Three Ways Farm Policy Could Impact Your Finances
As the dust settles from the 2024 election, all eyes turn to how new leadership and shifting priorities will shape farm policy in 2025.
There are some potential farm policy changes that could impact your farm’s finances and operational strategies, making it essential to stay informed and prepared. To support you through this transition, we’ve outlined what we know so far about three key farm policy proposals for 2025 and how farm operators can navigate the shifting tide.
Upcoming Farm Policy Shifts in 2025
1. Farm Bill Legislation
The Farm Bill is a cornerstone of U.S. agricultural policy, typically reauthorized every five years to regulate and fund a wide array of programs, from USDA conservation initiatives to the Supplemental Nutrition Assistance Program (SNAP). The 2018 Farm Bill, extended in 2023, expired once again this past fall, leaving its future still uncertain as we head into 2025.
Efforts are currently underway to secure another extension through 2025, but disagreements over budget allocations and policy priorities have led to what many describe as “Farm Bill fatigue”. National Farmers Union President Rob Larew captured the overall sentiment well in one sentence at the Iowa Farmers Union annual conference.
“I am so tired of talking about this farm bill.” – Rob Larew, National Farmers Union
But nevertheless, it must be discussed. With an incoming administration comes a whole new set of legislative priorities that could easily push a new farm bill to the backburner once again. Strong voices continuing to advocate for our farmers and the future of our food system can help keep it in the limelight.
Potential Changes and Financial Impact
As negotiations unfold, key areas for farmers to watch include potential changes to subsidies, crop insurance programs, and conservation initiatives. Different types of operations will feel varied effects. For example, small–scale and diverse operations are generally less affected by changes to commodity relief and crop insurance programs as historically these programs haven’t been as accessible to them compared to larger, more specialized operations. Ad hoc disaster assistance remains a point of discussion, though it’s not officially on the table yet, and there is partisan conflict about where disaster relief funding would be sourced.
Update: Following a week of intense negotiations, lawmakers approved a stopgap spending bill just in time that provides $21 billion for agricultural disaster relief, $10 billion in market support for farmers, and a one-year extension of the 2018 Farm Bill.
2025 Prediction and Insight
Looking ahead, Title I Commodity programs like ARC (Agriculture Risk Coverage) and PLC (Price Loss Coverage) are expected to play a more significant role in farm risk management in 2025. This is especially critical as markets for key commodities such as corn, cotton, and soybeans remain down. These operators should be on the lookout for reference price adjustments as the new farm bill is finalized.
A new Secretary of Agriculture, Brooke Rollins, is President-elect Trump’s nominee to oversee the USDA. While little is known about Rollins’ policy priorities related specifically to agriculture, her upbringing in agriculture and direct connection to the Oval Office will hopefully be an asset in shaping future farm policies and keeping the farm bill at the forefront of the new administration’s mind.
Another nominee expected to influence farm policy is Robert F. Kennedy Jr., Trump’s nominee for Secretary of Health and Human Services. While healthcare will be his primary focus, Kennedy has been vocal about his stance on U.S. agriculture and farm policy, often challenging conventional practices and advocating a shift away from “pesticide-intensive agriculture” towards technological innovation that support regenerative and organic farming practices. These positions have already sparked debate among the farm community that will assuredly continue into 2025.
2. Labor and Regulation Reform
Part of this debate includes regulatory reform for immigration and the environment, both of which can substantially impact operational costs and profit margins.
Immigration and Labor Costs
Let’s start with labor. The incoming administration ran on a platform of stricter immigration enforcement. Back in July, a Gallup poll found that 55 percent of Americans wanted immigration levels reduced, the highest since 2001. But one part of the discussion industry groups are sounding alarms on is how this will affect farm labor access. Labor costs account for one of the highest increases expected in 2025 for farmers, behind livestock purchases and property taxes. As farmers struggle to protect margins against a suppressed commodity market, higher labor costs could lead to significant financial strain and operational disruption.
