Cost of Production

Trump Warns Fertilizer Giants Against "Price Gouging" as Costs Soar 40%

Tue, 14 Apr 2026 15:46:56 GMT

Fertilizer market volatility is once again taking center stage as geopolitical tensions disrupt global supply lines and push input costs sharply higher. New analysis shows the increase in fertilizer prices may not be over, even if the Strait of Hormuz reopens soon.

Even with the situation in Iran pushing prices even higher, the sharp increase in fertilizer prices from 2020 to now is catching attention in Washington. Not only did President Donald Trump take to social media to warn of ‘price gouging,’ but Agriculture Secretary Brooke Rollins also posted on X Monday, specifically expressing frustration over Mosaic’s response to farmers.

While Rollins and USDA Under Secretary Stephen Vaden have raised concerns over fertilizer prices this year, the president posted on Truth Social over the weekend that he is closely monitoring fertilizer prices and pledged support for American farmers.

Trump said Saturday on his Truth Social platform he is “watching fertilizer prices CLOSELY” during what he described as the US “FIGHT FOR FREEDOM in Iran”, adding that the administration “will not accept PRICE GOUGING from the fertilizer monopoly”.

On Monday, Rollins posted on X, saying she was “So disappointed in this response” from Mosaic, “especially as you decide to idle two fertilizer production facilities, removing 1 MMT of supply from the world market.”

So disappointed in this response, @MosaicCompany, especially as you decide to idle two fertilizer production facilities, removing 1 MMT of supply from the world market. 🚨

Our Great President and this Administration have our farmers' backs. 💪🌾

Any sleight of hand will not be… https://t.co/GTCxcBQNgi
— Secretary Brooke Rollins (@SecRollins) April 13, 2026

Mosaic announced last week the decision to shut down major phosphate operations in Brazil, a move the that will cut production, reduce jobs, and signal a *strategic shift in how the fertilizer giant deploys its capital.

Mosaic Company announced Thursday it will idle two phosphate facilities in Brazil as part of a broader effort to cut costs and shift capital. Mosaic expects idling of the facilities to reduce annual phosphate production by approximately 1 million tonnes. CEO Bruce Bodine says the decision reflects what he calls a disciplined focus on long-term returns.

.@MosaicCompany, you’re right that U.S. farmers are facing a difficult economic situation, only made worse by the extra $6.9 BILLION they have had to spend on fertilizer since you petitioned the government to place duties on imported phosphorus. This has played a major role in… https://t.co/UuOqjE0jBu
— National Corn (NCGA) (@NationalCorn) April 13, 2026

Mosaic and Simplot have also been in the cross hairs of the push to remove countervailing duties on Moroccan phosphate . Groups like the National Corn Growers Association (NCGA) claim the CVDs are costing U.S. agriculture $1 billion each year.

The CVDs on Moroccan phosphate were put into place by the International Trade Commission (ITC) in 2021. As the sunset review begins, more than 50 state grower groups including the Texas Corn Producers Association, sent a letter to the U.S. Department of Commerce and the ITC to revoke the countervailing duties on imported phosphate fertilizers from Morocco and Russia.

In separate filings by Mosaic and Simplot to the ITC and the Department of Commerce, both companies said the continuation is necessary to maintain a “level playing field.”

In a written response to Farm Journal, Mosaic said:

“American farmers depend on a strong domestic fertilizer industry, which in turn depends on strong enforcement of U.S. trade laws that ensure a level playing field. Mosaic is proud to support U.S. agriculture with high-quality, reliable products produced here at home.”

Iran War’s Current Impact on Fertilizer Prices

The message from the Trump adminstration comes as tensions escalate in the Strait of Hormuz, where the United States is weighing a potential full naval blockade. Ship traffic through the critical waterway has already dropped from roughly 135 vessels per day to the single digits. A complete shutdown could halt flows entirely, further increasing fertilizer prices.

The stakes are high as roughly one-third of global fertilizer shipments move through the strait, and the disruption is already sending prices higher, up more than 40% compared to a year ago.

It is the 6-week anniversary of the closure of the Strait of Hormuz. Fert price comparisons:

NOLA urea - +$230 or 49%
NOLA UAN - +$145 or 38%
Midwest NH3 - +$245 or 32%
NOLA DAP - +$130 or 21%
NOLA potash - +$10 or 3%

...corn - 2-cents or 0.5% higher#sickeningforfarmers
— Josh Linville (@JLinvilleFert) April 10, 2026

Market data shows the impact Iran is having on already high fertilizer prices. According to StoneX analyst Josh Linville says in the six weeks since the war started:

Urea prices have surged by $230 per ton, a 49% increase
UAN is up $145 per ton, or 38%
Anhydrous ammonia has climbed $245 per ton, a 32% jump.
In contrast, corn prices have barely responded, rising just two cents, or about half a percent. The divergence is putting additional pressure on farm margins.

DOJ Probe Into Fertilizer Costs Seeks Input From Farmers

The Trump administration is asking farmers to help provide information as part of an ongoing U.S. Department of Justice investigation into elevated costs for fertilizer, machinery and other key agricultural inputs, according to reporting from Bloomberg.

Bloomberg reported the effort is aimed at gathering more on-the-ground data as regulators examine whether fertilizer producers may have coordinated to raise prices. The DOJ investigation was first reported in early March, when Bloomberg said federal officials had begun looking into whether fertilizer companies engaged in price coordination.

According to the Bloomberg report, Vaden said he has already met with officials at both the Department of Justice and the Federal Trade Commission to discuss potential lines of inquiry. He also noted that farmers could play a key role in the process.

Vaden said farmers “have a lot of information that might be relevant to these investigations.”

Bloomberg previously reported in early March that the Department of Justice is investigating whether fertilizer producers colluded to increase prices.

Speaking at the North American Agricultural Journalists’ annual conference in Washington on Monday, Vaden encouraged farmer participation in the probe, emphasizing confidentiality protections.

“We need farmers to help provide us with that information on a confidential basis, so that that can help inform the investigations that are ongoing,” Vaden said, according to Bloomberg. “I think we will have a mechanism in order to help encourage that exchange of information.”

NCGA Surveys Show Not All Farmers Have Fertilizer Secured for 2026

Against that backdrop, along with fertilizer prices climbing even higher in the six weeks after the conflict started with Iran, new surveys results from NCGA highlight how those market pressures are translating to on-farm realities.

Krista Swanson, chief economist for NCGA, says the organization conducted the survey to better understand fertilizer availability from the farmer perspective. Ag Secretary Rollins has told mainstream media that 80% of farmers have fertilizer locked in for 2026, but NCGA data contradicts that figure.

