Ten innovative startups focused on solving agriculture’s greatest challenges are seeking the top prize of $100,000 in the 2027 Farm Bureau Ag Innovation Challenge. The American Farm Bureau Federation, in partnership with Farm Credit, is proud to promote rural entrepreneurship and agriculture innovation through the Challenge.

“Farmers and ranchers count on innovation to produce the safe and sustainable food, fuel and fiber our country relies on,” said AFBF President Zippy Duvall. “Farm Bureau takes great pride in offering outstanding entrepreneurs an opportunity to showcase their technology and services that will help sow the seeds of a better, brighter future for all of agriculture.”

The Ag Innovation Challenge, now in its 13^th year, is an opportunity for entrepreneurs to showcase their solutions to the dynamic challenges facing American agriculture. Farm Bureau is offering a total of $145,000 in start-up funds throughout the course of the competition.

The 10 semi-finalist teams encompass the breadth of American agriculture, spanning across different sectors and states. The semi-finalist teams are:

• Animal Deterrent Solutions – Texas
• Clean Label Solution – New York
• Clear Grain Co. – Kentucky
• Gilly – California
• Good Agriculture – Georgia
• Nave Analytics – Nebraska
• Rootline Robotics – New York
• Seismi – Nebraska
• Swinergy – Minnesota
• URMRKT – Oklahoma

This fall, the competing semi-finalist teams will pitch their companies virtually as they look to advance to the final round held at the AFBF Convention in Charlotte, North Carolina. The top four teams that advance from the virtual round will each receive $10,000. The final pitch competition will be held on Sunday, January 10^th in front of a live audience of Farm Bureau members and industry representatives. The winning team will walk away with a $90,000 prize (total of $100,000), and runner-up will receive a prize of $15,000 (total of $25,000).

Farm Bureau recognizes and supports these cutting-edge businesses with generous funding provided by sponsors Farm Credit, Bayer, John Deere, Farm Bureau Bank, Farm Bureau Financial Services, Google, T-Mobile, and ClearPath.

To learn more about the Challenge, visit fb.org/challenge.

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Key Takeaways

• Farmland values remain at record highs even as growth slows. Average farm real estate values rose 3.4% to $4,500 per acre in 2026, marking a sixth consecutive annual increase and a nearly 44% gain since 2020.
• The post-2020 increase has reshaped the cost of agricultural land. Cropland values are up 48% and pasture values nearly 43%, with the largest gains concentrated across the Plains and Midwest while development, energy and other competing uses add pressure in many local markets.
• Stable cash rents offer little relief for producers. Average cropland rent declined by just $1 to $160 per acre and remains 15% above 2020, leaving renters with elevated costs but none of the equity gains benefiting landowners.
• Rising values strengthen equity and borrowing capacity for landowners, but record purchase prices and near-record rents create additional pressure for tenants, beginning farmers and operations seeking to expand as margins tighten.

USDA-National Agricultural Statistics Service’s recently released annual Land Values 2026 Summary and updated cash-rent estimates show U.S. agricultural land values reached another record in 2026, even as appreciation continued to slow. Average farm real estate value, including land and buildings, rose $150, or 3.4%, to $4,500 per acre. Cropland values increased 3.3% to $6,020, while pasture values rose 4.2% to $2,000 per acre. Since 2020, average farm real estate values have climbed nearly 44%, highlighting farmland’s continued resilience as an asset despite tighter margins across portions of the farm economy.

Cash rents remained near historically high levels but moved little overall. Average cropland rent declined by $1 to $160 per acre in 2026, still 15% above its 2020 level. On a per-acre basis, irrigated cropland rent held at $244, non-irrigated rent declined by $1 to $146, and pasture rent increased by $1 to a record $16.50. Rather than signaling a broad shift in rental markets, the figures show that land costs remain elevated even as farm revenues and margins face pressure.

The continued rise offers a mixed signal for the farm economy. Higher values strengthen farm balance sheets and provide landowners with additional equity and collateral, but they also raise the cost of buying, renting and expanding an operation. Farmland prices increasingly reflect more than agricultural earnings alone. Development, energy projects, outside investment and generational ownership changes can intensify competition for a limited land base, leaving land technically agricultural but less available, affordable or workable for the farmers and ranchers seeking to use it.

Farm Real Estate Value

The average U.S. farm real estate value, which includes all land and buildings on farms, reached a record $4,500 per acre in 2026. The 3.4% increase marks the sixth consecutive annual gain but also the slowest growth since the current upswing began in 2021. Annual appreciation has moderated from 11.7% in 2022 to 6.7% in 2023, 5% in 2024, 4.3% in 2025, and 3.4% this year.

