Top Ag, Food, Trade, Tax & Ag-Energy Stories of 2025
Weak margins met heavy politics as trade, health, and biofuel battles collided with stubbornly high farm costs — pulling agriculture deeper into the national affordability and election debate
2025 in agriculture was defined by a collision of weak crop margins and high political risk: economic stress in grain and oilseed markets, renewed turbulence in trade and farm support, escalating animal health and border biosecurity threats, and continued uncertainty around biofuel policy and tax credit implementation. Across nearly every storyline, producers faced a persistent “cost-price squeeze” as fertilizer, seed, machinery, and repair costs stayed elevated even when some commodity prices softened — while new consumer and political forces (from MAHA nutrition politics to GLP-1 weight-loss drugs and “sticky” food inflation) reshaped the debate over what Americans eat, what farmers grow, and what Washington should do next.
1) Trade war fallout: U.S./China ag flows hit fresh lows, soybeans stayed the pressure point; Trump/Xi reach a deal
The biggest single macro story in U.S. ag in 2025 was trade friction — and the way it showed up in soybean, sorghum, cotton and special crops demand, export share, and farm balance sheets. International friction, especially between the U.S. and China, depressed U.S. farm exports (except corn) and pressured global commodity prices. Despite abundant world supplies, U.S. grains and oilseeds faced stiff competition from Brazil and others, weakening export demand and keeping commodity prices low.
Amid escalating trade friction and weak commodity prices, President Donald Trump and China President Xi Jinping revived a familiar tool in U.S./China agricultural diplomacy in 2025: a soybean purchase commitment designed to stabilize farm income without rewriting tariff law. Rather than a formal treaty or total tariff rollback, the commitment followed the managed-trade playbook used during Trump’s first term. Chinese state buyers — primarily through government-directed purchasing channels — signaled intent to source a defined volume of U.S. soybeans over a specified marketing window, with flexibility on timing and execution. Some U.S. soybean analysts initially said China would not purchase many U.S. soybeans, only to have that assessment prove faulty as China started to purchase U.S. beans in quantities that surprised even the naysayers who failed to account for geopolitics. The 2025 soybean commitment underscored a central reality of modern ag trade: Soybeans are no longer just a commodity — they are a diplomatic instrument. The agreement didn’t end trade friction or erase surplus supplies, but it anchored demand expectations at a critical moment, reinforcing soybeans unique role at the intersection of geopolitics, farm income, and global food security.
Soybean purchases by China did not eliminate Brazil’s structural advantage. Timing flexibility meant buying could still avoid lingering U.S. price rallies, and the commitment helped volumes, not margins. For Xi, it preserved leverage. Soybeans could be purchased when useful — and withheld if broader strategic tensions resurfaced.
Why it mattered: Lower export volumes (other than corn) combined with abundant supply widened domestic stocks, pressured basis levels, and made profitability harder to achieve — intensifying the farm “cost-price squeeze.”
2) Trump’s trade policy: the “tariff state,” what it means for agriculture, and the looming Supreme Court test
In 2025, President Donald Trump’s trade strategy relied heavily on broad, fast-moving tariffs — including “reciprocal” tariffs and other emergency authority measures — positioned as both leverage in negotiations and a revenue engine. For U.S. agriculture, the policy cut two ways: it promised tougher bargaining power and potential market-access wins, but it also amplified retaliation risk, raised input costs, and injected legal uncertainty into export planning and farm income.
What Trump’s trade policy aimed to do. Trump’s approach leaned on tariffs as an all-purpose tool to:
• Pressure trading partners into concessions on market access, currency, migration, and non-trade issues
• Reshore supply chains and protect selected industries
• Generate significant federal revenue — a key political talking point in 2025
What it meant for U.S. agriculture. Agriculture felt the effects through three main channels:
• Export risk and retaliation math
• Farm exports remain an easy political target for retaliation. That makes soybeans, sorghum, cotton, meat, and specialty crops especially sensitive when tariff fights escalate — often showing up quickly in sales, basis, and forward pricing.
• Input-cost pressure. Tariffs can raise costs on farm machinery, parts, chemicals, packaging, and building materials — tightening margins for producers already dealing with a “cost-price squeeze.”
• Market uncertainty. The speed and breadth of tariff adjustments created planning uncertainty for exporters and processors — and complicated contracting decisions for grain handlers, feed manufacturers, and biofuel plants. The ag sector wants to know if there is true additionality of U.S. farm products shipments via Trump’s trade approach. For some commodities, like corn-based ethanol, the answer is yes. Ditto for U.S. rice relative to the increased market share for Japan’s rice imports. But the verdict is still out for other commodities.
Why “billions in tariff funds” mattered so much in 2025. One of the most consequential — often underappreciated — developments was the scale of tariff revenue. Customs duty collections surged, with total tariff collections reported around $195 billion for FY 2025 (a sharp jump from 2024), and a much level for FY 2026.
That revenue became politically significant because it:
• Created a large, visible pool of money that policymakers debated using for rebates/dividends, deficit reduction, and other priorities
• Raised the stakes of legal challenges — because if tariffs are struck down, questions arise about refunds and administrative feasibility
The coming Supreme Court ruling: constitutionality and limits on presidential tariff power. A defining “next step” issue for 2026 is the Supreme Court’s pending decision in consolidated litigation challenging Trump’s use of the International Emergency Economic Powers Act (IEEPA) to impose sweeping tariffs. The Court agreed to hear cases including VOS Selections, Inc. v. United States and Learning Resources, Inc. v. Trump, which squarely test whether IEEPA authorizes this kind of across-the-board tariff regime — and, by extension, how far Congress can delegate tariff power.