“We’re hearing that number being thrown around too, which is why we really wanted to find out directly from farmers what the status is for them,” Swanson says.

NCGA Grower Survey

(National Corn Growers Association (NCGA))

A Significant Gap in Fertilizer Readiness

The surveys show that only 60% of farmers report having their nitrogen fully purchased or secured for the 2026 growing season, while 64% say the same for phosphate. That leaves a sizable portion of producers still working to lock in supplies.

“When you think about over 500,000 corn farmers in the U.S., this isn’t a small number,” Swanson says. “Our survey results indicate that over 200,000 farmers still need at least some fertilizer for this year.”

Nitrogen remains a critical input for corn production and is closely tied to yield potential. Any shortfall, whether driven by availability or cost, can directly affect productivity and profitability.

NCGA Grower Surveys

(National Corn Growers Association (NCGA))

Younger Farmers Feeling the Pressure Most

The survey also points to uneven impacts across the farm sector, with younger farmers facing greater challenges in securing fertilizer.

Swanson says younger producers reported having more nitrogen left to purchase compared to older farmers.

“You think about younger farmers that have less capital already built up in their business, maybe tighter cash flow needs because of their equity position,” she says. “This does seem to have a disproportional impact on younger farmers.”

That dynamic raises concerns about financial strain among newer operations in a high-cost environment.

Corn Acres Likely Stable, But With Reduced Inputs

Despite the challenges, most farmers are not planning to reduce corn acreage. The survey found that 80% of respondents expect to maintain their planned acres.

NCGA Grower Survey

(National Corn Growers Association (NCGA))

At the same time, fertilizer application rates may fall short. Half of the farmers surveyed say they do not expect to apply their full amount of fertilizer.

“Pairing these two together, it seems to me like we are still going to see a lot of corn acres get planted,” Swanson says. “But those corn acres will have less fertilizer than maybe what they would have otherwise had.”

That combination could limit yield potential if input reductions become widespread.

Growing Concern Shifts to 2027

While fertilizer availability remains a concern for 2026, attention is already turning to the next crop year. Fertilizer purchasing follows a rolling cycle, and planning for 2027 will begin soon.

Survey responses show that for every one farmer more concerned about fertilizer price and availability for 2026, nearly two are more concerned about 2027.

NCGA Grower Survey

(National Corn Growers Association (NCGA))

“So farmers are concerned as we look ahead to next year,” Swanson says.

The shift reflects uncertainty about how long supply disruptions and elevated prices will persist.

Supply Chain Recovery May Take Time

Even if geopolitical tensions ease, relief may not come quickly. Swanson notes that the fertilizer market is still dealing with production disruptions and supply chain backlogs.

“A short-term ceasefire has limited immediate impact on this ongoing fertilizer crisis for farmers,” she says. “Even when a permanent end to the situation is reached, we’re still looking at recovery from supply chain backlogs and halted production that could take a long time to recover from.”

Damage to key inputs such as liquid natural gas and sulfur production could take years to repair, keeping pressure on supply.

A Tightening Outlook

The NCGA survey underscores a challenging environment for corn producers. Most acres are expected to be planted this year, but not all will receive optimal fertilizer applications. At the same time, concern is building for 2027 as farmers look ahead to the next purchasing cycle.

For many producers, the issue is no longer just securing fertilizer for this season. It is navigating a period of sustained uncertainty that could shape production decisions, costs, and risk management strategies across the U.S. corn sector.

Longstanding Concerns Over Market Concentration

In September 2025, USDA and the U.S. Department of Justice signed a Memorandum of Understanding, committing both agencies to jointly examine high and volatile input costs, which included fertilizer, by scrutinizing competitive conditions in agricultural markets and enforcing antitrust laws, particularly around price setting and market concentration.

While geopolitical tensions are the latest driver of volatility, many farm groups argue the root of the problem runs deeper. Matt Perdue, president of the North Dakota Farmers Union, says ongoing federal investigations into fertilizer pricing must lead to meaningful action.

“We appreciate the administration’s investigations into input costs,” Perdue says. “But investigations don’t do anything if they’re not followed by enforcement, and they don’t do anything if we don’t learn what came out of those investigations.”

Groups like the Texas Corn Producers Association have been raising concerns about fertilizer market concentration for years. Texas farmer Dee Vaughan says the organization began studying the issue in 2020, working with the Agricultural and Food Policy Center at Texas A&M to examine pricing trends.

“We’ve been very concerned about all of our input costs, but specifically fertilizer, because it’s the one that just keeps going up almost exponentially,” Vaughan says.

He adds those studies found a shift in how fertilizer prices are determined . Historically tied closely to natural gas costs, the study found nitrogen fertilizer pricing began tracking corn prices more closely after 2010, a change Vaughan says reflects deeper structural issues.

According to Vaughan, the small number of firms controlling the market have the data and market awareness to price inputs based on farmers’ revenue potential, rather than production costs.

“They all have economists on staff,” Vaughan says. “They know exactly what our costs are, what our income is, and they’re able to extract value based on what they see as the gross income of a farmer. It’s not based on cost of production any longer.”

Despite Sunny Optimism: Ongoing Challenges Remain for Dairy Farmers

Thu, 26 Jun 2025 14:28:06 GMT

Editor’s Note: This is one article in a series that is included in the 2025 Farm Journal’s State of the Dairy Industry report. The full 16-page report will appear in the May/June issues of Dairy Herd Management and Milk Business Quarterly and will be published in this space over the next several weeks. To download the full report for free click here.
_______________________________________________________________________________________

The dairy industry has recently been riding a wave of cautious optimism, as producers work tirelessly to steer through a myriad of complex challenges. Despite the sunny optimism, underlying issues such as rising operational costs, labor shortages, regulatory conundrums and unpredictable markets pose significant threats to the industry’s sustainability.

Rising Costs and Material Concerns

When we surveyed producers, obstacles such as inflation and the escalating costs of materials emerged as top concerns. These financial pressures, alongside sharply rising land costs, loom large over the potential for growth and expansion. Increased operational expenses, including those related to labor, equipment and inputs, stand as formidable barriers that must be navigated as producers strive toward future prosperity.

Labor Shortages: A Persistent Challenge

While the concern regarding availability of labor has slipped a bit in ranking, the issue remains significant. Frequent shortages and labor force hurdles are continually cited as obstacles preventing the achievement of growth milestones. With many dairy operations relying on non-family labor for at least half of their workforce, the challenge of finding and maintaining a dependable labor pool is a pressing issue that cannot be overlooked.

