Ag producers are planning for a challenging 2025

Producers are concerned about the financial outlook for 2025, with record trade deficits, a declining net farm income and other challenges in the forecast. 

Agricultural trade is the lifeblood of U.S. farming and ranching, and since 2008 the export proportion of U.S. agricultural production has held relatively steady at about 20 percent, with a compound annual growth rate of 2.1 percent from 2013-23.

At the same time, U.S. agricultural imports have increased at an annual growth rate of 5.8 percent, leading to a widening agricultural trade deficit over the last several years.  

According to AgAmerica, with global markets shifting and a pivotal election, understanding these changes is necessary when making financial and operational agricultural decisions for the year ahead. 

The U.S. Department of Agriculture’s (USDA) latest agricultural trade outlook offers key insights into what experts predict lies ahead in 2025 and projects a decline in U.S. agricultural exports to $169.5 billion in Fiscal Year 2025, driven largely by several key factors. 

Meanwhile, imports are expected to rise to $212 billion, widening the trade deficit to a staggering $42.5 billion. 

This significant shift presents both challenges and opportunities for U.S. farmers.

Key factors in 2025

According to AgAmerica, factors influencing the U.S. agricultural trade deficit include declining export prices which lower unit values for key commodities like soybeans, corn and beef, reducing the overall value of U.S. exports even as volumes remain steady or increase. 

“Rising imports increase demand for imported horticultural products like sugar and tropical products,” states the AgAmerica website. “Horticultural products generally make up as much as one-half of U.S. agricultural imports, which includes a broad category of fruits, vegetables, spirits, wine, essential oils, tree nuts and nursery stock.”

Creating a strong competition particularly in the soybean and corn markets could impact the U.S. export growth.

“Currency strength and appreciation of the U.S. dollar can also influence American goods abroad and would further the challenges in export growth,” reads the website. “Supply chain challenges may continue, like high freight costs and logistical bottlenecks affecting the efficiency and cost-effectiveness of U.S. agricultural exports as well.”

Action items

Depending on the presidential election, farmers and ranchers may see additional influences in 2025.

AgAmerica notes, “Under agricultural trade there are three strategies American farmers and ranchers can implement when navigating the complexities of the global agricultural trade landscape.” 

According to AgAmerica, producers should prioritize stability and secure contracts with stable markets like Canada and Mexico where demand remains consistent and strong, particularly for horticultural products and ethanol.  

AgAmerica also recommends a diversified market by exploring alternative Asian markets to reduce dependence on China and tap into growing demand in the region.

The organization also suggests staying informed by keeping abreast of competitor crop conditions, USDA initiatives, tariffs and other global trade trends, which are important for producers to identify new opportunities and mitigate market risks. 

Net income

The University of Missouri Food and Agricultural Policy Research Institute (FAPRI) recently released an update to its annual baseline report, finding net farm income has fallen due to lower crop prices.

In the September report by FAPRI, a third year of farm income decline is on the horizon, as U.S net farm income in 2024 was $137 billion, falling slightly below the USDA September forecast and $9 billion lower than the 2023 figure.

“When adjusted for inflation, an anticipate decline in farm income between 2022-25 may be $67 billion,” states the report. “However, despite a 35 percent drop, inflation-adjusted net farm income remains above the levels experienced between 2015-20.”

According to the FAPRI reports, “Net farm income would fall by six percent in 2025 and rebound modestly in 2026, while food inflation was forecast at a low 1.6 percent in 2025, rising slowly to 2.1 percent annually in 2028-29.”

The report also projects net farm income will average $139.6 billion a year between 2026-29, similar to the USDA forecast. 

FAPRI’s projections indicate a $32 billion drop in 2024 crop receipts due to lower prices for many grains, oilseeds and other field crops. 

Livestock receipts, on the other hand, will see a healthy $19 billion increase – the result of higher cattle prices. 

Overall farm production expenses are expected to decline in 2024 after seeing increases in 2022-23. 

“This year’s income will be $137.4 billion. A further reduction in cash receipts is projected for 2025, primarily because of lower prices for many crops and for poultry,” states FAPRI. “It pegged net farm income at $129 billion in 2025 which results in a third straight year of declining net farm income before a modest recovery in 2026.”

For 2025, the impact of lower crop receipts outweighs the effects of high cattle prices and moderation of some production expenses, according to the FAPRI report.

Melissa Anderson is the editor of the Wyoming Livestock Roundup. Send comments on this article to roundup@wylr.net.