Health and Beekeeping Innovation

    Sweet Harvest Foods, the largest producer of raw, unfiltered honey and parent company of Nate’s Honey and Nate’s Hives, today announced the launch of Nate’s Hives Research Grant Program, reinforcing its commitment to advance the long-term success and sustainability of honey bees and the honey industry through science, innovation and collaboration.

    The program will provide up to $100,000 in annual funding for research projects that strengthen honey bee health, improve sustainable beekeeping practices, and drive innovation in pollination practices and across the honey supply chain. Proposals may be submitted by academic institutions, nonprofit organizations and industry researchers, with funding available for projects up to three years in duration.

    “As the industry leader in honey and a top apiary, we believe scale brings both responsibility and opportunity, and the honey industry’s future depends on science and collaboration,” said Michael Carle, Chief Executive Officer of Sweet Harvest Foods. “Through the Nate’s Hives Research Grant Program, we’re investing in the kind of research that will strengthen honey bee health, advance sustainable beekeeping practices and support pollination, a more resilient food ecosystem and the honey industry. Innovation has always been central to how we operate and it’s more important now than ever to fuel continued progress.”

    Proposals may address one or more of the following areas of focus: honey bee health, sustainable beekeeping practices, environmental impacts, supply chain innovation, consumer demand and nutritional impacts, or trade policy and production economics. Each submission will be evaluated by a volunteer review board composed of Sweet Harvest Foods employees and external experts from academia and the beekeeping industry.

    “At Nate’s Hives, we believe science can and should shape the future of beekeeping,” said Matt Halbgewachs, president of Nate’s Hives. “This grant program puts that belief into action and empowers researchers to uncover solutions that help honey bees and beekeepers everywhere. By linking researched insights with on-the-ground experience, we accelerate progress for honey bees, beekeepers, farmers and consumers alike.”

    Applications are due March 1, 2026, with awards announced on April 15, 2026. For full eligibility details, proposal requirements and submission instructions, visit nateshives.com/research-grant-program.

    About Sweet Harvest Foods

    We believe in making life a little sweeter. As the leading procurer of honey in the U.S., Sweet Harvest Foods provides the highest-quality ingredients for some of the most iconic brands and beloved products. That’s a serious responsibility, which is why we keep innovating and setting higher standards in quality, taste and reliability. Sweet Harvest Foods is bolstered by its ownership of Nate’s Honey, the number-one branded honey, and Nate’s Hives, a top U.S. apiary. Join us on our mission to lead the honey industry by innovating from the hive to beyond the kitchen. For more information, visit www.sweetharvestfoods.com.

  • California Milk Advisory Board Welcomes Adrienne Daniels as EVP of Marketing

    The California Milk Advisory Board (CMAB), the marketing order representing California dairy producers, today announced the addition of Adrienne Daniels as  Executive Vice President of Marketing. In this role, Daniels will lead strategic marketing initiatives to expand awareness, engagement, and sales of Real California dairy products across domestic and international markets.

    Daniels brings over two decades of marketing leadership experience in the consumer packaged goods industry, having built, grown, and revitalized brands across a broad spectrum of categories. Most recently, she served as Senior Marketing Director at Gallo, where she managed a portfolio of more than 60 brands, including Black Box Wines, Apothic Wines, and Carlo Rossi Wines. Under her leadership, Daniels led brand turnarounds, launched innovative campaigns with record-breaking ROI, and launched over 15 new wines.

    Before beginning her more than 11-year tenure at Gallo, Daniels spent over 13 years at General Mills, holding multiple marketing leadership positions across iconic brands such as Cheerios, Pillsbury, and Progresso. Her strategic and creative leadership helped modernize legacy brands, drive multicultural marketing initiatives, and pioneered new approaches to health-focused consumer engagement.

    Daniels earned her MBA from Stanford University and a B.A. in Political Science from the University of Pennsylvania.

    An active community leader, she has supported education and literacy as a past mentor to Learning Quest through the Stanislaus Community Foundation’s Profit with Purpose program.

    Daniels is dedicated to championing women in business and has held numerous leadership roles advancing this cause throughout her career. In her previous role, she served as a key leader within Gallo’s Women of Wine & Spirits group, an organization committed to promoting and recognizing the achievements of women across the industry. Daniels also engaged in women’s networks while in her position at General Mills.