Regulatory and Environmental Hurdles

Another growing concern in the dairy industry is the maze of environmental and regulatory obstacles that dairy operators must traverse. Feedback from respondents highlighted increasing anxieties over inconsistent and burdensome regulations, particularly those surrounding environmental practices, labor laws and immigration. The impact of such obstacles is clear: They create uncertainty and heighten operational stress, which in turn hampers growth and expansion potential.

Market Volatility

Confidence in the milk market has emerged as a prominent challenge for growth. Producers express frustration over the volatile nature of milk prices, especially when coupled with rising input and operating costs.

Despite these challenges, there has been little change over the past year in anticipated investments for the next three to five years. Nearly half of the producers plan to replace or improve facilities and acquire additional acreage for growing crops. This trend signals a cautious, yet optimistic, outlook toward the future growth of the dairy industry.

New Trends Are Emerging In The Farmland Market

Fri, 20 Dec 2024 22:32:57 GMT

It’s been an interesting few years for the farmland market, with inflation and interest rates largely driving trends. But this year is different as new trends are emerging in the farmland market, including lower farm income and uncertainty surrounding tariffs and trade , the farm bill and renewable fuels/energy .

“Two years ago, we really focused on interest rates. That was a pretty easy conversation. And then last year we focused on inflation, and frankly, that was a pretty easy conversation too. We knew that things would somehow eventually calm down a bit,” says Bruce Sherrick, professor and director of the TIAA Center for Farmland Research. “This year, we focused a little bit more on income. To be honest, that’s a lot tougher to predict.”

People’s Company 2024 Land Values

(Peoples Company)

Considering the combination of lower commodity prices and farm income, it makes sense that land values have softened in 2024. What might be more surprising, however, is that they haven’t declined more.

“When you look at just commodity prices alone and interest rates alone, I think a lot of folks would have anticipated that land values would probably soften more so than what a lot of the survey data and the USDA numbers are showing,” says Steve Bruere, president of Peoples Company. “So, why aren’t land values declining to the degree that maybe your spreadsheet might show that they would? The are themes such as ecosystem services, natural capital, wind and solar, carbon.”

Iowa State University’s (ISU) recent land value survey found farmland values in the state decreased 3.1%, or $369, to $11,467 per acre, and 75 of Iowa’s 99 counties showed a decrease in land values. Bruere believes the decline of land values in the state might be closer to 10% to 15%, based on transactions he’s seen, and there’s likely still farther to go.

“The markets have probably softened more than what the Iowa state survey would reflect,” he says. “I think everybody is incredibly bullish about where the land markets headed over the long haul, but in the short term, there’s some adjustments happening around commodity prices and interest rates.

This sentiment is echoed by respondents to ISU’s survey, as 58% expect a decline in values over the next year while 80% believe land values will increase over the next five years.

“This long-term confidence aligns with expectations of more stable or slightly rising corn and soybean prices, suggesting that while the short-term outlook may be challenging, the market’s foundation remains strong,” says ISU survey author Rabail Chandio.

A Regional Look

Peoples Company 2024 Returns by Region

(Peoples Company)

Looking at the farmland trends by region reveals a few interesting connections.

“When you start to look at some of the stability of returns, you can start to call out those regions where you have more diversity in crop production. The Pacific Northwest jumps out, whereas in the corn belt, you can see a bit of a tracking along some of those commodity cycles,” says Dave Muth, Peoples Company’s director of capital markets. “In 2025, you can plan on farmland across different regions and different systems needing to be looked at more independently.”

Livestock’s role in a region’s income also becomes clearer.

“In 2024, animals and livestock products exceeded, in terms of receipts, crops for the first time. This is a major change because when commodity prices go down, feed prices for livestock also go down,” Sherrick says. “This is having differential effects in supporting farmland values moving forward again.”

3 Takeaways For The Future
The Peoples Company team gives the following predictions for what to expect in the farmland market moving forward.

Land values are increasing long term, but the next year could be more unpredictable.
Record-breaking sales will likely be a bidding war between neighbors who wanted the land instead of a new trend.
Voluntarily bringing land to market just because a neighbor had a huge sale seems to be over - at least for now.

“I wouldn’t be surprised to see a little bit of a pullback, but I think the pullback will still need to be precipitated by some policy or world event that is not present now,” Sherrick says. “Otherwise, I would expect it to be essentially flat. There’s a lot of folks who would like to own farmland still, so I’m not expecting a huge correction.”

USDA’s Latest Farm Income Data Looks Brighter Than Early 2024 Numbers

Thu, 12 Sep 2024 15:42:03 GMT

USDA–Economic Research Service (ERS) has released updated projections for 2024 farm income, and though it’s still anticipated to decline, the outlook doesn’t look quite as dim as it did earlier this year.

The new numbers show net cash farm income for the 2024 calendar year will fall $12 billion, which is about 7% down from 2023, and net farm income will fall $6.5 billion or 4.4%. This is compared to projections released in February of this year that suggested net farm income would fall 26%.

“There are a lot of factors going on here, but to me, the primary ones are that the revisions reflect expectations that animal and animal product cash receipts will increase while production expenses will fall,” says USDA–ERS economist Carrie Litkowski. “This is largely due to the incorporation of new data.

Litkowski shares the primary cause for the fall in 2024 farm income comes from commodity prices. Cash receipts or sales are expected to decrease by $27.7 billion. When combined with the inventory adjustment for crops, the value of crop production is forecast to decrease $25.6 billion from 2023. The largest decline comes from corn and soybeans, though wheat producers are expected to have a nearly 50% decline in average net cash farm income in 2024.

USDA ERS Row Crop Cash Receipt Projections 9-5-24

(USDA ERS)

But it’s not all bad news for crop farmers. Fertilizer expenses are expected to fall almost 10%.

Better News in Livestock
The outlook for livestock producers is more positive. Total animal and animal product recipes are expected to increase by $17.8 billion, or 7.1%, with the main driver coming from egg prices.

“Receipts for eggs are perhaps the biggest story here, in that they are forecast to see the largest increase in 2024 at 35%, or about $6 billion. Eggs alone account for a little more than half of the total increase in animal and animal product receipts,” Litkowski says. “Back in February, we did not anticipate that egg prices were going to increase as much as they have. That’s due to supply restraints we’re seeing due to the avian flu.”

Dairy farm businesses can expect to see the largest increase in average net farm income at 47.2%. Litkowski attributes this to higher milk receipts and lower expenses in 2024.

Farm businesses specializing in hogs are forecast to have an 11% increase but remain low relative to prior years. Beef farm businesses are projected at a 9.7% increase and poultry will see an 11.7% increase.

USDA ERS Livestock Cash Receipt Projections 9-5-24

(USDA ERS)

These operations should see big savings in feed as well, with an anticipated decline of 12%.