What’s at stake for agriculture:
• If the Court upholds the approach, tariffs remain a durable lever — meaning trade risk stays structurally embedded in ag outlooks.
• If the Court narrows or strikes down the authority, it could force the administration to seek new statutory tools (or narrower approaches) and reopen the question of tariff refunds — which administration officials have warned would be logistically messy.
Why it mattered: Trump’s 2025 trade policy effectively built a high-revenue, high-uncertainty “tariff state.” For U.S. agriculture, it offered negotiating leverage but increased volatility — while the Supreme Court’s forthcoming decision will determine whether this model becomes a lasting feature of farm-market risk, or a legally constrained episode that forces trade policy back toward Congress.
3) Large crops, low prices — margin compression for growers
Record or near-record yields in key U.S. crops like corn and soybeans pushed down average prices. While this benefitted input affordability to some degree, the decline in revenues outweighed cost reductions, leaving many producers with negative or near-negative margins on the year.
Why it mattered: Farmers faced a structural profitability challenge — good yields weren’t enough to overcome low commodity prices and stubbornly high expenses.
4) Farm financial stress triggers major government support
The Trump administration announced a $12 billion farm aid package to help growers cover losses tied to trade disruptions and weak markets. Even with this support, producers and bankers said the funds were a lifeline — not a full solution. Meanwhile, USDA’s implementation of Stage 2 of the Supplemental Disaster Relief Program resulted in significant ag sector opposition, a situation that is still pending for a possible policy change or congressional action. As for additional aid, a USDA official ruled that out, citing a lack of funding. This was seen as a signal to farm-state lawmakers to legislate another farmer economic aid package, something Ag committee leaders signaled was their intent for a must-pass bill likely in January 2026.
Why it mattered: The high level of ad hoc support underscored the severity of 2025’s economic pressures, especially when combined with elevated input costs and weak global demand. But despite general media, even some in the ag sector, saying the aid was a farmer bailout, that is nowhere near the truth as the actual assistance covered far less than farmers’ actual losses.
5) Farm policy shifts — baseline change and farm bill overhang
Besides emergency checks, policymakers also grappled with structural policy changes — including adjustments to reference prices and safety-net mechanisms, including positive crop insurance program changes, in the wake of major tax and spending legislation via the One Big Beautiful Bill. These shifts could lift long-term support levels, though timing and implementation details are ahead.
Why it mattered: Policy changes that alter the economics of farm programs influence risk management decisions — especially in a year where markets and costs are misaligned.
6) Livestock cycle tightens beef markets
Cattle markets diverged from row crops. With inventories low from drought and depopulation, beef prices climbed to record levels, and ranchers may begin slowly rebuilding herds. This helped offset some downturns in crop sectors but also raised consumer food price concerns.
Why it mattered: Livestock markets offered pockets of strength amid broader agricultural weakness, but also highlighted how uneven the sector’s economics are.
7) Trump orders DOJ and USDA review of U.S. meatpacking industry
President Donald Trump in 2025 directed the Department of Justice and USDA to examine competition and pricing practices in the U.S. meatpacking industry, elevating long-running farm-state concerns to the White House level.
The review focused on whether market concentration among major beef packers has weakened price discovery for cattle producers or contributed to elevated consumer beef prices. While no immediate enforcement action was announced, the directive signaled renewed federal scrutiny of packer margins, procurement practices, and transparency.
Why it mattered: The move reassured ranchers that consolidation concerns remain on Washington’s radar — even as tight cattle supplies, not just market structure, continue to drive prices in the beef complex.
8) Trump remarks and Argentina deal rattle U.S. livestock and soybean producers
President Donald Trump unsettled U.S. livestock producers in 2025 when he publicly said he wanted lower meat prices, a comment ranchers viewed as opposite what they wanted: tolerance for policy or market pressure at a time when tight cattle supplies were finally delivering strong returns after years of herd contraction. The Trump administration also announced actions that significantly increased the opportunity to import additional Argentine beef.
Cattle groups warned that pushing prices lower risked undercutting herd rebuilding incentives and ignored the reality that supply constraints — not packer behavior alone — were driving high beef prices.
At the same time, frustration spread across farm country after Treasury Secretary Scott Bessent announced U.S. support for a $20 billion bond swap for Argentina, aimed at stabilizing Buenos Aires’ finances and its president ahead of his re-election, and supporting broader economic reforms in Argentina.
Why the Argentina move mattered to U.S. farmers: The bond swap was designed to shore up Argentina’s economy and global market access, not agriculture specifically. But almost immediately after the announcement, Argentina removed farm export taxes, sharply improving the competitiveness of its soybeans. China then moved quickly to purchase billions of dollars’ worth of Argentine soybeans, during the same seasonal window when U.S. exporters typically dominate Chinese buying.
Why it mattered: For U.S. ranchers and soybean producers, the episode reinforced a hard lesson of 2025: macroeconomic and geopolitical decisions can ripple through farm markets faster than traditional trade negotiations — sometimes benefiting competitors at precisely the wrong moment for U.S. agriculture.
9) Tyson restructures beef operations amid tight cattle supplies
In another sign of how the tight cattle cycle reshaped the beef sector in 2025, Tyson Foods announced it was closing its beef processing plant in Lexington, Nebraska, and adjusted production schedules at its Amarillo, Texas, facility to better align capacity with available cattle supplies.