Values remain highly uneven across the country. Rhode Island had the highest average at $23,600 per acre, followed by New Jersey at $17,000, Massachusetts at $15,200, Connecticut at $14,600 and California at $14,100. These markets combine limited land availability with development pressure and high-value agricultural production. At the other end, New Mexico averaged just $735 per acre, followed by Wyoming at $1,030, Nevada at $1,230 and Montana at $1,260. Lower values in much of the Mountain West reflect a larger share of arid rangeland, lower cropping potential and less pressure from development.

Since 2020, however, the largest percentage gains have been concentrated in the central Plains, with values rising 76% in Kansas, 65% in Nebraska and 61% in South Dakota. These states began from lower per-acre values than many coastal markets, while the 2021–2022 surge in grain and livestock returns, limited land for sale and longer-term productivity gains supported stronger bids for available ground. The result has been a rapid repricing of productive agricultural land even as annual growth has slowed. Higher values strengthen equity for landowners but raise the cost of entry and expansion, particularly where agricultural demand overlaps with development, energy and other competing land uses.

Cropland Value

Unlike farm real estate, cropland value measures the land used to grow field crops, vegetables and hay, rather than the combined value of land and farm buildings. The average U.S. cropland value rose 3.3% to a record $6,020 per acre in 2026, an increase of $190 from the previous year. This was the smallest annual gain since the current upswing began in 2021, but values are now 48% higher than in 2020.

Cropland values remain highest in the Northeast and California. Rhode Island led at $34,300 per acre, followed by Massachusetts at $26,600, Connecticut at $23,200, California at $18,430 and New Jersey at $17,100. Limited acreage and intense development pressure support values in the Northeast, while California’s irrigated ground and concentration of high-value fruit, vegetable and nut production raise its agricultural earning potential. At the other end, Montana averaged $1,350 per acre, followed by Wyoming at $2,080, New Mexico at $2,090 and Oklahoma at $2,560. These markets generally have more arid conditions, lower expected crop returns and less pressure from competing land uses.

Changes since 2020 broadly mirror the pattern in overall farm real estate values. Kansas led with a 78% increase, followed by Nebraska at 67% and South Dakota at 64%, while Wisconsin and Tennessee each rose 60%. In the Plains and western Corn Belt, the 2021–2022 surge in crop returns, limited land offered for sale and improvements in production potential translated directly to higher cropland prices. In other regions, development, energy projects and other competing uses have also kept values elevated by increasing demand for the same limited acres.

Pastureland Value

Average U.S. pastureland value increased 4.2% to a record $2,000 per acre in 2026, an $80 increase from the previous year. Pasture values grew faster than both cropland and overall farm real estate values this year and are now nearly 43% higher than in 2020.

Values again are highest in densely populated Eastern states. Rhode Island led at $17,500 per acre, followed by New Jersey at $15,600. In these markets, limited private open land faces competition from residential development, recreation, rural lifestyle demand and other uses in addition to grazing. At the other end, New Mexico averaged $650 per acre, followed by Wyoming at $770, Nevada at $870 and Montana at $940. Lower forage productivity, arid conditions, larger tracts of rangeland and less development pressure generally keep values lower across much of the Mountain West.

Percentage gains since 2020 were led by Kansas at 83%, followed by Nebraska at 60%, North Dakota at 57% and Utah at 55%. Wisconsin, Oklahoma and Tennessee each increased 52%. The strongest appreciation remained concentrated across the Plains and Midwest.

Cash Rent

Cash rents generally adjust more slowly than land values and commodity prices because many lease agreements are negotiated before the growing season and reflect earlier income expectations. In 2026, average U.S. cropland rent declined by $1 to $160 per acre, a 0.6% decrease. Irrigated cropland rent held at $244 per acre, non-irrigated rent declined by $1 to $146, and pasture rent increased from $15.50 to a record $16.50 per acre.

Cash rents remain highest in states where land supports high-value crops or consistently strong yields. California led at $331 per acre, followed by Hawaii at $280, Iowa at $271 and Illinois at $261. Irrigation infrastructure and specialty crop production support rents in California and Hawaii, while highly productive soils and concentrated corn and soybean production underpin rates in Iowa and Illinois. At the other end, Oklahoma and Montana averaged about $41 per acre, followed by Texas at $50 and Wyoming at $53, reflecting lower expected cropping returns across more arid and less intensively cultivated land.

Since 2020, the national average for cropland cash rent has increased 15%, much less than the 48% rise in cropland values over the same period. Most states posted rent increases in the mid-teens or low 20% range, although Massachusetts rose 38%, New York 33% and Maryland 27%. California and Hawaii were notable exceptions, with reported averages down about 25%, though both remained among the country’s highest-rent markets.

For producers, stability near record levels offers little meaningful relief. Rent is a largely fixed expense that may not adjust quickly when commodity prices or farm revenues decline, particularly because leases are often negotiated in advance and based on earlier market conditions. Renters are especially exposed because they bear the elevated operating cost without benefiting from the equity gains associated with rising land values. Competition from other farmers, development, energy projects and rural residential demand can also keep local rents elevated even where agricultural returns are under pressure.