    “Adrienne brings a wealth of strategic marketing expertise, creative insight, and a deep understanding of consumer engagement,” said Bob Carroll, CEO of the CMAB. “Her proven ability to grow and reposition major brands will be instrumental as CMAB continues to drive demand and build connections with today’s dairy consumers.”

    California is the number one dairy state with more than 1,000 family dairy farms focused on delivering the wholesome goodness of California milk while creating a more sustainable future for dairy in the state.

    About Real California Milk/California Milk Advisory Board

    The California Milk Advisory Board (CMAB), an instrumentality of the California Department of Food and Agriculture, is funded by the state’s dairy farm families who lead the nation in sustainable dairy farming practices. With a vision to nourish the world with the wholesome goodness of Real California Milk, the CMAB’s programs focus on increasing demand for California’s sustainable dairy products in the state, across the U.S. and around the world. Connect with the CMAB at RealCaliforniaMilk.com.

  • California Milk Advisory Board Offers Opportunity For Student Ambassadors With International Audiences


    The California Milk Advisory Board (CMAB) has announced the return of its student internship program where young agriculture ambassadors will represent Real California Milk internationally. Applications are now open for summer representatives in  CMAB’s partner countries.

    The interns, selected from students enrolled in agriculture-related programs at colleges and universities throughout the state, will be chosen based on academic achievement, connection to the dairy industry and a willingness to travel abroad and learn more about international dairy sales and marketing, as well as a plan to work in the California dairy industry in the future.

    Over the six-week period, interns will spend time with CMAB marketing organizations overseas in order to gain a better understanding of these markets, consumer buying habits and promotional efforts on behalf of California’s dairy industry.

    “Over the last decade, the CMAB has worked closely with partners in Mexico and Asia to develop markets for California dairy products. This program is focused on providing insight into international marketing for future leaders who will work in the dairy business and one day serve on dairy industry boards and lead industry groups,” said Glenn Millar, Vice President of International Business Development for the CMAB.

    Interested candidates must submit a completed application, essay, and other requirements by Friday, November 14, 2024. Additional information is available here.

    California is the nation’s leading milk producer, and makes more butter, ice cream and nonfat dry milk than any other state. California is the second-largest producer of cheese and yogurt. California is the leading U.S. state in dairy production. Its family dairy farms are focused on delivering the wholesome goodness of California milk while creating a more sustainable future for dairy in the state.

    About Real California Milk/California Milk Advisory Board

    The California Milk Advisory Board (CMAB), an instrumentality of the California Department of Food and Agriculture, is funded by the state’s dairy farm families who lead the nation in sustainable dairy farming practices. With a vision to nourish the world with the wholesome goodness of Real California Milk, the CMAB’s programs focus on increasing demand for California’s sustainable dairy products in the state, across the U.S. and around the world through advertising, public relations, research, and retail and foodservice promotional programs. For more information and to connect with the CMAB, visit RealCaliforniaMilk.com.

  • Tariff Policy, Declining Immigration and Massive AI Investments Cloud US Economic Outlook

    Significant downward revisions to monthly payroll estimates in August led many market observers to anticipate the Federal Reserve would begin cutting interest rate cuts more aggressively. However, recent economic data has generally been positive, tempering expectations for more significant cuts before the end of the year.

    According to a new quarterly report from CoBank’s Knowledge Exchange, the most likely scenario is an additional four or five cuts of 25 basis points through 2026, leaving the overnight rate around 3.0% by the end of 2026. The actual outcome will depend heavily on how the economic data looks and how successful the White House is in influencing monetary policy.

    Tariff policy uncertainty, the sharp decline in immigration and the massive surge in AI investments have made interpreting traditional economic reports more difficult. The CoBank report suggests sharp swings in monthly import volumes, a flattening of working-age population growth and a soaring stock market make it difficult to gauge how “Main Street” America is doing economically.

    “The intense politicization of attitudes has rendered longstanding public sentiment surveys erratic and unhelpful in gauging actual economic conditions,” said Rob Fox, vice president of CoBank’s Knowledge Exchange. “The federal government shutdown and potential loss of scheduled economic reports will make it even more difficult for businesses to gauge the economy and make prudent business decisions.”