Tyson cited insufficient cattle availability and sustained margin pressure as key drivers, reflecting an industry-wide challenge as historically low herd numbers limited slaughter volumes even as beef demand and prices remained elevated.
The Amarillo adjustments — including reduced shifts and intermittent downtime — underscored how packers increasingly favored flexibility over throughput, prioritizing plant efficiency rather than running facilities below optimal capacity.
Why it mattered: Tyson’s moves highlighted a core 2025 reality: the cattle shortage — not demand — became the binding constraint in U.S. beef processing, forcing packers to resize operations even as consumer beef prices stayed high.
10) New World screwworm: border risk returns to the livestock debate
In 2025, the re-emergence of New World screwworm cases in southern Mexico reopened a long-dormant biosecurity threat — complicating efforts to resume Mexican cattle imports into the United States and adding new tension to already tight North American livestock markets.
The parasitic fly, once eradicated north of Panama through a U.S./Mexico sterile-fly program, resurfaced in isolated outbreaks, triggering heightened surveillance and movement controls. U.S. officials made clear that border reopening would hinge on containment, verification, and sustained control, not timelines.
Cautious reopening talks: U.S. regulators insisted on proof that outbreaks were localized and fully controlled before restoring normal cattle flows from Mexico. It appears efforts to reopen the border are near, with USDA taking a very cautious, science-based approach that will phase in the return of some Mexican cattle.
Market impact: Delayed imports (and Canada’s increased imports of U.S. feeder cattle) tightened U.S. feeder cattle supplies, reinforcing already high prices amid herd rebuilding.
Biosecurity focus: The episode revived attention on cross-border animal health coordination and the long-term funding of eradication infrastructure.
Why it mattered: The screwworm episode underscored that animal disease risk — not just trade policy — can shut borders, and that reopening the U.S./Mexico livestock corridor now requires epidemiological certainty as much as diplomatic agreement.
11) Animal health shocks continued with bird flu spread
Highly pathogenic avian influenza (HPAI) evolved beyond poultry to cattle and other species in 2025. Novel strains, wildlife spillovers, and expanded testing regimes kept the industry on high alert and added another layer of operational complexity for producers.
Why it mattered: Outbreaks disrupted production, revised biosecurity approaches, and influenced input and labor costs tied to mitigation.
12) “Sticky” food inflation becomes a political flashpoint
In 2025, food inflation proved stubbornly uneven — with some grocery prices falling while others remained firm — turning food affordability into a growing political and election-year issue despite broader easing in headline inflation.
Commodity-linked items such as eggs, some grains, and select produce saw price relief at various points during the year, reflecting improved supplies and lower input costs in certain segments. But meat, dairy, sugar-containing foods, and processed items stayed elevated, reinforcing the perception among consumers that grocery bills were not meaningfully improving.
Why prices stayed “sticky”
• Tight livestock supplies kept beef and protein prices high
• Labor, transportation, and packaging costs remained elevated
• Input cost pass-through lagged commodity price declines
• Food companies were reluctant to cut prices after absorbing years of cost inflation
Political implications: Food prices became a shorthand issue for cost-of-living frustration, frequently cited alongside housing, insurance, and energy (especially electricity) costs. Even as inflation data cooled, voters focused on what they still paid at the checkout counter, not year-over-year statistics.
For agriculture, the debate created tension:
• Farmers argued many prices reflected supply constraints, not excess profits
• Policymakers faced pressure to “do something” despite limited tools
• Calls grew louder to scrutinize processors, retailers, and market concentration
Why it mattered: In 2025, food inflation wasn’t uniformly high — but it was uneven and visible, making grocery affordability a powerful political issue and reinforcing the gap between macroeconomic data and consumer experience.
13) SNAP battle intensifies as food affordability and farm policy collide
In 2025, the long-running fight over SNAP (food stamps) escalated into one of Washington’s most contentious food policy debates, tying together grocery affordability, federal spending, nutrition standards, and farm-state politics.
Republicans pushed for tighter eligibility rules, work requirements, and spending limits, arguing SNAP growth during and after the pandemic had outpaced need. Democrats countered that SNAP remained essential as food prices stayed “sticky,” especially for rural, elderly, and low-income households.
Why agriculture was pulled in:
• Farm bill leverage: SNAP accounts for roughly three-quarters of farm bill spending, making it inseparable from commodity and conservation programs.
• Demand implications: SNAP benefits support baseline food demand, including meat, dairy, grains, and specialty crops — linking nutrition policy directly to farm economics.
• MAHA crossover: Nutrition-focused lawmakers increasingly tied SNAP debates to food quality, processed foods, and health outcomes, raising concerns among farm groups about prescriptive purchasing rules.
Political dynamics:
• SNAP became a proxy fight over inflation, deficits, and the role of government in addressing affordability.
• Major SNAP changes included in the One, Big Beautiful Bill (OB3) fractured traditional farm/nutrition coalitions that underpin farm bill passage.
• Democrats wants to claw back some of the reduced SNAP funding via the OB3, but Republicans oppose such efforts. This is a lingering issue to complete work in 2026 on the Farm Bill 2.0 or “skinny” farm bill.
Why it mattered: For agriculture, SNAP is not just a social program — it is a pillar of the food system and farm policy architecture. The 2025 battle underscored that future farm bills may hinge less on acreage or yields, and more on how Washington defines affordability, nutrition, and federal responsibility for feeding Americans. Or it could lead to a splintered farm bill process, perhaps through annual farm bills via the appropriations process.