Conclusion

The 2026 report is notable not simply because farmland values reached another record, but because the sharp post-2020 increase is proving durable. Farm real estate values are now nearly 44% higher than in 2020, cropland values are up 48% and pasture values are up nearly 43%. Annual appreciation has slowed, but there is little evidence of a broad reset. Instead, farmland appears to have settled onto a substantially higher cost base.

That shift is creating an increasingly divided experience within the farm economy. Farmers who own land benefit from stronger equity and collateral, while renters, beginning farmers and operations seeking to expand face record purchase prices and rents that remain near historic highs even as crop margins further weaken. Because land values reflect long-term agricultural potential as well as competition from development, energy and other uses, softer commodity markets do not quickly translate into cheaper access. The central issue may therefore be less about whether farmland values rise another 3% or 4% next year and more about who is able to farm it.

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Key Takeaways

• Canada and Mexico are two of the largest markets for U.S. agriculture, making USMCA critical for farmers and ranchers.

• Needed improvements include ensuring Canada delivers the dairy market access negotiated in the original USMCA and providing for a rapid response mechanism when additional issues arise.

• The stability provided by guaranteed cross-border market access is vitally important at a time when American agriculture faces strong headwinds.

Under Review: USMCA

In 2020, the U.S.-Mexico-Canada Agreement (USMCA) entered into force, replacing the North American Free Trade Agreement, or NAFTA. In President Trump’s first term in office, he prioritized improving trade relationships for the United States. As part of his overall trade agenda, he directed former United States Trade Representative (USTR) Robert Lighthizer to work with Mexico and Canada to bring NAFTA into the 21st century.

In addition to including important provisions maintaining guaranteed duty-free market access for agricultural products, improved sanitary -and phytosanitary (SPS) clauses, and enhanced dispute settlement mechanisms, the final agreement included something never seen in a U.S. free trade agreement.

Article 34.7 of the USMCA – the “Review and Term Extension” clause – includes language stipulating that unless agreed to continue by all three countries, the USMCA will terminate 16 years after entry into force – July 1, 2036. Article 34.7 already includes language directing the three countries to come together to review the agreement and confirm in writing if they wish to extend the agreement for a full 16-year term.

The Importance of July 1, 2026

After two rounds of bilateral negotiations with Mexico, and a trilateral virtual discussion with all three countries, on July 1, Ambassador Jamieson Greer from USTR issued a statement concerning the renewal status of the USMCA. While a renewal was not agreed to, for farmers, ranchers and agribusinesses dependent on these trade relationships, it’s important to acknowledge that the USMCA will continue while the agreement falls into an annual review process.

A Trilateral Partnership

Trade wonks around North America have had July 1, 2026, circled on calendars since 2020. This is uncharted territory in trade policy; traditionally, free trade agreements were signed with the idea that they would live on in perpetuity. However, we have seen President Trump use both his terms at the White House to rethink global trade relationships and use outside-the-box and creative ideas to achieve his trade priorities, including utilizing authorities such as Section 301 to bring about the U.S.-China Phase One Agreement. He also expanded market access in Japan for U.S. agriculture products during both his first and second terms in office, and full implementation of the Turnberry Agreement between the U.S. and European Union holds the potential to expand the European market to additional U.S. commodities.

While there have been varying statements about the importance of the USMCA, the fact of the matter is simple - for U.S. agriculture, the trilateral trading relationship between the U.S., Canada, and Mexico is critical. Since NAFTA entered into force, annual agricultural exports to those two countries from the U.S. grew from $8.9 billion in 1993 to nearly $60 billion in 2024.

Major commodities such as corn, beef, pork, dairy and poultry count Mexico as their largest export destination. For other commodities, such as soybeans, Mexico is their second-largest export market (behind China).

The importance of the Canadian market should not be overlooked. After Mexico, Canada represents the second-largest trading partner for U.S. agriculture and is the largest export market for U.S. forestry products, fresh fruits and vegetables, and ethanol. That relationship has existed since the Canada-U.S. Free Trade Agreement was implemented in the late 1980s (later replaced by the trilateral NAFTA).

Due to the USMCA, many goods will cross a North American border multiple times along the supply chain. As an example, Canada exports live hogs to the U.S. for finishing and processing. That pork is then returned to Canada as ham and other premium pork products, highlighting the importance of the integration of North American supply chains, and the jobs and economic boost they provide along the way. This scenario is repeated in a variety of other agricultural sectors, including beef and dairy.

U.S. agriculture also relies on imports from both countries. Canada is the world’s largest producer of potash, a critical mineral necessary for both plant and animal health. Potash is an important component of fertilizer application for U.S. farmers, and we are heavily reliant on imports to meet that demand. On average, Canadian potash accounts for 85% of the potash imports into the U.S. And for your weekend festivities, Mexico is a major exporter of both distilled spirits and beer for thirsty U.S. consumers.