Geographic Breakdown
Looking at the data by region, six of USDA’s nine regions will see lower average net cash farm income. Farmers in the heartland states will be hit the hardest with a 23% decline.

Income increases are forecast for producers in the northern crescent and fruitful rim regions — between 1% and 4%. Litkowski says this is where many dairy farms are located and can be attributed to the expectations for higher dairy receipts and lower expenses.

“Regional performance of farm businesses can vary considerably due to the strong geographic concentration of certain production specialties or average farm size,” she explains. “Across all farm businesses, average net cash farm income is forecast to decrease 9% from 2023 to 2024 in nominal dollars.”

USDA ERS Farm Income By Region 9-5-24

(USDA ERS)

Household Income Remains Unchanged
Total farm household income is projected to increase 1.7% in 2024 to $99,683. However, when inflation is taken into consideration, Litkowski says she categorizes it as “relatively unchanged”.

“1.7% is less than the expected rate of inflation in 2024, so it’s really more like a decline of 0.7% in real dollars,” she explains.

The Big Picture
While this year’s income projections may have producers concerned about their bottom line, USDA–ERS stresses the importance of looking at the numbers with the past 20 years in mind.

“The farm sector balance sheet is projected to remain strong,” Litkowski says. “Net farm income fell 22% from 2022 to 2023, and in 2024 net farm income is forecast to fall nearly 7%. Even with these expected declines, both sectors in 2024 are forecast to remain above their 20-year-average.”

USDA ERS Farm Income 20-year Average 9-5-24

(USDA ERS)

Click here for the full report.

Your Next Read: How Do You Know When Agriculture Is In A Recession?

Land Values Have The Resilience Of a Dandelion

Tue, 09 Jul 2024 13:08:03 GMT

Though the ag economy is facing headwinds in interest rates, inflation and commodity prices, all classes of land across the country have gained in value, according to Farmers National Company’s July report .

“Despite these negative pressures, the land market has remained relatively resilient but is showing signs of settling in general, including single-digit decreases in specific areas,” says Paul Schadegg, senior vice president of real estate operations at Farmers National Company.

The decreases Schadegg references can be found in the eastern part of the country - in states such as Indiana, Kentucky, Ohio and Michigan. The overall stability of the market, however, is something Steve Bruere, president of Peoples Company, chalks up to simple supply and demand.

“Commodity prices are softer and interest rates are higher, yet the farmland markets have been incredibly resilient. That’s because there’s still more capital out there that wants to own farmland than there is supply available,” Bruere says. “I talk to folks who say they want to buy farmland, but they want the market to cool off a little bit. I don’t know if the market will cool off to the degree they think that it should because there’s just not going to be supply.”

Correlation Between Farmland and Inflation
Another factor that might keep the land market from significantly settling is inflation, which, based on data from Peoples Company , is shown to be very strongly correlated with farmland values.

This chart from Peoples Company combines data from USDA, BLS and TIAA Center for Farmland Research to show the connection between farmland values and inflation

(Peoples Company)

“There’s a strong belief that we’re at the beginning stage, because of the fiscal policy in this country, where inflation is going to last quite a while and is going to get much more severe,” Bruere says. “If you believe that and that’s the camp you’re in, then you probably want to own farmland versus being in a fixed income like a T-bill.”

But this doesn’t necessarily mean owners who are considering selling should wait for this environment to occur to get a higher price at auction.

“If you’re considering selling, and you’re saying ‘OK, next year, the farmland market is going to be more vibrant than it is today, so I’m going to wait two or three years’, I think it’s going to take a little while for this interest rate and inflation environment to sort itself out,” Bruere says.

What To Watch
The timelines for inflation, interest rates and global conflict create a lot of unknowns in the market. As always, location and type of land plays an important role in overall land values.

“We anticipate variations in land value changes across our regions in the U.S.,” Schadegg says. “Areas with strong supply/demand scenarios, an expansion of alternative land use projects and irrigation water concerns might experience more dramatic increases or decreases in values.”

This sentiment is echoed by Bruere, who says he’s never been more bullish about land.

“There’s some uncertainty around where farmland is going. But if you have a long-term timeline, there’s just never been a period where you buy a piece of farmland that it’s not going to be worth more at 10 years than the day you bought it.”

Here Are The Notable Changes In The House Farm Bill

Tue, 04 Jun 2024 19:04:11 GMT

The House Ag Committee recently released and approved their initial version of the long-awaited 2024 Farm Bill, which included changes to several areas important to production agriculture – such as reference prices, base acres and federal programs. During an episode of the Top Producer podcast, Farm CPA Paul Neiffer explained how farmers could expect those changes to affect them.

Reference Prices
According to Neiffer, the proposed farm bill would increase reference prices across the board, with the smallest increases in barley, oats and corn and the largest in rice. The changes for other crops include:

• Legumes: ~19%
• Peanuts: 17.8%
• Cotton: 14.4%
• Wheat: 15.5%
• Soybeans: 18.5%

It’s important to note, however, these likely won’t be the final numbers in the farm bill.

“I think this is going to increase the cost of the farm bill by – over a 10-year period – maybe $15 billion to $20 billion,” Neiffer says. “If they need to cut some, they can cut it out of here.”

Base Acres
Another update includes base acres. In the new House-approved language, if you have planted more acres than you have base acres, the excess acres will now qualify to be increased to reflect what your plantings were over the average of 2019 to 2023 crop years.

“This is a pretty good deal. It’s a one-time opportunity – not a reallocation of your current base,” Neiffer says. “Let’s say you have corn and soybeans, but the last five years you only planted corn. This base acre update will be based on what you planted. So, if you only planted corn, you’ll get an increase in corn base acres.”

In addition, non-covered commodities, such as potatoes or onions, can now be used on up to 15% of total farm acres.

The House proposal does not restrict who qualifies for the program.

Agriculture Risk Coverage Program
Like reference prices, the Agriculture Risk Coverage program (ARC) also sees an increase in this proposal.

The guarantee of benchmark revenue jumps from 86% to 90% and the maximum payment also rises from 10% of benchmark revenue to 12.5%.

Marketing Loans
Neiffer says that while some may go up slightly more than others, almost all marketing loans increase by about 10%.

“There are a couple of situations where that helps. If you want to get a loan, you can get more of a loan,” he says. “But it could also hurt you in a way.”

He goes on to explain price loss coverage (PLC) payments are calculated as the difference between the effective reference price and market year average (MYA) price and the MYA price cannot drop below the loan rate. So, with the increase in the market loan rate, PLC payments could be smaller.

Livestock Programs
On the animal side, changes have been made to the dairy margin program and livestock indemnity payments.
“The big one [for the dairy margin program] is the tier one coverage gets more of a subsidy from 5 million lb. up to 6 million lb. That’s a 20% increase,” Neiffer says.