14) Weight-loss drugs reshape food demand — sugar and other products feel the pressure
In 2025, the rapid adoption of weight-reducing GLP-1 drugs began to register as a demand side issue for U.S. agriculture, particularly for processed foods, snack products, sugar-heavy items, and alcoholic beverages.
Food companies and commodity analysts increasingly reported evidence that consumers using these drugs were eating fewer calories overall, with a disproportionate reduction in snack foods, sugary desserts, sweetened beverages, and discretionary alcohol consumption. That shift raised new questions about long-term demand for refined sugar, corn-based sweeteners, and beverage alcohol inputs.
Key ag implications:
• Sugar demand risk: Early indicators suggested softening growth in per-capita sugar and sweetener consumption, pressuring outlooks for sugar processors and sugar growers.
• Snack food exposure: Salty snacks, baked goods, confectionery, and impulse foods showed the greatest sensitivity as GLP-1 users reported reduced cravings and snacking frequency.
• Alcohol demand headwind: Beer, spirits, and ready-to-drink beverages faced early signs of reduced consumption, with downstream implications for corn, barley, and sugar inputs.
• Gradual, not sudden: Analysts stressed the impact was incremental — a slow structural headwind, not an immediate shock to commodity demand.
Why it mattered: For the first time, a pharmaceutical trend entered mainstream agricultural demand forecasting, adding another variable — alongside MAHA nutrition politics (see next item) — to debates over food consumption, sugar policy, beverage demand, and the future of processed foods. Weight-loss drugs didn’t disrupt U.S. food markets overnight, but in 2025 they emerged as a quiet, cross-sector force affecting agriculture, food manufacturing, and alcohol markets — one that producers, processors, and policymakers can no longer ignore.
15) MAHA and agriculture: health politics meets farm policy
In 2025, the MAHA (“Make America Healthy Again”) movement emerged as a new force shaping ag-related debates, pulling farming, food production, and input use into a broader national health conversation.
Led by HHS Secretary Robert F. Kennedy Jr., MAHA framed chronic disease and diet outcomes as inseparable from how food is grown and processed. While not an agriculture program, the movement increasingly touched core farm issues — pesticides, seed traits, biotechnology, livestock practices, and ultra-processed foods.
For producers, MAHA introduced political and reputational risk rather than immediate regulatory change. Farm groups broadly supported nutrition goals but warned against narratives that cast modern production systems as inherently harmful, especially as growers faced low prices and high input costs.
The movement also sharpened interagency tension, with Department of Health and Human Services pushing health-driven scrutiny while USDA and farm groups worked to defend conventional agriculture and maintain farm-state support.
Why it mattered: MAHA did not rewrite farm rules in 2025 — but it reframed the debate, signaling that future ag policy risk may come as much from health and food narratives as from markets, weather, or trade.
16) USDA reorganization fuels delivery concerns
USDA launched sweeping reorganization and relocation plans that shook producer confidence in program delivery and continuity. Critics raised concerns about potential delays in service, rulemaking, disaster assistance, and advisory capacity.
Why it mattered: Institutional uncertainty matters at the farmgate — especially when margins are tight and program timing counts. A former USDA official emailed: “Getting USDA closer to those it serves should be embraced. What is missing from USDA leadership is a vision of why this is being done and how it is going to be done… i.e. which agencies will be located in which of the five regional hubs… and why. If this is done in a thoughtful and wholistic way… it’s very likely reorg will be well received.”
17) Farm input costs: the year’s central economic squeeze
Perhaps no theme cut across agriculture and ag-energy in 2025 more sharply than input costs— especially fertilizer, seed, and machinery.
Fertilizer & Seed Costs
• USDA’s Prices Paid Index showed fertilizer prices (nitrogen, potash, phosphate, mixed) up sharply year-over-year — continuing an inflationary trend that keeps substitution and usage decisions fraught with uncertainty. Fertilizer costs were significantly higher than a year ago, even as some other input prices eased.
• Late-2025 industry forecasts and commodity sector summaries pointed to continued elevated cost pressure, with fertilizer costs trending above 2024 levels and seed costs expected to rise 5–7% in 2025 due to investments in advanced genetics and traits.
• Crop growers, including soybean producers, continued to report a multi-year cost-price squeeze, with input costs like seed and fertilizer cited as major economic headwinds.
Machinery Costs & Repair Pressures
• USDA data showed the Prices Paid Index for machinery up year-over-year, reflecting persistent inflation in equipment prices and parts — even where fuel costs softened in some months.
• Many farmers responded to high capital costs by delaying major machinery purchases and extending equipment life, which in turn raised repair and maintenance costs and labor pressures. That also resulted in significant declines in some farm machinery companies sales of high-priced equipment in both the United States and Canada.
Policy & Legal Spotlight on Costs
• The U.S. Department of Justice (DOJ) and USDA signed a memorandum to examine rising farm input costs, focusing on potential antitrust issues in fertilizer and seed markets amid persistent high prices.
Why it mattered: High input costs erode profit margins directly; when combined with low commodity prices, weak export demand, and tight credit conditions, they forced many producers to re-evaluate planting decisions, cost structures, and borrowing needs.
18) RFS and biofuel policy — uncertainty reigns
Biofuel markets were buffeted by regulatory timing and volume debates:
• The EPA proposed higher renewable fuel volume mandates through 2027, including changes to how imported feedstocks generate RIN credits.