When the USMCA entered into force in 2020, it was widely praised as a much-needed modernization of NAFTA. Six years later, while the agreement is still pivotal for the long-term success and stability of the rural economy, there are additional improvements that can be made to address lingering trade irritants. Canada’s administration of its tariff rate quota (TRQ) for dairy, as an example, favors Canadian processors above retailers and importers. This administrative system results in U.S. dairy maintaining a smaller-than-intended portion of the TRQs across multiple dairy products.

While there remain concerns with imports of Mexican produce into the U.S. during key harvest periods, the USMCA also serves as an example of how trade disputes can be resolved within the confines of the agreement. In 2023, the U.S. successfully challenged Mexico’s presidential decree, which called for a phaseout of genetically engineered corn for human consumption. The U.S. filed a formal dispute under the USMCA dispute settlement chapter, and Canada supported the U.S.’s legal challenge. After multiple rounds of technical consultations, a dispute settlement panel found in favor of the U.S., and the decree was revoked as it was found to be counter to Mexico’s commitments under the USMCA. A functional dispute-settlement mechanism is critical to ensuring the tenants of a trade agreement are adhered to and can function as intended.

Review and Renew

The current non-renewal status of the USMCA for another 16 years creates a new wrinkle in the fabric of the American rural economy. There are more questions than answers about the future of the North American trilateral trade relationship, particularly when it comes to the ongoing and ever-evolving U.S. tariff landscape. While the administration seeks to replicate its global tariff scheme, it is heartening to see many of these new tariff orders continue to contain a carveout for USMCA-compliant goods, meaning products imported under the agreement are exempt from additional tariffs.

(It should be noted the Presidential Proclamations outlining potential new tariffs against Canada under Section 338 of the Trade Act of 1930 do not contain an exemption for USMCA-compliant goods. Should they come to pass, those tariffs would go into effect on Aug. 19, 2026).

America’s farmers and ranchers produce high-quality products that are in demand around the world, and robust trade agreements like the USMCA set a level playing field to expand markets and help boost the farm economy. U.S. farmers and ranchers are facing the toughest economy in a generation, making it even more important that we protect and expand market access to help ensure the economic sustainability of family farms and ranches. The USMCA has facilitated the flow of commerce among all three countries, at a cost savings to American farmers and ranchers. It is critically important that we take this opportunity to improve the agreement for the betterment of U.S. agriculture, but at the end of the day, the U.S. must renew the USMCA.

• AFBF policy supports a strong and equitable trading relationship with Mexico and Canada.

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Following the U.S. House of Representative’s approval of a budget resolution that includes $12 billion in much-needed economic aid for farmers and ranchers, American Farm Bureau Federation President Zippy Duvall sent a letter today to Senate leadership encouraging the chamber to advance the budget resolution.

“Due to persistent financial challenges across the agricultural economy, the President has called on Congress to deliver additional farmer assistance this year, and the House of Representatives answered the call with $12 billion for U.S. agriculture in reconciliation,” Duvall wrote in the letter. “American Farm Bureau Federation supports the advancement of this Budget Resolution in the Senate, which will provide critical relief to enhance the farm safety net.

“We are grateful to the House for acting to deliver needed relief for agriculture, and for the Senate’s consideration of this Budget Resolution. We recognize that the cumulative losses for agriculture due to sustained economic pressures far exceed $12 billion and urge continued work to address these losses.”

The letter also details some of the factors influencing the farm economy, including historic inflation in production expenses and persistently low commodity prices.

“These factors have contributed to multiple years of losses for U.S. agriculture, which has made it increasingly difficult for farm families to stay afloat,” Duvall wrote. “U.S. agriculture delivers the food, fuel, and fiber that Americans rely on every day. Farmers are leaders in their communities and serve as the backbone of America, boosting our rural economy and protecting our food supply. We greatly appreciate your continued leadership and support of American agriculture, and we respectfully urge your support to bring relief for farmers and ranchers during this prolonged downturn in the farm economy.”

Read full text of the letter here.

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American Farm Bureau Federation President Zippy Duvall today applauded the release of farm bill text and notice of a Senate Ag markup for next week.

“When you look across the spectrum of agriculture, there is one piece of legislation that touches almost every farm in America, and that’s the farm bill, so it’s time for Congress to get it done.

“We’re grateful to Senate Agriculture Committee Chairman John Boozman for releasing farm bill text and are encouraged that we can achieve a bipartisan bill that can get across the finish line. We appreciate the Administration’s call for Congress to move this process forward and urgently deliver a farm bill to the President’s desk.

"The bill includes important provisions beyond traditional farm bill program support, including authorizing the sale of E15 blended fuel year-round, expanding investments in specialty crops and measures to reduce input price volatility. We’re also calling on Congress to deliver a fix for interstate commerce issues as well as much-needed economic aid for agriculture.