Regulatory Relief and Sustainable Practices
Based on past administrative action, another Trump presidency is historically marked with deregulatory actions that could ease compliance burdens and provide some financial relief to farmers. However, Kennedy’s influence on regulatory action could change compliance requirements, particularly in terms of pesticide use. It will largely be up to congressional ag committees, the new USDA ag secretary, and industry groups to work closely with Kennedy to ensure environmental policy reform supports the farmer’s ability to maintain operational load.
2025 Prediction and Insight
Immigration policies are likely to tighten under the incoming administration, presenting significant challenges for the agricultural labor force. As the availability of migrant workers diminishes, reforms to the H-2A visa program are crucial. Streamlining this program by reducing costs and improving processing efficiency could help farmers offset workforce losses.
Lawmakers might also explore initiatives that connect farmers with domestic workers or incentivize agricultural labor through targeted programs. Automation technology presents another avenue for addressing shortages, but its adoption will require substantial investments and support to make it accessible to operations of all sizes.
Anticipated environmental policies in 2025 could provide significant incentives for conservation efforts, both in land management and farming practices. If done correctly, these measures could balance environmental sustainability with operational flexibility, ensuring farmers maintain autonomy in their practices without undue government constraints.
To navigate these changes, farmers should proactively monitor new funding opportunities for conservation and disaster relief programs. These resources could prove vital in mitigating the financial pressures forecasted for 2025.
3. Trade and Tariffs
Whether the agricultural export market directly impacts your sales this year or not, the implications it has on the global market will likely influence your bottom line on some scale. Global competition and demand can impact commodity prices, along with production costs for imported inputs. Staying informed on international market movements can help you better anticipate both.
Trade Deficit
The U.S. agricultural trade deficit is projected to widen significantly in 2025, reaching $45.5 billion. This increase reflects challenges such as reduced exports to Asia, particularly China, where agricultural purchases are forecast to drop from $25.7 billion in FY24 to $23.3 billion in FY25. Meanwhile, imports of horticultural products, sugar, and tropical goods continue to rise, further contributing to the deficit. Domestically, the citrus industry continues to grapple with the aftermath of hurricanes Milton and Helene. As a result, orange juice imports are expected to remain elevated, with prices staying high.
Mexico and Canada remain vital trade partners, jointly accounting for 40 percent of U.S. agricultural exports and imports. Their combined trade with the U.S. is estimated to total $385.5 billion, emphasizing the importance of maintaining strong trade relations.
Tariff Concerns
Enter the tariff talks. The potential imposition of tariffs proposed by the incoming administration could send shockwaves through both agricultural exports and domestic food prices. Proposed tariffs on imports from Canada and Mexico—key suppliers of fruits, vegetables, meat, and dairy—could increase costs for U.S. consumers, raising prices on staples like avocados, tomatoes, and cheese. On the other hand, it could create a more competitive landscape for U.S. producers of these items and support demand.
2025 Prediction and Risks
The appointment of Jamieson Greer as U.S. Trade Representative signals an aggressive protectionist trade strategy is in order. Greer, a key player in crafting the U.S.-Mexico-Canada Agreement during Trump’s first term, has emphasized reducing trade deficits and opening export markets. However, his critical stance on China, including advocating for revoking permanent normal trade relations, raises concerns about the potential for retaliatory measures.
Retaliatory tariffs could exacerbate input costs and increase reliance on federal support programs to offset lost trade income. Programs like the Market Facilitation Program may need to be reinstated to provide financial relief.
Farmers should consider locking in inputs that could be impacted by retaliatory tariffs, diversifying their revenue streams, and exploring alternative markets to reduce reliance on any single trade partner. Staying informed about trade developments and adapting strategies accordingly will be key to navigating both opportunities and challenges ahead.
Stay Ahead of Farm Policy with AgAmerica
Farmers face a dynamic landscape of policy shifts in 2025 with the new administration. Whether that’s good or bad largely depends on the eye of the beholder. No matter your political views, staying proactive and informed is the secret sauce to mitigating risks and seizing opportunities.
Staying informed is easier said than done, but partnering with experts who help monitor these policy shifts for you can help. With tailored financing solutions and expert guidance, AgAmerica is here to help you navigate the road ahead.
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