Last week I reported about the plans for moving USDA staff from Washington DC. headquarters to the hinterlands. Apparently, this was a surprise to USDA staff and to Congress as well. Senate Agriculture Committee Chair John Boozman, a Republican from Arkansas remarked, that “We need to fully understand its implications for the people USDA serves, especially how reorganization will affect USDA’s boots on the ground presence in rural America and delivery of essential services.” During a committee hearing on July 30th, senators from both parties questioned why they weren’t consulted ahead of time, and Agricultural organizations such as the American Farm Bureau Federation and the National Farmers Union, were left out of discussion about plans for the move. Ranking Senate Ag Committee Democratic Senator Amy Klobuchar, called the plan a “half-baked agenda” that she contends will result in worse service for farmers, families and rural communities, and was critical about the Senate Ag Committee “learning about this proposal just minutes before it was announced.” Klobuchar was one of many senators who are concerned that the decision to relocate more than 2,000 USDA employees from the Washington DC area will cause experienced employees to leave the agency while more than 15,000 USDA workers have left the agency by taking early retirements or accepted extended severance packages. While Secretary Brooke Rollins contends that these departures were voluntary, many USDA employees say they were presented with the option, accepting incentives to leave now or face likely termination later this year.
Another long running unknown for agriculture producers is how they will come out financially this year, considering the current trade war. Mexico remains the top market for U.S. agricultural products with nearly $12.3 billion in sales through May, which is down 2% from a year ago. Mexico imported over $30 billion of U.S. agricultural goods in 2024. China is also an unknown, since a trade deal still hasn’t been announced, and yesterday, the Trump administration stated that, “While a formal comprehensive trade deal has yet to be finalized, the US and China are continuing to engage in talks to address trade disputes, and to extend a tariff truce that is set to expire on August 12th .” However, overall, U.S. agricultural exports to China are down 55% through May, according to the USDA, which is the biggest hit for top export markets. In 2024, China was the third-largest market for U.S. agricultural goods at $24.4 billion, but sales through May had not reached $5 billion. In the meantime, U.S. soybean exporters have sold just over 3 million metric tons of soybeans for export in the 2025/2026 Marketing year. That sales volume is a 20-year low for soybean sales, and is down 12% from last year. Chinese buyers have declined to lock in new purchases even though September soybeans have fallen almost a dollar a bushel since late June. Livestock producers are also getting some troubling news, with pork exports to China down 18%, compared to 2024, and beef exports to both China and Hong Kong are down a combined 29%.
Even though farmers and ranchers have been facing some tough sledding recently, according to an annual USDA report that surveyed more than 28,000 agricultural operations, the value of land and buildings on U.S. farms rose 4.3% this year, to $4,350 per acre. Cropland values increased 4.7%, to $5,830 an acre, and pasture value increased almost 5% to $1,920 an acre. Farmland prices increased in every state. For example, Iowa agricultural land was valued at $9,790 an acre, that's up 3.9% from a year ago. Illinois saw gains of 2.6%, to $8,930 an acre. States with the highest valuations on agricultural land were Rhode Island, the smallest state, at $22,500 an acre; New Jersey, at $16,600; and Massachusetts, at $14,900 per acre. States in the Mountain Region saw the lowest values, led by New Mexico, at $725, Wyoming, at $1,000, and Nevada, at $1,200 an acre, while Colorado farmland averaged $2,200, Utah, $3,300, Arizona $4,000.
Looking at longer term issues, ag producers are also facing higher costs for agricultural equipment. Farm equipment manufacturers AGCO Corporation and Case New Holland recently stated that if duties rise, equipment makers will be forced to pass along the extra costs both to U.S. farmers and for those elsewhere in the world. Some of AGCO’s high-end Fendt tractors and combines are built in Europe, where goods exported to the U.S. have a 15% tariff, so AGCO is spreading the cost of the tariffs across all of its equipment. AGCO Chief Executive Officer Eric Hansotia stated, “We have a pile of costs that we’ve got to absorb somehow, and we look to sprinkle it wherever we can, all around the world on all products.”
17th century economist Adam Smith wrote, A trade war can sometimes force the offending country to lower its tariffs, but more often than not, the reverse happens.
