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Current economic factors influence farm bill needs in 2025Current economic factors influence farm bill needs in 2025

2025 Economic Outlook Series: Congress will be busy as the new administration is installed and new congressional committee leadership takes over. So, will U.S. producers get a new farm bill in 2025?

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Amy Hagerman, Bart Fischerand 1 more

January 13, 2025

3 Min Read
alfalfa field
Will a new farm bill be passed in 2025?Shelley E. Huguley

*This is the third article in our 2025 Southwest Economic Outlook series. Oklahoma State University and OSU Extension Service, and Texas A&M University and TAMU AgriLife Extension Service economists weigh in on the 2025 outlook. A digital copy of the Economic Outlook Issue is also available online.

 

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As we contemplate the farm bill in 2025, it’s important to consider the evolving U.S. agricultural landscape shaping agricultural policy discussions and policies’ potential impact on U.S. farmers and ranchers. Producers are facing a number of challenges such as commodity price volatility, increased input costs, the potential for rising farm debt, unpredictable weather and recent disaster events, trade tensions, and farm labor shortages. Delays in farm bill reauthorization since 2023 have added an additional degree of uncertainty for farmers and ranchers.  

Crop, livestock insurance

Tools like Price Loss Coverage (PLC) and Agricultural Risk Coverage (ARC), or crop insurance products like Multi-Peril Crop Insurance (MPCI) and Livestock Risk Protection (LRP) programs will be essential to manage market and price risks in 2025. Market and farm finance conditions, influenced by broader macroeconomic factors, will play a critical role in determining the effectiveness of any new policy such as the farm bill or new disaster programs. A theme across commodity outlook and farm input price outlook for 2025 is a heightened sense of uncertainty, driven by interest rates and a strong dollar, fluctuating trade dynamics and uncertain price expectations, which underscores the need for a robust safety net for producers. Additionally, disaster programs remain a key component of the support structure, with many of these protections grounded in permanent legislation, offering a degree of stability even in times of shifting policy landscapes. However, key changes are needed to make these programs effective in the current agricultural economy. One such change is related to reference prices.  

Related:U.S. economy stable in 2025, challenges remain for ag

Costs of production have increased since 2018, and as crop prices began to decline the costs of production have not declined at the same rate. Figure 1 shows USDA Economic Research Service costs of production for the Prairie Gateway, a region that encompasses most of the Southern High Plains where cotton, grain sorghum, and wheat are commonly grown. Each dot represents the region's annual average cost of production. The horizontal lines indicate 85% of the effective reference prices (ERP) reported by the USDA Farm Service Agency annually—since only 85% of base acres can be enrolled in PLC. For example, wheat's average cost of production increased by 96% from 2017 to 2023.  

Related:Continued cotton market volatility expected in 2025

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Figure 2 includes corn and soybeans. The gap is tighter for these two commodities throughout the life of the farm bill, but 2022 and 2023 have seen sharp increases in the cost of production for soybeans in particular. The gaps between costs of production and effective reference prices were much smaller in 2017 but have widened considerably over the last two years. The average gap between the COP and reduced ERP was 37% in 2017 across all five commodities, but in 2022 when sharp increases in inflation and key input cost occurred it jumped to an average gap of 199%. The House bill that passed out of committee in May proposes to raise corn, cotton, grain sorghum, soybeans, and wheat statutory reference prices to $4.10/bu, $0.42/lb (seed cotton), $4.40/bu, $10.00/bu, and $6.35/bu, respectively.  

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Congress will be busy in 2025 as the new administration is installed and new congressional committee leadership takes over. Congress will kick off with debt limit discussions and needs to address expiring provisions in the Tax Cuts and Jobs Act of 2017. So, when will we get a farm bill in 2025? That is the question.  

Related:Courts reinstate Corporate Transparency Act injunction... again

Read more about:

Farm Economy

About the Authors

Amy Hagerman

Assistant Professor, Department of Agricultural Economics, Oklahoma State University Cooperative Extension

Bart Fischer

Co-Director, Research Assistant Professor, Agricultural & Food Policy Center, Texas A&M University

Joe Outlaw

Co-Director, Regents Fellow, Agricultural & Food Policy Center, Texas A&M University

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