The payment rate for livestock indemnity payments is also increased to up to 100%. Neiffer says that increase is for animals that have been killed by a federally protected species, such as wolves.

He adds if a pregnant animal is killed in this situation, the owner could be paid up to 85% of the unborn animal’s lowest weight class.

Partnership Tax Payments
Another payment change to watch involves how operations are classified. In the past, Neiffer says, operations taxed as partnerships – such as an LLC or S corporation – were limited to one payment. The new proposal does not have a payment limit for qualified pass-through entities, which could be any LLC not electing to be a C corporation, any S corporation or any general partnership or joint venture. The one-payment limit would still apply to C corporations.

“I don’t know if this will happen,” Neiffer says. “The 2018 Farm Bill had certain provisions similar to this in the House bill but didn’t happen.”

Farm Income Definition
The House proposal also broadens the definition of what counts as farm income.

“Under the current definition of farming, gains from trading in farm equipment typically is not considered to be farm income. This farm bill specifically states that is farming, as well as agritourism and direct-to-consumer marketing,” Neiffer says. “That’s good news.”

Conservation Reserve Program
The maximum Conservation Reserve Program (CRP) payment more than doubles in this draft – jumping from $50,000 to $125,000.

“For farmers who maybe have acres that really shouldn’t be farmed, this is allowing more of those acres to get enrolled,” Neiffer says.

Crop Insurance
The final area Neiffer highlights with notable changes is supplemental crop insurance.

He shares the 85% cap on revenue protection policies is increased to 90% for individual yield or revenue coverage, but it’s aggregated across multiple commodities. The supplemental coverage option (SCO) is also increased from 86% to 90%.

“This is really welcome news for farmers in North Dakota, Texas, Oklahoma or southern Missouri where the cost of crop insurance is so high,” Neiffer says. “By increasing the subsidy, this is probably going to allow a lot of those farmers to buy revenue protection at 60% or 65% and then use SCO to go up to 90%.”

There’s also a 10-percentage point subsidy increase for those who qualify as beginning or veteran farmers. This has been expanded from five years to 10 years as well.

3 Trends to Watch in the 2024 Land Market

Tue, 06 Feb 2024 16:22:15 GMT

Will the year ahead bring higher peaks, a flat plateau or dip into a valley for farmland values? Jim Rothermich of Iowa Appraisals shares his insights in how the red-hot land market we’ve seen the past few years is showing signs of cooling off.

“The hyper volume of acres going to auction started happening in mid-2021 and kept going to 2022. As we got into 2023, the first quarter had pretty aggressive numbers going to auction, and then it started slowing down,” he says. “The frequency of $20,000 an acre or more really slowed down in the spring and summer.”

Drought, Interest Rates and No Sale Auctions
As for 2024, Rothermich says the level of drought already occurring in much of the country has potential to impact the volume of land sales.

“[Drought] makes people pull back,” he says. “It seems like with crop insurance we don’t see those valleys as much on a dry year, but we haven’t had a major drought since 1934 or 1936 – so we’ll have to see.”

Another factor to watch continues to be interest rates.

“People call in and say they’re interested in a farm, then talk to their banker and say ‘we’re out’. That’s shrinking the buyer pool, and it’s affecting the market,” Rothermich says. “What I’m hearing from my banker friends is interest rates will eventually go down to 5% to 6%, and that’s going to be the normal. Those 3% to 4% interest rates are a thing of the past.”

He adds there have been several no sales at auction recently, which could impact the market as well.

“We’re going to continue to see some records set in some counties, and we’re going to continue to see sales. But I think the auction companies are going to be more selective in what they take to auction because of the chance of a no sale,” Rothermich says. “They’re going to do more traditional listings. So, I think the volume is probably going to go back to normal.”

Cash Rents Predict Strength in 2024 Land Values
When it comes to cash rents, Rothermich says values remain strong despite lower commodity prices.

“Some of these recent cash rent auctions, there’s just no weakness in it at all,” he says. “A lot of them are three-year terms, so it seems like those tenants are forecasting the next three years to be pretty decent.”

This is a trend he predicts will help keep the overall land market steady in the year ahead.

“I see the market gradually cooling off in 2024,” he says. “It’s not going to fall out of bed because these rents are too strong. I think it’s just going to slowly settle down and go back to normal.”

To hear more from Rothermich, listen to this episode of the Top Producer podcast.

Farmland Values Are Holding Up, But There Are Hints of a Reset At a New Level

Farmland Values Remain Strong, Expected To Stabilize In 2024

Thu, 11 Jan 2024 22:25:26 GMT

After multiple years of record land values, Farmers National Company (FNC) is expecting the market to stabilize in the year ahead.

In their January 2024 land values report, the company shared the sharp increase in farmland values has slowed, and values are holding strong.

“The key point, without a doubt, is resiliency,” Paul Schadegg, FNC senior vice president of real estate operations, shared with U.S. Farm Report. “Even with all the pressures that we’ve seen - some declining commodity markets, interest rates being higher than what we’re used to, and the cost of inputs - we really expected more of a settling of land values. And we really haven’t seen it–no decreases to speak of and still some really strong sales out there in the country.”

Demand for farmland has remained strong as well, though the focus has turned to high quality land that is available in a limited supply – something Schadegg says will help maintain current values.

The limited supply of land is anticipated to continue as some landowners decide to hold their assets due to its value.

“When we look at the seller side, we have many sellers that are looking at their land right now and deciding that it’s never been worth more than it is today and make that decision to sell. But at the same time, some of those sellers are looking at it and at the appreciation in value that they’ve seen over the last 20 to 25 years, and realizing that it’s a very valuable asset that provides them a return and making the decision to hold that land. And that’s keeping a certain amount of inventory off the market,” Schadegg says.

FNC completed nearly 700 transactions across the Midwest in 2023 – a number that is below 2021 and 2022 levels but still above average for the company. Of those sales, 80% of the buyers have been local farmers and operators.

“When this land market it really took off, the primary pool of buyers were operating farmers, and they continue to be the successful buyer of land,” Schadegg says. “But behind that is the investor that is pushing them to the levels they are paying for the land.”

As far as what may come in the year ahead, FNC expects the commodity markets and input costs to play a large role. And while easing interest rates and reduced inflation could help the farmland market, global uncertainty and U.S. political factors remain a wild card.

“Over the past 25 years, average land values have experienced steady growth following the 1980s farm crisis. Under a strong ag economy, Farmers National Company expects that trend to continue,” Schadegg says.

The company breaks down what to expect by region as well.