• Final rules were delayed into early 2026, leaving blenders and producers in a policy limbo that impacted contracting and margin decisions.
• At the White House level, biofuel waiver reallocation discussions pitted farmers against refiners over how to account for waived blending obligations.
Why it mattered: Policy uncertainty feeds market volatility — especially in soy oil, renewable diesel feedstocks, and ethanol margins.
19) Year-round E15: legislative push continues as California moves toward adoption
In 2025, year-round access to E15 remained a central biofuels objective, with ethanol producers and farm-state lawmakers pressing Congress to permanently legislate nationwide E15 sales, even as states — most notably California — moved ahead on their own regulatory paths.
Congressional stalemate: Despite bipartisan support, Congress again failed to pass legislation explicitly and permanently authorizing E15 sales year around. Ethanol advocates argued that relying on annual waivers created uncertainty for retailers and discouraged infrastructure investment, while oil-state opposition continued to stall a permanent fix.
California’s separate track: At the same time, California regulators advanced steps to allow E15 under the state’s unique fuel and air quality framework:
• Regulatory approvals moved through technical and environmental review
• Fuel suppliers and retailers began early compliance planning
• Industry expectations coalesced around initial E15 availability in California in 2026, assuming final rule adoption and supply logistics proceed as planned
Why it mattered:
• Demand growth: Year-round E15 represents incremental corn demand and ethanol throughput
• Market certainty: Legislative action would stabilize blending economics nationwide
• Symbolic weight: California adoption would carry outsized influence
Bottom line: In 2025, year-round E15 remained politically unfinished but directionally inevitable — with Congress still debating permanence, and California quietly positioning itself to become the most consequential new E15 market in the country within the next year.
20) 45Z Clean Fuel Production Credit reshapes economics
2025 marked the operational start of the 45Z clean fuel tax credit, shifting incentives and documentation requirements for SAF and other clean fuels. Early guidance from the IRS (including Notice 2025-11) highlighted how compliance, emissions scoring, and lifecycle accounting would shape project finance and feedstock contracts during the transition.
Why it mattered: Tax policy became a key driver of ag-energy investment decisions — and added a layer of administrative complexity around carbon intensity and eligibility that wasn’t fully resolved within the year. While details for 2025 were expected, tax incentive details beyond await final Treasury/IRS announcements.
21) Biofuel import dynamics shift
U.S. imports of biodiesel and renewable diesel slumped in 2025 as tax credit and mandate structures changed, altering trade flows and competitive dynamics. Domestic producers gained relative advantage, even as uncertainty around feedstock costs and RIN pricing persisted.
Why it mattered: Changing import patterns influence feedstock demand (soy oil, used cooking oil) and have downstream impacts on basis and domestic margins.
22) Hydrogen and low-carbon pathways intersect ag energy
Final guidance on the 45V clean hydrogen credit gave developers clarity to proceed on projects, some of which intersect with low-carbon ammonia/fertilizer pathways. Despite policy support, investment hesitation persisted amid broader legislative and regulatory uncertainty.
Why it mattered: Ag energy is broader than ethanol/biomass-based diesel — hydrogen and ammonia markets affect fuel costs, fertilizer economics, and the trajectory of decarbonized supply chains.
23) Proposed railroad mega-merger raises stakes for agriculture
A proposed mega-merger between major Class I railroads in 2025 injected new uncertainty into U.S. agricultural transportation, reviving long-running concerns among farmers, grain shippers, and agribusinesses about competition, service reliability, and freight rates.
The deal — led by Union Pacific and Norfolk Southern — would create the first true coast-to-coast freight railroad in the United States, fundamentally reshaping rail logistics for grain, ethanol, fertilizer, and export-bound commodities. The proposed railroad mega-merger is valued at about $85 billion in a stock-and-cash transaction. The combined enterprise would have an estimated total value exceeding $250 billion, spanning more than 50,000 route miles across 43 states if approved.
Why agriculture is watching closely:
• Market power: Farm groups warned further consolidation could weaken shipper leverage and raise rates in captive rural regions.
• Service risk: Memories of rail service disruptions in recent years kept producers wary of promises tied to efficiency gains.
• Export competitiveness: Rail performance directly affects grain flows to ports and the U.S. position in global markets.
Next steps: The merger faces intense review by the Surface Transportation Board (STB), which must determine whether the deal is “in the public interest.” Regulators are expected to require extensive service, competition, and contingency commitments, with a review process likely stretching well into 2026 and a final STB decision perhaps in 2027. Agricultural shippers, ethanol producers, and state officials are preparing to formally intervene, ensuring farm-sector impacts are central to the record.
Why it mattered: For agriculture, the railroad mega-merger is less about Wall Street synergy and more about whether fewer railroads will mean higher costs or better service — making the STB review one of the most consequential transportation decisions farmers have faced in years.
24) Rural healthcare costs and the Affordable Care Act become an ag-state flashpoint
In 2025, rural health care costs emerged as a growing — if often underappreciated — economic pressure in farm country, as millions of rural Americans continued to rely heavily on coverage through the Affordable Care Act (ACA/ObamaCare) and faced uncertainty over the future of Covid-era enhanced premium tax credits.
Rural residents are disproportionately dependent on ACA marketplace plans because they are more likely to be self-employed, work seasonally, or lack employer-sponsored insurance. The enhanced credits, first enacted during the pandemic, significantly lowered monthly premiums and expanded enrollment across rural counties.