    Despite rising fears that the rapid adoption of AI will soften the labor market and dim job prospects for college graduates, Fox said there is little evidence to support those fears. “New technologies have always raised concerns about job losses. The recurring theme is job transformation, not elimination. This time isn’t any different. Today’s college graduates are already deeply familiar with AI and are using it to sharpen skills hiring managers value most.”

    U.S. Economy

    Personal consumption and unemployment rates, arguably the most important economic signals, have held steady in the face of ongoing uncertainty. However, other signs suggest the economy may be slowing. Personal income growth, adjusted for inflation, has fallen from 4% in early 2024 to about 2% today. Consumers have responded by dipping into savings to maintain their spending, which cannot be sustained indefinitely. While a potentially slowing economy and declining interest rates should put downward pressure on the dollar, the effect for U.S. agricultural exports has been muted. Row crop exports have not experienced the benefit of the weakening dollar relative to the currencies of America’s largest grain importers.

    U.S. Government

    The government shutdown and lack of congressional action are contributing to widespread political and economic uncertainty. With no more funds to support most federal programs or pay many public servants, the suspension of most revenue-generating capabilities are halted and will likely negatively impact the economy as time goes on. Meanwhile, the abundance of American agricultural commodities is no longer an asset but rather a liability for many U.S. farmers. Tariffs have ultimately shut out American commodities to many countries. The administration is expected to announce $10 billion-$15 billion in farm aid to struggling producers but that may be delayed because of the government shutdown.

    Grains, Farm Supply & Biofuels

    U.S. farmers are harvesting a record-large corn crop and the second-largest soybean crop in five years following the largest wheat harvest in five years. The supply abundance is welcomed news for grain elevators looking to capture bigger carries in the futures market. But the record grain crop will strain U.S. storage and transportation infrastructure. The demand outlook for U.S. grains remains clouded by geopolitical uncertainty. Corn and wheat sales enter the fourth quarter historically strong, but soybean sales are abysmal due to the lack of Chinese purchases. Low water levels on the Mississippi River threaten to slow grain and oilseed exports during the peak shipping season.

    Elevated crop input costs will further erode producer profitability during the current low commodity price cycle. Producers will likely reduce fall fertilizer applications and stall overall input purchases for 2026 due to higher prices. Tariffs are also driving up input costs. The average tariff on crop inputs imported to the U.S. has increased from 1% to nearly 12%, according to data published by North Dakota State University. Fertilizer prices remain the biggest headwind for producers. Farmers will be reassessing and potentially reducing their usage rates of nitrogen, phosphorus and potassium. If farmers shift more applications to the spring, high seasonal demand could lead to supply chain hiccups.

    Biofuel demand remains a silver lining for the crop side of the agricultural economy. But the delay in regulatory policy on renewable volume obligations and small refinery exemption reallocation are casting a cloud over future demand. The EPA is unlikely to finalize next year’s renewable volume obligations before 2026. Renewable diesel and biodiesel margins will stay in the red as producers work through the long transition from the Blenders Tax Credit to the 45Z Tax Credit. Ethanol producer margins should remain positive to close out the year, due to plentiful corn supplies and low prices for natural gas and corn.

    Animal Protein & Dairy

    Dollar sales of retail ground beef grew by double digits in August, up 13% year-over-year at $1.7 billion, according to Circana. While beef prices remain elevated on tight cattle supplies, persistent demand boosted overall sales, and volume kept pace. Domestic cattle prices rose throughout much of the third quarter, setting new records and boosting returns to ranchers, but complicating beef market dynamics otherwise. Beef packer margins struggled during the third quarter. Despite strong demand for beef, several factors are limiting production growth.

    A slimming U.S. hog herd served to lift market prices. Price rallies for lean hog futures and feeder pigs persisted over the summer, settling at 20% and 48% higher year-over-year, respectively, in late September. In August, farrow-to-finish profit margins reached $52.58 per head, the highest since June 2021, according to Iowa State University. Pork producers have now posted profits for 17 consecutive months. Export demand has slowed slightly compared to 2024, which was a record export year for U.S. pork. Mexico remains the largest buyer of U.S. pork.