“Iowa continues to be a strong point, but also, Illinois and Indiana have picked up a little steam. And a lot of the sales that we’re seeing out there are quite strong, in the $20,000 plus range,” Schadegg says. “Another little pocket that has typically not seen a lot of activity in the recent past, but we have here in the last six to 12 months, is northwest Missouri. There’s some very good quality land that hasn’t changed hands much in the past, and there’s been some great competition there.”

8 Factors Shaping the Rural Economy in 2024

Mon, 18 Dec 2023 16:31:33 GMT

CoBank has released their 2024 outlook report , which takes a look at the key themes the organization expects to shape agricultural and the rural economy in the coming year.

Director of CoBank’s Knowledge Exchange Rob Fox shares that while the U.S. economy is still in good shape overall, high prices are expected to continue to take a toll.

Here are the top eight factors to watch in 2024.

1. Global Slowdown
Global growth in 2023 is estimated at 2.5%, which is less than half of the average growth between 2000 to 2018. This trend is expected to continue into next year.

CoBank recommends accounting for permanently slower global economic growth in your business plan moving forward.

2. Prices Remain Elevated
While inflation and the unemployment rate are down, higher prices appear to be sticking.

According to the report, the price of food at home has risen by 25% in the past three years and has affected consumer shopping behavior as a result. Retail spending has fallen in all but two months through the past year – which is expected to continue.

“Consumers are increasingly feeling the pinch of higher prices for food, housing and other essential goods. People have anchored mental expectations about what prices should be and those anchors take a long time to move,” Fox says. “Consumers are beginning to realize some prices aren’t going back to where they were three years ago and changing their purchasing behaviors to reduce spending. That will create stronger headwinds for the U.S. economy in 2024.”

3. Slowed Government Progress Continues
With slim majorities in both the House and Senate, shutdown deadlines continue to loom. Little progress has been made on major legislation such as the Farm Bill.

While CoBank shares the work already put into the Farm Bill could incentivize committees to pass it before 2025, the election of a new Senate Chair and the inexperience of many members of Congress may limit progress.

4. Lower Profitability Resulting From Several Factors
Commodity prices have seen the effect on high interest rates, a strong U.S. dollar and the resiliency of the U.S. economy. And despite the drop in fertilizer prices, the cost of production for agriculture commodities remains high.

CoBank is anticipating ag commodities to benefit from more upside price risk than down in 2024 due to tight inventories and a strong El Nino weather pattern during the growing season.

5. An Increase of Planted Soybean Acres
An expansion of soybean acreage is expected for two reasons: 2023’s smaller soybean harvest in the U.S. and an increase in biofuel demand.

USDA’s early release of its Agricultural Projections to 2033 points to planted soybean acreage rising 4% YoY to 87 million acres this spring.

Current 2024 futures prices suggest a decline in prices for the sector, but the outlook relies heavily on the value of the U.S. dollar, conditions of wheat in Russia and South America’s corn and soybean harvests.

6. Livestock Growth Plans Put On Hold
Lower feed costs and domestic demand should help profitability a bit in the livestock sector, but costs are still high. CoBank expects the industry to focus heavily on efficiency, technology and risk management.

7. Uncertainty In The Dairy Industry
Increased prices for consumers could keep sales growth at a slow rate, though they’re still expected to grow. International demand will play a large role in profitability and lower feed costs paired with improved cow productivity should increase milk production to meet the need.

8. Power, Energy And Broadband Sectors Face Obstacles
Global conflicts create uncertainty for commodity markets and energy prices. While oil prices have fallen by 5% in the fourth quarter, CoBank does not anticipate this environment to last.

As for broadband, investment continues to flow into the industry. However, it will not be without challenges due to a tight labor market, tight credit conditions and a difficult permit process.

Click here to read CoBank’s full report.

2024 Land Value Influencers in Your Region

Mon, 04 Dec 2023 21:41:34 GMT

Using a combination of data with boots on the ground experience, Peoples Company has released its fourth annual land values report.

The report shows a three-year period of remarkable land appreciation across the country – something Bruce Sherrick, professor and director of the TIAA Center for Farmland Research at the University of Illinois, says has not been surprising.

“We kind of have a rolling narrative around this and quite often people will remark it’s shocking that farmland almost anticipated inflation or that it’s shocking how well that’s done through time. And I don’t think I’m surprised by that,” he says. “I’m surprised by the accuracy or the degree or the strength of that relationship if anything.”

Annual rates of return have been in the double digits for many regions. In the Northern Plains region specifically, the rate of change in the past year has been especially high.

(Farm Journal)

“In the last year, what we’ve seen is really quite remarkable in the middle of the country,” Sherrick says. “That area has kind of caught up to previous years in the Midwest and Lake states.”

As far as what’s affecting land values in the rest of the country, Peoples Company breaks the data into eight regions.

Pacific West

(Farm Journal)

Annual performance on permanent cropland in the Pacific West and California has suffered in recent years due to a period of low nut prices, tariffs, water challenges and high operating capital.

3 Unique Characteristics of The Permanent Crop Industry

Steve Bruere, president of Peoples Company, anticipates a lot of land transactions in the California market in 2024.

“The amount of irrigated, plantable acreage is shrinking,” he adds. “The acreage left standing will be more valuable over time because of the optionality of what you can grow on it.”

Pacific Northwest

(Farm Journal)

Similar to the Pacific West, the Pacific Northwest has had a period of good returns and offers a lot of optionality of what can be grown on the land. The land values in comparison to its western neighbors, however, are much lower to produce a similar product. That factor – alongside increased access to water resources – allows the region to absorb displaced production from other areas.

“We’re seeing at least that phase of exploration on some of those fresh market crops that may have some compressed acreage and higher water costs to deal with in California looking at the Pacific Northwest, the Columbia River Basin area in particular, as a transition point,” says Dave Muth, Peoples Company’s capital markets managing director.

Southern Plains

(Farm Journal)

The Southern Plains region – Texas and Oklahoma – is experiencing good land value returns despite water issues and labor complications. As these challenges continue, renewable energy projects are becoming key to the region’s profitability.

“Think about it: 20,30, or 40 years ago, when someone was looking to buy a ranch, if transmission lines ran across it, that might take it off the list. Now those same transmission lines are seen as a huge asset,” says Eric O’Keefe, editor of The Land Report. “This emphasis on energy, whether it be in terms of oil and gas or renewables including direct carbon capture, is going to be a complete game changer. I think it’s going to be driving land values in Texas for decades to come.”

Northern Plains

(Farm Journal)

Total returns per year in the Northern Plains over the past three years are averaged at 18.5% - the highest in the country.