What’s at stake:
• Affordability cliff: Without congressional action, enhanced ACA credits are scheduled to expire, sharply raising premiums for many rural households.
• Farm household budgets: Health insurance costs increasingly compete with input expenses, land rents, and debt service in farm financial planning.
• Rural access risk: Higher premiums could push healthier enrollees out of the marketplace, destabilizing rural insurance pools and further straining already limited rural health care infrastructure.
Congressional battle and timeline. Lawmakers spent much of 2025 debating whether — and how — to extend the enhanced credits. The issue remains unresolved heading into late 2025, with negotiations expected to run into January 2026, likely attached to a must-pass legislative vehicle. The debate has become politically charged, intersecting with broader election-year arguments over cost of living, health care affordability, and federal spending.
Why it mattered: For farm families and rural communities, healthcare costs are no longer a side issue — they are a core economic variable, shaping labor decisions, retirement timing, risk tolerance, and even farm succession planning. In 2025, rural healthcare joined food prices, fuel costs, and input inflation as part of a broader affordability debate, with the fate of ACA enhanced credits looming as a high-stakes policy decision that will directly affect farm households well into 2026.
25) H-2A changes and the push for year-round ag labor reform
In 2025, the Trump administration moved to tighten and recalibrate the H-2A guest-worker program, while farm-state lawmakers simultaneously pressed Congress to address what producers say is the system’s biggest flaw: its restriction to seasonal, not year-round, agricultural work.
Administration actions. The Trump administration advanced changes aimed at stronger enforcement and compliance, while signaling skepticism toward unchecked expansion of temporary worker programs. Employers reported:
• Increased scrutiny of applications and worksites
• Continued upward pressure from H-2A wage rate formulas
• Greater uncertainty as enforcement actions and policy guidance shifted throughout the year
While administration officials argued the moves protected U.S. workers and program integrity, producers countered that the changes raised costs and reduced labor reliability, especially for labor-intensive sectors.
Eventually, the Dept. of Labor finalized changes to how H-2A wages (the Adverse Effect Wage Rate, or AEWR) are calculated that reduced upward pressure on wages for many farmers, compared with what they otherwise would have paid under the prior system.
What DOL changed:
• DOL modified the AEWR methodology so that wage increases are more closely tied to occupation-specific data rather than a single, broad farmworker wage rate.
• For many employers, especially those using non-field or mixed job classifications, this resulted in lower required wage rates than projected under the old rules or smaller year-to-year increases.
What it did not do:
• The changes did not cut wages outright below prior-year levels.
• Many crop producers still faced higher absolute labor costs, just less severe increases than expected.
• Core H-2A requirements — housing, transportation, recruitment, compliance — remained unchanged.
Why farmers still complained:
• Even with the DOL adjustment, H-2A wages remained well above local market wages in many regions.
• Administrative complexity and compliance costs continued to rise.
• Producers argued that predictability, not just wage levels, was the bigger problem.
DOL’s 2025 action lowered the trajectory of H-2A wage growth and prevented sharper cost spikes, but it did not make migrant labor “cheap.” For many farmers, it was cost containment — not cost relief, and it reinforced calls for broader reforms, including year-round worker authorization and congressional action.
Congressional push for year-round agricultural workers. Rep. GT Thompson (R-Pa.) has led renewed efforts in Congress to allow year-round agricultural jobs to access the H-2A guest-worker program — particularly for dairy, livestock, and poultry operations, which are excluded under H-2A’s current seasonal structure. Some proposals have also raised questions about processing jobs closely tied to agriculture, though those remain more contested.
Supporters argued:
• Modern agriculture is no longer purely seasonal
• Year-round labor access would reduce illegal hiring and enforcement disruptions
• Stability would ease wage spikes and help contain food prices
Opposition centered on labor protections, wage impacts, and immigration politics, leaving the proposal unresolved as 2025 ended.
Why it mattered: Together, the administration’s tightening of H-2A and Congress’ failure to enact year-round labor reform left agriculture caught between higher costs and chronic workforce shortages. For many producers, labor policy — like trade and biofuels — became another Washington decision directly shaping farm viability and food affordability heading into 2026.
26) WOTUS reset: regulatory retreat after years of conflict
In 2025, the long-running battle over the Waters of the United States (WOTUS) rule entered a new phase, as federal regulators moved to scale back and clarify jurisdiction following repeated court setbacks and sustained opposition from farmers, ranchers, and state governments.
After the Supreme Court’s Sackett decision sharply narrowed federal authority over wetlands and ephemeral waters, the administration revised its approach, directing agencies to align enforcement with the Court’s limits and reduce regulatory reach over features such as ditches, farm ponds, and isolated or temporary waterways.
What changed:
• Narrower federal jurisdiction: Regulators emphasized that only waters with a continuous surface connection to navigable waters fall under federal control.
• Reduced enforcement risk: USDA and EPA signaled a pullback from aggressive interpretations that had triggered compliance fears on farms.
• State role expanded: Water regulation increasingly shifted to states, creating a patchwork but giving producers more local clarity.
Why it mattered: For farmers, WOTUS had long been a planning and liability issue, affecting drainage, conservation work, land improvement, and even routine field operations. The 2025 reset reduced the risk that normal farming practices would trigger federal permitting or enforcement, especially for row-crop and livestock producers managing marginal or seasonally wet ground. At the same time, environmental groups warned the changes weakened protections, setting the stage for continued legal and political fights.