“We’ve lost 200,000 farms in a decade, and a modernized farm bill will help stabilize the struggling farm economy. We’re calling on the Senate Agriculture Committee to advance the bill out of markup and send it forward for full Senate passage and ultimately the president’s signature.”

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The Commodity Credit Corporation may soon fall short of funds, hindering farm safety net programs. Chad Smith has the details.

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After restrictive state groundwater rules were adopted in 2024, Oregon farmers were left with very few practical tools to manage water in times of drought or shortage.

When one of the governor’s priority bills was introduced late during the 2025 legislative session – adding to more than 100 water-related measures – it threatened the viability of one of the most effective and efficient tools available: the temporary transfer of water rights.

Oregon Farm Bureau quickly mobilized members, coordinated strategy with other stakeholders, and worked directly with a diverse group of lawmakers to highlight the bill’s unintended consequences, costs, and lack of clarity.

The measure, SB 1153, allowed “public interest” challenges of routine water transfers on vague grounds, such as “loss of in-stream habitat for sensitive, threatened, or endangered aquatic species” or potential “contributions to water quality impairment.”

With one party controlling both the legislative and executive branches, and the bill one of the governor’s key initiatives, many considered the bill’s passage a foregone conclusion.

Unwilling to accept that, Oregon Farm Bureau elevated the issue with members, called them to action and brought them together at bimonthly meetings. The organization also coordinated with allied groups to deliver targeted, unified messaging.

Of the first batch of comments legislators received on the legislation – 852 in total – only 31 comments were in support. By the time the legislative session wrapped up, 1,900 comments had been submitted, with an overwhelming majority in opposition to the bill.

As part of their messaging, Oregon Farm Bureau and their partner groups questioned why such a precedent-setting bill was introduced so late in the session, undermining stakeholder input; highlighted the legislation’s out-of-state support; challenged proponents to identify the problem the bill would solve; and pointed out the inconsistency of adding new burdens to an already overextended state water agency facing staff reductions.

Oregon Farm Bureau also understood the importance of consistent targeted outreach to key senators and daily coordination with coalition members so they would be well-positioned to change advocacy tactics when necessary.

By combining disciplined advocacy, real-time tactic adaptation, strategic use of legislative dynamics and coalition strength, Oregon Farm Bureau not only thwarted what many assumed would be the inevitable passage of this harmful bill, the organization also set themselves up for future meaningful stakeholder engagement.

State Awards of Excellence

Oregon Farm Bureau’s efforts to prevent passage of SB 1153 were recognized with a 2026 Award of Excellence in the Coalitions and Partnerships category. The award was presented at the 2026 American Farm Bureau Convention in January in Anaheim.

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• Driven by H.R. 1’s farm bill program and conservation investments, as well as assumptions on USDA’s use of Section 5 authority, the Congressional Budget Office (CBO) projects the Commodity Credit Corporation (CCC) will hit its $30 billion borrowing cap every year for the next decade.

• Hitting the $30 billion cap threatens USDA's ability to respond to emergencies via Section 5 discretionary authority. That authority — used for things like COVID-19 relief and the 2026 Farmer Bridge Assistance Program — only works if borrowing liquidity exists.

• The $30 billion cap hasn't been adjusted since 1987, raising the policy question of whether Congress should raise the borrowing limit. CBO's current scoring approach makes doing so a costly one-to-one budget increase, complicating the path forward.

Understanding the Commodity Credit Corporation

Since 1933, USDA has used Commodity Credit Corporation funds to implement select congressionally established programs. Today, the primary programs funded by the CCC include those related to commodity support, livestock, disasters, conservation, trade promotion and marketing assistance loans.

Since 1987, the CCC has held authority to borrow up to $30 billion at any one time to implement USDA commodity support and conservation programs, e.g., deliver Price Loss Coverage program payments or provide financial assistance for the Environmental Quality Incentives Program. By law, the CCC is replenished annually through the appropriations process.

At times, when funding is available, the Secretary of Agriculture may use the broad authority of the CCC under Section 5 of the Charter Act to provide additional and discretionary support to farmers and ranchers.

Historically, the CCC’s Section 5 discretionary authority has been used for administrative priorities or responses to emergency economic conditions. Examples of USDA’s recent use of Section 5 discretionary authority include:

• 2026’s Farmer Bridge Assistance Program, which helped to offset low crop prices and high input costs experienced since 2023;

• 2022’s Partnerships for Climate-Smart Commodities, which provided financial and technical assistance to implement on-farm climate-smart agricultural production practices; and

• 2020’s Coronavirus Food Assistance Program, which helped farmers and ranchers affected by COVID-19 supply chain disruptions.