    With beef prices hitting all-time highs, the U.S. broiler segment capitalized on the opportunity to provide consumers a value offering this summer. A strong focus on chicken at retail and foodservice boosted white meat values through August. The quick-service restaurant segment featured a multitude of chicken options focused on strips and new flavors. Softening white meat values during the remainder of the year are likely to crimp margins but will continue to position chicken as a competitive value offering in 2026. Broiler production is expected to remain elevated through the end of 2025.

    U.S. dairy farmers continue to enhance their revenue by producing calves destined for beef production. Beef’s contribution to the bottom line has moved from $1 to $4 per cwt. over the past four years. The U.S. dairy herd has climbed to its highest level in over 30 years, in part, to capitalize on revenue from beef-on-dairy calves. While milk production margins had been somewhat favorable, strong output in recent months significantly changed the price forecasts. Butterfat production is in overdrive and ample supplies have sent milk futures lower. Typically, that would prompt dairies to reduce production. But the combination of the lowest feed prices in five years and profit margins for beef may be a stronger signal.

    Cotton, Rice & Sugar

    Cotton prices remain depressed despite a smaller U.S. crop. A slowing global economy continues weighing on clothing and apparel sales, pushing cotton prices lower. U.S. cotton exports have languished amid the weakening economic outlook. Cumulative U.S. export commitments of upland cotton were down 18% year-over-year as of mid-September. The slouching export pace is a concern for U.S. cotton farmers, as 80% of the cotton crop is typically exported. USDA estimates the 2025/2026 cotton crop at 13.22 million 480 lb. bales, falling 8% year-over-year.

    Rice prices continue to suffer from downward global pressures. Ample global supplies of competitively priced rice have eroded U.S. export market share. U.S. rice export sales are down 26% year-over-year since India resumed rice exports in 2024. Increased export competition from South America into the key Western Hemisphere market has added to the global headwinds. Stronger sales of medium-grain rice to Japan and Korea have been a bright spot in U.S. rice trade. While U.S. tariffs on imported rice have offered some support to U.S. prices, global rice abundance threatens to hold prices at multi-year lows.

    Strong global sugar supplies have pulled prices lower just as the U.S. sugar beet and sugarcane harvest is underway. Total U.S. sugar production is expected to rise 1.8% year-over-year. The bigger U.S. crop arrives amid a global sugar crop that will be biggest in eight years. Major exporters including Brazil, Thailand and India have expanded production. The global abundance continues to anchor U.S. sugar prices, which fell to their lowest level in four years last quarter. However, biofuel policies in India may limit future sugar exports, putting a stronger floor under U.S. and world sugar prices.

    Food & Beverage

    Merger and acquisition activity in the food and beverage sector continues, as evidenced by marquee deals including Ferrero’s acquisition of WK Kellogg and Mars’ purchase of Kellanova. However, deconsolidation and divestures are becoming equally common. Unraveling the biggest deal of a decade ago, Kraft Heinz is splitting into two companies. The move reflects a growing trend toward deconsolidation as companies aim to focus their efforts more narrowly and increase their agility to address changing consumer needs. This trend will likely continue as consumer sentiment shifts toward more cost-effective, at-home meal solutions.

    Power & Digital Infrastructure

    The cost of electricity is becoming a chief economic concern for Americans as prices are rising twice as fast as inflation. While data centers’ enormous appetite for power is frequently assigned blame, the problem of rising electricity prices pre-dates data centers. The North American Electric Reliability Corporation has long warned of supply challenges. Large load growth customers such as data centers could be a catalyst for modernizing the U.S. electric grid, ultimately helping to lower rates for all customers. However, regulatory misalignment or the mis-apportionment of system costs could deter the beneficial load growth needed to temper electricity costs. The imperative for utilities is to insulate consumers from data center cost sharing.

    Historic investments continue pouring into data center and AI infrastructure development. Capital expenditures could approach $400 billion in 2025, up from $235 billion in 2024. Investments will surge even higher in 2026, with Oracle, Microsoft and Broadcom signaling continued growth in AI infrastructure. That momentum creates a unique opportunity for rural America, as data center developers and hyperscalers search for land and a clear path to power. But the road ahead is not without challenges. The looming supply-demand imbalance in U.S. energy markets could become a bottleneck for growth and increase the risk of critical AI training activities migrating overseas.

    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.