Bottom Line: In 2025, WOTUS moved from an expanding federal mandate to a judicially constrained framework, giving agriculture more certainty — but ensuring the issue remains politically alive as states, courts, and future administrations continue to shape how water is regulated on farmland.
27) EPA deregulation push: proposal to rescind the climate endangerment finding
In 2025, the Environmental Protection Agency (EPA) moved toward one of the most consequential regulatory reversals in decades by proposing to rescind the 2009 greenhouse gas “endangerment finding,” the legal foundation underpinning most federal climate regulations.
The endangerment finding — adopted during the Obama administration — established that greenhouse gas emissions endanger public health and welfare, triggering EPA authority to regulate emissions under the Clean Air Act. The Trump administration’s proposal argued the finding relied on outdated assumptions, overstated climate risks, and imposed sweeping economic costs with limited statutory clarity.
Why agriculture paid close attention:
• Regulatory exposure: The finding has served as the legal backbone for climate rules affecting fuels, fertilizer production, livestock emissions, and on-farm energy use.
• Biofuels and ag energy: Rescinding the finding could weaken or reshape EPA authority over fuel carbon intensity, indirectly affecting ethanol, renewable diesel, SAF, and hydrogen policy.
• Cost containment: Farm groups viewed the move as reducing the risk of future climate-driven mandates that could raise input costs or impose reporting and compliance burdens.
What it does — and doesn’t — do
• The proposal does not repeal existing statutes or automatically eliminate all climate regulations.
• It does invite extensive litigation, setting up a prolonged legal battle that could stretch well beyond 2026.
• Any final outcome will likely hinge on judicial review, potentially returning climate authority questions to the Supreme Court.
Political and legal implications. The move intensified partisan divides, with critics warning it undermines climate science and international credibility, while supporters argued it restores regulatory balance and reins in agency overreach. For agriculture, the proposal reinforced a broader 2025 theme: major environmental policy is increasingly being decided through courts as much as Congress or agencies.
Why it mattered: The endangerment finding proposal signaled that climate regulation risk for agriculture could shift dramatically, depending on court outcomes and future administrations. Even without immediate rule changes, the move reshaped long-term expectations around environmental compliance, ag-energy investment, and the scope of federal regulatory authority over farming and food systems.
28) OB3 tax cuts and incentives reshape farm and agribusiness planning
The One Big Beautiful Bill (OB3) became one of the most consequential pieces of economic legislation affecting agriculture in 2025, extending and expanding tax cuts, investment incentives, and expensing provisions that materially altered planning decisions for farmers, ranchers, and agribusinesses. (The measure also included the boost in reference prices and positive crop insurance changes previously discussed.)
Key provisions affecting agriculture:
• Enhanced expensing and depreciation: OB3 reinforced and extended accelerated expensing for equipment, buildings, and certain technology investments — providing near-term cash-flow relief even as machinery prices remained high.
• Business tax relief: Pass-through farms and ag businesses benefited from lower effective tax rates, supporting working capital during a period of thin operating margins.
• Energy and biofuel incentives: OB3 aligned tax policy with clean-fuel credits (including 45Z and related provisions), shaping ethanol, renewable diesel, SAF, and low-carbon infrastructure investment decisions.
• Estate and succession implications: The bill’s tax framework eased near-term pressure on farm succession planning, a critical issue amid rising land values and aging producers.
OB3: Permanent tax changes for agriculture: OB3 removed major tax cliffs for agriculture by making several previously temporary provisions permanent. The 20% Section 199A pass-through deduction was locked in, stabilizing tax planning for most farms and agribusinesses. OB3 also restored and permanently extended 100% bonus depreciation and full expensing for equipment and certain improvements, improving cash flow and supporting investment in machinery, grain bins, livestock facilities, and ethanol infrastructure at a time of high capital costs. Higher estate and gift tax exemption levels were made permanent, easing farm succession pressures amid elevated land values. The 21% corporate tax rate was reaffirmed, providing certainty for processors, packers, ethanol plants, and fertilizer companies, while immediate domestic R&D expensing was restored to support innovation in seed genetics, crop protection, precision agriculture, biofuels, and food technology.
Why it mattered: OB3 did not eliminate the underlying cost-price squeeze, but it changed timing and risk calculus:
• Farmers were better positioned to delay income, accelerate deductions, and manage tax liability in a low-price environment.
• Agribusinesses used the incentives to rationalize capacity, invest selectively, or restructure operations rather than expand aggressively.
• The bill reinforced agriculture’s reliance on tax policy as a stabilizer, alongside direct payments and trade management.
Political and fiscal context. While supporters argued OB3 strengthened rural economies and investment confidence, critics warned that reliance on tax incentives — like reliance on ad-hoc aid — highlighted how dependent farm economics had become on Washington decisions rather than market signals alone.
Bottom Line: In 2025, OB3 functioned less as a growth catalyst and more as a financial shock absorber for agriculture, giving farmers and agribusinesses tax tools to navigate weak margins, high costs, and policy volatility — while underscoring how central federal tax policy has become to the modern farm economy.
29) Marijuana reclassification and the push to close the hemp loophole collide
In 2025, the federal decision to reclassify marijuana from Schedule I to Schedule III marked a major economic shift for the U.S. cannabis sector — one with quiet but meaningful implications for agriculture, tax policy, and rural economies. Meanwhile, Congress simultaneously wrestled with whether to close the so-called “hemp loophole” that has allowed intoxicating hemp-derived products to proliferate nationwide.