CCC Section 5 Discretionary Authority Will Soon be Limited

Importantly, the ability to utilize Section 5 authority is conditional on the availability of borrowing authority (liquidity) under the $30 billion cap. Moving forward, if outlays related to the implementation of key farm bill income support and conservation programs are near the $30 billion cap, there would be limited financial resources available to respond to emergency needs, e.g., geopolitical disruptions or large-scale animal disease outbreaks.

Congress could still authorize and appropriate additional disaster assistance outside the CCC’s existing borrowing authority, but that process can take months and depends on lawmakers reaching agreement on a separate legislative package. The central concern is therefore not whether Congress retains the authority to respond, but whether USDA has enough CCC liquidity to act immediately when an emergency occurs rather than waiting for Congress to do so.

The Congressional Budget Office’s latest projections suggest that little, if any, liquidity will remain. Given the significant improvements and investments made to farm bill risk management and conservation programs in 2025 as part of H.R.1, the CBO now projects the CCC to expend its $30 billion borrowing authority each year over the next decade, either through traditional farm bill program outlays or the discretionary use of Section 5 authorities.

According to the February 2026 CBO Baseline for Mandatory Farm Programs, projected outlays for farm bill programs supported by the CCC are $10.9 billion for fiscal year 2025 but are expected to approach or exceed $27 billion from fiscal year 2027 to fiscal year 2029. The increase in projected outlays is driven by expectations for higher program payments related to continued low crop prices or revenue, as well as additional spending on conservation programs enacted in H.R. 1.

After taking into consideration CBO’s estimates for the use of Section 5 authority of $12.75 billion in fiscal year 2025 and $9.1 billion in fiscal year 2026, as well as the funds needed to be held in reserve until the annual replenishment occurs, CBO projects CCC outlays to exceed or approach the statutory limit of $30 billion going back to 2025 through 2029, with CCC needs exceeding borrowing authority by approximately $3 billion per year for fiscal years 2027 through 2029.* Given these projections, a policy question emerges: should Congress increase the CCC’s borrowing authority to ensure the necessary liquidity is available to respond to emergencies?

Is it Time to Raise the CCC Borrowing Authority?

This is not the first time raising the CCC borrowing authority has been considered. A 2020 Farm Bureau analysis reviewed how the CCC provided timely support to farmers and ranchers following the COVID-19 pandemic and estimated that, if indexed for inflation, the borrowing authority for the CCC should be more than double the $30 billion borrowing authority set in 1987. If adjusted for inflation to 2026, the CCC borrowing authority would approach $90 billion.

Increasing the CCC’s borrowing authority above $30 billion would provide USDA flexibility to utilize the Section 5 authority to respond quickly to emergency needs without having to go through annual funding packages for ad hoc assistance or other authorities.

What Happens if the Borrowing Authority is not Increased?

If the borrowing authority is not increased and CBO projections for farm program outlays are realized or climb even higher because of lower prices or revenues than currently projected, USDA could expend its borrowing authority under the CCC. In such a scenario, Congress would need to provide an exception, or “anomaly,” to alter the timing of CCC reimbursement. Recent years in which an anomaly was needed include fiscal years 2017, 2020 and 2021, when CCC expenditures approached the $30 billion borrowing authority.

Absent an anomaly, i.e., early replenishment, USDA would need to prioritize or prorate program payment delivery. This could result in farmers and ranchers receiving less than the full amount of commodity program or conservation program payments or even delaying the delivery of these program payments until after a replenishment has occurred.

CBO Math is a Head Scratcher

One potential challenge for raising the CCC borrowing authority is the current scoring methodology. Over the years CBO has altered its scoring methodology for the CCC Section 5 authority – going from a flat $1 billion per year assumption as recently as 2023, to variable outlays in 2024, and now to an assumption that USDA will definitively exhaust any additional CCC liquidity in each fiscal year. As a result, every additional dollar of CCC borrowing authority is treated as an additional dollar of federal spending, creating a one-to-one increase in the budget baseline even though a higher cap would only provide USDA the option (not the obligation) to spend those funds. This makes raising the limit appear significantly more costly and could make it more difficult for Congress to approve.

With a one-to-one score on the baseline, raising the CCC borrowing authority may not be the best use of baseline resources as those dollars are not guaranteed to flow to farmers and ranchers in emergency scenarios. However, if CBO used historical data to revisit the assumption that USDA will automatically utilize its Section 5 authority to expend all borrowing authority, it could result in an increase in the CCC borrowing authority without a direct one-to-one increase in the score.

Summary

Given the substantial enhancements and investments made to farm bill risk management and conservation programs under H.R.1 in 2025, CBO now projects that the CCC will exhaust its $30 billion borrowing authority annually over the next decade, whether through traditional farm bill program outlays or discretionary use of Section 5 authorities.

Without Congress raising the CCC’s borrowing authority, USDA will be unable to respond to emergency needs, and instead, stakeholders would continue to rely on annual appropriations or supplemental packages to fund emergency and ad hoc assistance efforts.