“The increase in values have been rather dramatic compared to other parts of the country in the last three-year period. Part of that’s driven by relative yield gains, but it’s also the genetics and the attention to doing genetics for this part of the country by the major seed corn and other seed producers,” Sherrick says. “It has made this a possible competitor for the rest of the country.”

The focus on foreign and corporate ownership in this area also makes it unique in comparison to other regions.

“You see a difference in these types of markets where the farmers aren’t driving values,” Bruere says. “If you take that institutional investor out of the market, it definitely impacts land values and we saw that real time this summer and Kansas and Colorado.”

Delta Market

(Farm Journal)

The Delta Market – Mississippi, Louisiana and Arkansas – has seen the most stable returns over time when compared to other regions across the country, which makes it attractive to outside investors.

“You don’t get necessarily the same swings that we get in the Midwest in this market. And I’m really bullish – you’ve got plenty of water and you’ve got large fields,” Bruere says. “One of the issues we do struggle with in this market is the tenant pool. You don’t have that same competitive nature for tenants that you’ve gotten Midwest.”

Southeast Market

(Farm Journal)

The Southeast – Florida, Alabama, Georgia and South Carolina – has seen moderate returns in comparison to the other regions. The increase in severe weather as well as development in the area leads Sherrick to expect quite a bit of transition in the future.

“I’m actually not worried about land values, hardly at all in this region, for traditional agricultural things,” he says. “Land that gets displaced for a retirement community, a park, golf course or major league baseball facility aren’t reductions in value. They’re just a reduction in the use of it for agriculture.”

Lake States

(Farm Journal)

The Great Lakes region is one Sherrick describes as “still trying to figure out who they’re going to be”.

“There’s great optionality, reasonable acquisition prices and massive increases in land values that have kind of kept the returns high, very correlated with inflation as well,” he says.

Though the yields in the region may not be as high as in the corn belt, the area’s total returns per year over the past three years have averaged 14%.

Corn Belt

(Farm Journal)

Sherrick refers to Illinois and Indiana as indicators and predictors of what’s happening in the agriculture industry.

The region continues to have high appreciation values and above average farm incomes, though transactions have slowed in 2023. The corn belt is anticipated to have continued interest from non-operating investors.

Looking at 2024
Overall, Peoples Company reports the driving factors behind land values are income, interest rates and inflation. As we move into 2024, they expect this will begin to normalize.

Buyer demand is also expected to remain a key player.

“There’s more money that wants to own farmland in there as farmland for sale. That dynamic is not going to change in 2024,” says Bruere. “Right now it feels like interest rates are pulling back a little bit and I think the landmark is going to remain pretty stable in 2024.”

High Interest Rates, Strong U.S. Dollar Take a Toll on Ag Economy

Fri, 21 Mar 2025 15:53:06 GMT

According to a new quarterly report from CoBank’s Knowledge Exchange , the combination of the highest interest rate environment since 2007 and a strong U.S. dollar is beginning to take a disproportionate toll on rural industries such as agriculture, forest products, mining and manufacturing.

“The challenge for agriculture and other rural industries that rely heavily on global markets is their export partners simply can’t afford to buy U.S. products,” said Rob Fox, director of CoBank’s Knowledge Exchange, in the company’s press release. “When you combine the loss of exports with a general slowdown in the U.S. economy, it’s a double whammy for many businesses operating in rural America.”

Key Takeaways from the Report

Macroeconomic Outlook

Fed officials now expect interest rates to stay higher for longer.
As the U.S. economy outperforms expectations, countries such as Europe and China have fallen short - resulting in the strong U.S. dollar. This makes U.S. exports more expensive and imports cheaper, heavily impacting the rural economy.

Grains, Farm Supply & Biofuels:

Historically low water levels on the Mississippi River, higher barge rates, a strong U.S. dollar and robust export competition from Brazil and Russia are creating major headwinds for the U.S. grain and oilseed export program.
Acreage for winter wheat planting is expected to be down slightly with prices below expected breakeven costs of production.
Anhydrous ammonia and potash prices fell 30% and 15%, respectively, during the third quarter. Less fertilizer usage is expected in 2024 as acres shift from corn to soybeans.
Ending stocks have tightened and are now 17% below the March 2023 peak.
Renewable diesel and other biofuel capacity is up 26% since January 2023.

Animal Protein and Dairy

USDA estimates total U.S. beef output will be down 5% in 2023 and expects an additional 7% decline in 2024.
Pork cutout values increased 41% from May through July, countering weak prices earlier in the year. Hog prices also rallied, with nearby hog futures climbing 36% from late May through early August. With production rising and seasonal interest fading, markets have since cooled.
Strong cheese production and slowing dairy exports pulled Class III milk prices down to $13.77 per cwt. However, futures markets indicate the final quarter of the year could be much better, with projected Class III milk prices at $17.30 per cwt.

Cotton and Sugar

Cotton production was hindered by ongoing drought and USDA is expecting a year-over-year drop of 9.2%, bringing the lowest level in 10 years. Heading into the fourth quarter, outstanding export sales of all U.S. upland cotton were down 23% year-over-year.
Drought was also an issue for sugarcane producers in Louisiana and Texas. Yields in the region are expected to fall to the lowest level in 16 years, but sugarcane harvest is expected to climb as key growing states have benefitted from ideal conditions.

Specialty Crops

Monthly fruit imports have recently declined but are positive in the longer term.
U.S. fruit and vegetable exports are growing in dollar terms.
Orange production may shift north as disease threatens Florida options.
Fresh potato usage has slipped, and shifting more into frozen.

Oil

U.S. crude oil prices increased 30% in the third quarter, with WTI futures rising from $71 at the start of July to $95 by the end of September.
High prices are marked by an important re-ordering in global supply, intransigent producers and a global economy that simply won’t slow down.
Without greater demand side destruction, transportation costs are likely to remain elevated through 2024.

John Phipps: Why Now Is the Time to Sit Down With Your Ag Lender

Fri, 20 Nov 2020 03:02:19 GMT

One of our most difficult tasks in the ag media is to show how farmers are doing. The idea that one chart or table of numbers will describe how any given farmer is doing has become less likely. We are an industry full of individual economic situations and averaging them out or even totaling them up can conceal more than it illuminates.

The financial industry we work with struggles with this variability as well. When you throw in outside influences like weather, it is impossible to predict how any farmer is doing financially without knowing several specifics.

For example, even in the hard-pressed dairy industry, some are doing relatively well. There are corn and soy growers who are quietly raising their income projections as prices have come off their lows. No matter how much we argue about the precise number, there are millions of acres of “good-to-excellent” crops out there. And no matter how much we complain about how prices should be higher, it is rare we don’t gripe about that, and for growers in lucky locations current and future prices are a heck of a lot better than we expected.

