This is Bob Bragg with the Farm News & Views Report for the week of September 8th.
The U.S. Farm Bill is supposed to be rewritten by Congress every five years, but the 2018 Farm Bill, which expired in 2023, has yet to be updated, but it was extended until the end of this month. The Bill is supposed to govern federal agriculture and food policies, that include supplemental nutrition assistance,conservation programs that promote sustainable farming practices, support for the dairy industry, through the Dairy Margin Coverage program, and crop insurance. But Congress hasn’t been able to get their act together, and it’s likely that we will see another extension or two or three before a new Bill becomes a reality. It’s reported that at this point, it is doubtful that the House Republicans will be able to move the Bill out of the House Ag committee any time soon, and Senate Agriculture Committee members are hedging their bets that the Bill will be approved by the Senate, and signed before the end of this year. It’s necessary that a new Farm Bill will be passed so that the next cycle of mandatory funding and policies for agriculture and food programs can be enacted. The expiration and subsequent extensions have created uncertainty for farmers that may cause Farm Bill programs to revert to older, inconsistent laws from the 1930s and 40s if a new bill isn’t passed before extensions expire.
Analysts at Rabobank, an international cooperative bank that operates in 37 countries, are forecasting that farm profitability faces continued pressure into 2026, due to historically low crop prices colliding with high input costs, and they believe that U.S.-China trade tensions and tariff-driven inflation will further complicate the outlook. Tariffs are affecting corn prices by driving up increased costs for many inputs like fertilizer, equipment repairs and replacement, and shipping costs, while at the same time, they are threatening to restrict U.S. corn from entering key export markets, while reducing demand for the crop. They also point out that although some tariffs have led to price increases on specific agricultural goods, the overall uncertainty created by the ongoing trade disputes has negatively affected corn prices, causing them to erase earlier gains.
Tariffs can make strange bedfellows. For example, Brazil is the world's largest beef exporter, with China being Brazil’s leading trading partner, while the U.S. was China’s second largest beef trading partner. But recently, Mexico moved into that trading slot, by importing Brazilian beef and then exporting it to China. A move that is completely cutting out U.S. beef trade with China. This may lead to other countries making similar deals with Mexico to avoid U.S. tariffs. Trump is imposing an excessive 50% on Brazil because the country is holding their former president to account for attempting to overthrow the government after he lost the election in 2022.
As the U.S. corn and soybean harvest approaches, farmers are likely facing volatile markets that could lead to lower prices for these crops due to the projected large yields, along with tariffs that are impacting both corn and soybean prices. But good yields may not offset the higher input costs for repairs, fertilizer and crop chemicals that were a result of the tariffs imposed on these inputs. At this point, corn and soybean prices are lagging behind what farmers received last year, which may leave farmers seeing a loss on their corn crops, and slim soybeans profits, since China is absent from the soybean markets so far this year.
Warren Buffet calls a tariff “an act of war to some degree.”