*CBO identifies known transfers of $12.5 billion in fiscal year 2025 and $3 billion in known transfers in fiscal year 2026 and assumes additional transfers to reach a total of $6 billion in fiscal year 2026.

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Two recent reports from USDA provide a closer look at the U.S. cattle industry. Chad Smith has details on the numbers and market reaction.

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Key Takeaways

• U.S. cattle herd shows signs of stabilization. Total cattle inventory increased slightly for the first time since 2018, but the beef cow herd fell to 28.5 million head, a record low for the July report, indicating herd rebuilding remains limited.
• Replacement heifer numbers improved, but the calf crop remains historically small. Beef replacement heifers increased 3%, suggesting farmers and ranchers are beginning to retain females for breeding. However, the 2026 calf crop is projected at a record-low 32.5 million head, marking the ninth consecutive annual decline and constraining future herd growth.
• Feeder cattle supplies are expected to remain tight through 2027. Lower calf numbers and declining feedlot placements point to fewer feeder cattle available in the coming years. While the reopening of the U.S.-Mexico border will gradually increase feeder cattle imports, supplies are still expected to remain historically tight.
• Market signals are mixed as supply constraints clash with softer demand indicators. Tight cattle supplies remain supportive for long-term cattle prices, but recent declines in boxed beef values and the reopening of cattle imports from Mexico have added bearish pressure. Cattle prices have fallen sharply in recent weeks, though improving packer margins may help support processing activity going forward.

USDA’s July Cattle Inventory report offers a critical midyear snapshot of the U.S. cattle herd, including an estimate of the year’s calf crop. Released in tandem with USDA’s monthly Cattle on Feed report, the two datasets together provide a more comprehensive view of supply trends and herd dynamics.

July Cattle Inventory

According to the July Cattle Inventory report, the inventory of all cattle and calves in the United States totaled 94.2 million head on July 1, 2026, up 200,000 head, or less than 1%, from 94.0 million head on July 1, 2025. This marks the first increase in the July cattle inventory since 2018.

Despite the slight increase in total inventory, indicators of herd expansion remain mixed. All cows and heifers that have calved were estimated at 38.1 million head, unchanged from a year ago. Within that total, beef cows were estimated at 28.5 million head, down 200,000 head, or 1%, from 2025 and the smallest July inventory on record (the data goes back to 1973). In contrast, milk cows were estimated at 9.65 million head, up 200,000 head, or 2%, from last year.

One of the most closely watched measures in the report is the inventory of beef replacement heifers weighing more than 500 pounds, which was estimated at 3.8 million head, up 100,000 head, or 3%, from 2025. This increase represents the first meaningful sign of heifer retention and potential herd rebuilding in nearly a decade. Meanwhile, other heifers totaled 7.3 million head, down 100,000 head, or 1%, from last year. These animals remain a potential source of future breeding stock.

The report also estimated the 2026 calf crop at 32.5 million head, down 2% from 2025 and the smallest calf crop on record. This marks the ninth consecutive year of decline and remains a major constraint on future herd growth. These calves represent the pool of animals available either for breeding or for placement into feedlots in 2027 and 2028. As long as calf numbers continue to decline, producers face limitations in expanding the herd, regardless of retention decisions.

Overall, the report suggests stabilization rather than expansion of the U.S. cattle herd. The increase in beef replacement heifers is an encouraging sign and contributed to the modest rise in total cattle inventory. However, that gain was largely offset by a smaller beef cow herd, while growth in milk cow numbers accounted for much of the increase in total cattle inventory. A sustained increase in both the calf crop and total cattle inventory would provide a clearer indication that a broader expansion phase has begun.

Cattle on Feed

USDA releases a monthly Cattle on Feed report that tracks inventories in large commercial feedlots with capacities of 1,000 head or more. The July Cattle Inventory report complements that survey by providing a broader estimate of all cattle and calves on feed across U.S. feedlots of every size.

According to the July report, 13.2 million cattle and calves were on feed in all U.S. feedlots on July 1, 2026. Of that total, 11.37 million head were in feedlots with capacities of 1,000 head or more, up 2% from a year earlier and accounting for 86.2% of all cattle on feed, compared with 85.2% a year ago.

Within large feedlots, USDA estimated 7.12 million steers and steer calves on feed, up 236,000 head, or 3%, from last year. Heifers and heifer calves totaled 4.25 million head, up 10,000 head, or less than 1%. Steers and steer calves represented approximately 63% of cattle on feed, while heifers and heifer calves accounted for about 36%.

Recent placement and marketing activity highlights the increasingly tight supply. June placements totaled 1.40 million head, down 42,000 head, or 3%, from a year ago. This followed May placements that were down 10%, or 183,000 head, from May 2025. At the same time, June marketings were estimated at 1.66 million head, down 46,000 head, or 3%, from last year and the lowest June total on record.