Our farms vary in size which has a significant effect on breakeven prices. Our farm households are quite unique as well. Depending on outside income, even farmers with miserable crops may be able to forecast a small positive outcome this year. This range of situations makes working with farmers a series of separate adventures for lenders especially. It also means farmers won’t all get the same deal from the same lender.

This is hardly news, but it reminds me of one of the most valuable lessons I learned about my relationship with my bank. Even during some really tough years, I discovered lenders were serious about wanting to help my farm survive and prosper. To be sure, they wanted to make sound lending decisions, but banks don’t make any income unless they push money out the door. What finally dawned on me, after some difficult but informative meetings with my lender during the 80s was that a big part of my job was to make her job as easy as possible. Good records, updated projections, clear goals, and detailed plans were essential to that objective. It was amazing to me how many times we found ways together to endure that neither of us thought about before we met. Right now, it may be hard to sit down at the computer and enter yields and prices and costs to get a peek at a possible future. It may be even harder to sit down with your lender. The longer we put those taskes off, the less likely good solutions will be found.

Government Price Controls Didn't Work The First Time, And They Won't Now Either

Do you ever get the feeling that you may be living in a time warp? I mean, doesn’t it seem just a little weird that bell-bottom pants and Marcia Brady hairstyles are the latest rage? I don’t know about you, but one trip through the 1970s was good enough for me.

Unfortunately, bad fashion sense and bad hairdos are not the only bad idea that has been resurrected from this tumultuous decade. Recently, the idea of reviving government price controls on food and other consumer staples has been injected into the public forum.

Why Now?
It’s an election year, and a presidential election year at that. We all know politicians will say almost anything if it will mean just one more vote come election day.

On Friday, August 16, Democratic presidential candidate Kamala Harris floated a public policy that hasn’t been tried since the Nixon administration. To address rising food prices, Harris proposed a federal ban on price gouging, focusing on “excessive” and “unfair” mergers and acquisitions that give big food companies the power to “jack up” food and grocery prices.

There is a reason that such a heavy-hand tampering by the government in the supply and demand workings of the marketplace was banished from the political landscape as we know it. Former president Richard Nixon tried it, and it failed miserably! It would have been prudent for Vice President Harris to have brushed up on her history before rolling out this bad batch of political candy to lure the last group of undecided voters.

The twist of historical irony is that Nixon rolled out his first series of economic control measures, including wage and price freezes, almost 53 years to the day that Harris publicly floated her ideas. On August 15, 1971, in a nationally televised address, Nixon announced, “I am today ordering a freeze on all prices and wages throughout the United States.”

After a 90-day freeze, increases would have to be approved by a pay board and a price commission, with an eye toward eventually lifting controls — conveniently, after the 1972 election. Unfortunately the American people would pay the price — but not until after Nixon coasted to a landslide re-election in 1972 over Democratic Senator George McGovern.

Not Then, Not Now
By the time Nixon reimposed a temporary freeze in June 1973, Daniel Yergin and Joseph Stanislaw explain in “The Commanding Heights: Battle for the World Economy,” it was obvious price controls didn’t work: “Ranchers stopped shipping their cattle to market, farmers drowned their chickens, and consumers emptied the shelves of supermarkets.”

When price controls were implemented in 1971, inflation stood at 5.8%. By the summer of 1975 it had ballooned to 8.7%. For the rest of the decade, inflation totally derailed the U.S. economy. The real pain came with what it took to ultimately slow that train. The Federal Reserve took the Fed Funds rate from a low of 3.75% in 1971 to an astronomical 19.29% in 1981.

For U.S. agriculture, these were the worst of times. As interest rates rose and land and commodity prices bottomed, U.S. agriculture endured one of the darkest periods in modern history. The final governmental gut punch came in 1979 with President Jimmy Carter imposing a grain embargo on the Soviet Union, resulting in a 20% decline in agricultural exports.

Farmers saw the rally cry to “plant fencerow to fencerow” and “feed the world” turn into prayers so that they could feed their family. Bankruptcies and suicides became all too common as the fabric of rural America ripped apart. Government had failed them, and their best hope was that Willie Nelson would show up to do another Farm Aid concert in their back 40.

With farm income expected to record its largest year-to-year dollar drop in history, now is not the time to roll out love me ’til election day economic proposals. Still reeling from supply chain chaos caused by the Covid-19 pandemic, U.S. agriculture is in a weakened state.

The Real Drivers
It is important that all links of the U.S. food supply chain remain strong. With average profits of less than 3% for farms and only 1.6% for grocery stores, one has to wonder who the government is going to have to squeeze if price controls were implemented. Vice President Harris specifically pointed her finger at large corporate food processing companies and suppliers.

Although the Harris proposal was light on specifics, it marshals the Federal Trade Commission and state attorney generals with new authority to “impose strict new penalties” on companies that price gouge. She also said her administration would address “unfair mergers and acquisitions” that contribute to higher priced food and groceries.

One would hope if these government agencies were currently doing their day job, then the above mentioned issues should not be a problem in the first place. We don’t need a governmental “grocery czar” telling us what a box of Cheerios should or shouldn’t cost.

Our government needs to look in the mirror to see the key factors that have really driven up grocery prices. Energy costs and interest rates are two of the biggest. Both have a huge impact on food production costs and the price paid at the grocery store. Over the past four years, the consumer price index for energy has risen 32%. In that same time, the prime interest rate has gone from 3.25% to 8.50%.

Even Captain Obvious could connect the economic dots from the current administration’s policies and legislative actions to the reality that is happening to consumers at the checkout line. On day one in office, President Biden canceled the Keystone XL pipeline, and he and Harris have continued for the past three-and-a-half years to throttle the traditional fossil fuel industry at every turn. Meanwhile, the Congressional Budget Office projects that under Biden’s four-year term $7.902 trillion will have been added to our overall national debt. Such actions and polices have been a lead foot on the gas pedal that is driving inflation.

It’s That Bad
So, before we grant our government Wizard of Oz powers over the nation’s food supply chain, it might behoove Vice President Harris and her economic advisers to address the root cause of inflation. Instead of trying to fix it artificially through failed policies of the past and election year pandering, they should address the real issues behind high food prices and inflation as a whole. When friendly press allies such as the New York Times, Washington Post and CNN all shot the Harris plan down from the moment it left her lips — you know it’s bad. The Washington Post called it a “populist gimmick”, and personal finance guru Dave Ramsey said, “It’s not sustainable because it’s artificial.”

Let us hope and pray that such policies will forever remain as a footnote in our history books and not become part of our future economic reality. Whenever I hear something like this I’m always reminded of what Ronald Reagan considered the nine most terrifying words of the English language, “I’m from the government, and I’m here to help!”