While marijuana remains federally regulated, Schedule III status fundamentally changed how cannabis businesses are treated under the tax code. Most notably, growers and processors — technically farmers under federal definitions — became eligible to fully deduct ordinary and necessary business expenses, something that had been barred under Section 280E when marijuana was classified as Schedule I.
Why it mattered for taxes:
• Tax relief: Cannabis operators can now deduct costs for labor, inputs, equipment, utilities, and rent — dramatically improving after-tax profitability.
• Capital and consolidation: Improved cash flow is expected to accelerate investment, expansion, and consolidation in cannabis cultivation and processing.
• Ag policy crossover: The change highlighted a growing overlap between traditional agriculture and regulated cannabis production, especially in rural areas where marijuana farming has become an economic pillar.
Limits remain:
• Marijuana is not federally legalized, and interstate commerce remains restricted.
• Access to federal farm programs, crop insurance, and USDA support remains limited or unavailable.
The hemp loophole fight. At the same time, lawmakers intensified efforts to rein in intoxicating hemp-derived products — such as delta-8, delta-9, and other synthesized cannabinoids — made legal under the 2018 Farm Bill’s hemp definition.
Key concerns driving the push:
• Hemp-derived intoxicants sold outside state marijuana regulatory systems
• Youth access and inconsistent labeling
• Competitive imbalance between regulated marijuana producers and lightly regulated hemp processors
Where Congress split
• House Republicans, backed by some state regulators and law enforcement groups, pushed to close or narrow the loophole, arguing the hemp market had strayed far beyond Congress’s original intent.
• Hemp growers and processors, along with some Democrats and libertarian-leaning Republicans, warned that tightening the definition could cripple legitimate hemp farming, CBD production, and rural investment.
• Senate divisions left the issue unresolved, with proposals ranging from outright bans on intoxicating derivatives to enhanced FDA-style regulation instead of prohibition.
• Despite intense debate in 2025, Congress did not hold a final, binding vote to close the hemp loophole — leaving producers, retailers, and regulators in continued legal and market uncertainty.
Why it mattered for agriculture: The pairing of these issues underscored how definitions drive farm economics:
• Marijuana producers gained tax parity with other farmers and reinforcing agriculture’s expanding role beyond traditional commodities.
• Hemp producers faced potential market contraction or re-regulation
• USDA and FDA authority lines remained unsettled
2025 in Summary: A Sector Under Strain — and a Politics of Food and Farming
Across cropping, livestock, and bioenergy, 2025 became a year where policy decisions often mattered as much as weather and yields. Trade and geopolitics repeatedly whipsawed export expectations, including the Trump/Xi soybean purchase commitment and the backlash to moves that advantaged competitors — such as Argentina’s bond-swap headline followed by export-tax changes and China buying Argentine beans during the U.S. seasonal window. Meanwhile, cattle markets highlighted the sector’s uneven economics: tight supplies supported record beef prices, but producers bristled at White House rhetoric about “lower meat prices,” DOJ/USDA scrutiny of packing, Tyson’s restructuring moves, and renewed biosecurity threats like New World screwworm that complicated border reopening for Mexican livestock.
Ag-energy remained a major demand and political lever, but also a source of uncertainty: the RFS path, year-round E15 legislation, California’s slow-moving push toward E15, and the 45Z transition kept ethanol and biomass-based diesel economics tied to regulatory timing. Layered on top, sticky food inflation and the affordability debate — alongside MAHA and the early demand effects of GLP-1 drugs on sugar and processed foods — pulled agriculture deeper into culture and election politics. The bottom line from 2025: even when some prices eased, the farm economy didn’t, and the industry ended the year more dependent on policy clarity — on trade, safety-net design, biofuels rules, and competition/market structure — than at any point since the last major trade war cycle.
Bottom Line: The defining lesson of 2025 was clear: U.S. agriculture is no longer just cyclical — it is structural and political, increasingly influenced by decisions far beyond the farmgate, with lasting implications for producers, consumers, and policymakers heading into 2026. One ag sector contact emailed: “This didn’t just happen… it just became readily apparent to policymakers over the last year or so. Brazil and China have fundamentally upended our view towards ag trade… and for last 10 years we have been asleep at the switch as to these fundamental changes… and most importantly, how to respond.”
Farmers want political stability. They are used to having market volatility. It is hard to cope with domestic and trade policy uncertainty and short-term policy horizons on annual production practices. What should not be overlooked is that farmer financial realities are having louder reverberations in the agricultural business sector. 2026 could really test the whole system to a greater degree and also for local communities. Will these reverberations lead to U.S. non-competitiveness in the global agricultural stage in the long run?
Our ability to produce is outstripping U.S. and global demand and U.S. farm policy and export programs haven’t adjusted to this new reality. A farm policy expert says, “The nexus between nutrition programs and farm related programs… that has existed since Bob Dole and George McGovern… had the foresight to link them together in the early 1970s… is completely broken… and policymakers, farm groups and nutrition advocates need to admit it. It raises the question… Are multi-titled farm bills a thing of the past? Meanwhile, MAHA advocates… seeking changes in our food and nutrition policy… have gained considerable credibility in a relatively short period of time. It will be interesting to see with the enhanced focus on affordability and food prices… how this plays out.”
Concludes one veteran farm policy expert: “Given these fundamental structural challenges we face in U.S. agriculture, is it time to rethink our farm and food policy? Is it time to start investing significant resources to creating new demand opportunities?”