The combination of declining placements and slower marketings suggests cattle are remaining in feedlots longer, contributing to heavier market weights. Slower slaughter rates have also allowed market-ready supplies to build in feedlots, while packers have reduced processing schedules amid tight cattle supplies and compressed margins. As a result, cattle are being fed to heavier weights before entering the packing sector, partially offsetting the impact of lower cattle inventories on beef production.

Feeder Cattle Supplies and Mexico

Mexico typically exports between 1.2 million and 1.5 million head of feeder cattle to the United States each year. These cattle are an important component of the U.S. beef supply chain, moving from border crossings into feedyards across the country before eventually entering packing plants.

This trade was disrupted in November 2024 when the United States closed the border to livestock imports following the detection of New World screwworm (NWS) in southern Mexico. The pest gradually spread northward and was eventually detected in the United States in June 2026. As of this article’s posting, there have been 42 confirmed NWS detections in the current U.S. outbreak: 41 cases in Texas and one in New Mexico.

The border closure has tightened feeder cattle supplies, particularly in border states such as Arizona, New Mexico and Texas, which depend heavily on Mexican cattle to support feedyards and maintain beef production. Reduced cattle imports have contributed to tighter supplies and higher beef prices.

Efforts to contain the pest have centered on the Sterile Insect Technique, a proven method for controlling NWS populations. A key milestone occurred on June 27, 2026, with the opening of a new sterile fly production facility in Metapa, Mexico. Prior to its opening, the only remaining production facility was located in Panama and produced approximately 100 million sterile flies per week. The Metapa facility is expected to produce 30 million flies per week by the end of August, with an increased capacity up to 100 million flies per week by the fall.

These advancements helped pave the way for the gradual reopening of cross-border cattle trade. On July 24, Secretary of Agriculture Brooke Rollins announced that imports would resume through the Douglas, Arizona, port of entry after a 30-day period, with two New Mexico ports scheduled to reopen thereafter. Reopening protocols include stringent treatment and inspection requirements. Imported cattle must pass through disinfectant dip vats and undergo additional inspections for open wounds or any additional signs of NWS. Animals showing evidence of NWS infestation or visible open wounds will be rejected and prohibited from entering the United States.

The phased reopening should help ease feeder cattle supply constraints over time while maintaining safeguards to prevent further spread of NWS.

Markets

The monthly reports and the announcement that the United States will reopen its border to livestock imports from Mexico were both released after markets closed on Friday, July 24. Overall, the reports provide mixed signals and are largely neutral for cattle markets, while the reopening of the border is viewed as bearish because it will increase cattle supplies over time.

These developments follow a sharp decline in cattle prices over the past month. August 2026 live cattle futures recently recorded a historic streak of losses over 15 consecutive trading days. In the cash market, the 5-area daily weighted average fed cattle price has fallen $29/hundredweight (cwt), or 11%, since June 25, 2026.

From a supply perspective, the strongest bullish takeaway from the reports is found in the feeder cattle market. A record-small calf crop and lower June placements both point to a tighter supply of feeder cattle later in 2026 and throughout 2027. While the reopening of the border to Mexican cattle imports will gradually increase feeder cattle availability, supplies are still expected to remain historically tight. Reduced feeder cattle numbers ultimately imply limited future fed cattle supplies, which should provide some support to cattle prices.

Demand

Boxed beef prices have weakened since late June. U.S. beef demand typically peaks around the Fourth of July holiday as summer grilling season reaches its height. Since reaching a high of $400.31/cwt on June 23, the Choice beef cutout value has declined $39.07/cwt, or roughly 10%, to $361.24/cwt on July 24.

Although seasonal declines in beef prices following the peak grilling season are common, the recent weakness raises questions about whether consumer demand is beginning to soften after several years of exceptional strength. If consumer demand is slowing, beef cutout values could continue to decline. If demand remains resilient, however, boxed beef prices may find support.

Both scenarios have important implications for packer profitability. While fed cattle prices have recently declined faster than beef cutout values, resulting in a modest improvement in the live-to-cutout spread, packer margins remain firmly in negative territory and have been for several months.

Conclusion

USDA's July Cattle Inventory and Cattle on Feed reports suggest the U.S. cattle industry remains in a period of stabilization rather than meaningful expansion. While the increase in replacement heifers provides an early signal that some producers may be positioning for herd rebuilding, record-low beef cow numbers and the smallest calf crop on record continue to limit growth potential. At the same time, lower feedlot placements point to tight feeder cattle supplies extending into 2027, even as the gradual reopening of live cattle imports from Mexico provides some relief.

For markets, the outlook remains mixed. Tight long-term cattle supplies remain supportive, but softer boxed beef prices, questions surrounding consumer demand, and increased imports from Mexico have added near-term pressure. The coming months will be critical in determining whether early signs of herd rebuilding gain momentum or whether supply constraints continue to define the cattle market cycle.

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