Key Takeaways

• China’s list of goods covered under the new “30-for-30" trade framework includes major U.S. agricultural products such as beef, pork, poultry, dairy, corn, wheat, rice, sorghum and specialty crops, but whole soybeans are excluded.

• The roughly $30 billion figure reflects the value of products covered by the framework. Lower tariffs can help U.S. products compete, but they don't guarantee sales.

• The benefits for farmers and ranchers will depend on how far tariffs are reduced, how quickly changes take effect and whether the new agricultural working group can resolve non-tariff market-access barriers.

The United States and China have taken another step toward easing trade barriers, each identifying roughly $30 billion in goods for tariff reductions. This list comes from the newly established U.S.-China Board of Trade. For U.S. agriculture, the agreement covers a wide range of products, from beef and pork to corn, wheat, dairy and specialty crops. However, this is not a purchase commitment. Several important details, including final tariff rates, the timing of implementation and the exclusion of whole soybeans, limit how much can be concluded about its near-term impact on U.S. farm exports.

On Sept. 27, the White House released the first product lists under the new “30-for-30” framework. The two governments set lists based on 2024 bilateral trade: 1,619 U.S. products for potential tariff reductions entering China and 77 Chinese products entering the United States. The actual rate of tariff reductions is yet to determined. Both countries will need to announce reduction rates and specify how they will be implemented.

Agriculture is Prominent on China’s List

Agricultural products make up a significant portion of China’s list. Covered products include beef, pork, lamb, poultry and offal; dairy products such as cheese, butter and cream; wheat, barley, corn, rice and sorghum; fruits, vegetables, beans and mushrooms; edible oils, juices and processed foods; as well as seafood, pet food, tobacco and forest products.

China's Ministry of Commerce has said about 90% of covered products are expected to see tariffs cut to most-favored-nation (MFN) rates, the standard tariffs China charges World Trade Organization (WTO) members without a free trade agreement. That would remove the retaliatory duties added during the trade dispute but not eliminate tariffs, so competitors with free trade agreements, like Australia and New Zealand, could still pay less. Notably for U.S. agriculture, though, it would return covered products to tariff rates equal to competitors in South America like Brazil and Argentina. Specific reductions and implementation dates have not been released.

However, one notable agriculture product is left out. Whole soybeans. Soybeans have historically been one of the top agricultural exports to China, but they are not included in this round of proposed tariff reductions. Soybean oil and some other soybean-derived products are covered; however, China is primarily a whole soybean importer, owing to a mature domestic crush industry. In late 2025 and spring 2026, the administration announced separate purchase commitments with China, including at least 25 million metric tons of soybeans and at least $17 billion in agricultural purchases annually in 2026, 2027 and 2028. This latest agreement does not include any purchase commitments.

Trade Has Fallen Sharply

Historically, China has been a top trading partner for U.S. agriculture. However, that has fallen amid the ongoing negotiations and trade tensions. USDA reports that U.S. agricultural exports to China fell 66% in 2025 to $8.4 billion, dropping China to the sixth-largest U.S. agricultural export market. USDA attributed much of that decline to reciprocal tariffs and weaker Chinese demand for U.S. soybeans. USDA’s May trade forecast projected fiscal year 2026 agricultural exports to China at about $12 billion, compared with $16.2 billion in fiscal year 2025.

The new agreement to lower tariffs on products included in the 30-for-30 framework may improve the competitiveness of U.S. commodities. For products such as meat, dairy, grains and specialty crops, even modest tariff reductions can narrow the price gap between U.S. products and competing supplies from countries with more favorable trade arrangements.

However, there are other factors that impact trade outside of tariffs. Chinese purchases will still depend on domestic consumption, commodity prices, exchange rates, production conditions and competition from other exporters. Brazil, Australia, New Zealand and other major agricultural suppliers will continue competing for market share. In many commodities, U.S. producers also face non-tariff barriers that cannot be resolved simply by reducing an import duty.

The Agricultural Working Group

The announcement also included the creation of a working group within the China Board of Trade that will specifically focus on agricultural market access barriers. The White House described the group as a mechanism for addressing impediments to agricultural trade beyond tariffs.

Agricultural exporters routinely face sanitary and phytosanitary requirements, facility registrations, onerous biotechnology approval processes, product eligibility rules and other regulatory requirements that can limit market access even when tariff rates are competitive. Continued negotiations through a standing agricultural working group could provide a venue for addressing those barriers product by product.

What it Means for Agriculture

The 30-for-30 framework represents potential improvement in market access for U.S. agriculture, particularly livestock products, grains, dairy and specialty crops. However, the agreement does not guarantee additional purchases. The $30 billion figure reflects the 2024 trade value of goods included in the broader framework, not a Chinese commitment to purchase $30 billion of U.S. products.

For farmers and ranchers, the real test is how far tariffs fall, how quickly the cuts take effect, whether regulatory barriers are addressed and, ultimately, whether ships leave U.S. ports loaded with American farm products bound for China.

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The American Farm Bureau Federation applauded an executive order on dyed diesel usage. Chad Smith says more is needed.

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Leaning into the International Year of the Woman Farmer, Women in Agribusiness this year expanded their annual Demeter Award of Excellence to include a female farmer category. Last month, Michigan dairy farmer and Farm Bureau member Terri Hawbaker took the stage at the 15^th annual Women in Agribusiness Summit in New Orleans to accept the award.

“I am deeply humbled and honored to receive this recognition from Women in Agribusiness in collaboration with the American Farm Bureau Federation. I am especially grateful for the opportunity to attend the Summit and network with so many successful women,” Hawbaker said.

Growing a Diversified Farm with a Focus on Sustainability

Since starting her dairy from scratch in October 2002 with her late husband, Rick, Hawbaker has built a thriving, diversified operation in Pewamo in Michigan’s Lower Peninsula, spanning 337 acres and supporting a 150-cow milking herd, 70 replacement cattle, and grass-finished beef.

Her seasonal, pasture-based model that aligns calving with Michigan's natural grazing cycle has cut input costs while improving environmental stewardship and long-term profitability. That commitment to quality has earned her farm several awards, including more than eight Grade A Perfect Score awards, two Outstanding Performance awards, and four Bronze Quality awards, all from the Michigan Milk Producers Association. Hawbaker has also been nationally recognized in publications like USA Today and received individual honors including being a finalist for Michigan Farm Bureau’s Young Farmer Achievement Award.

A Role Model in Resilience

As long as Hawbaker’s list of agricultural accolades is, what really sets her apart is her resilience. For the past decade, she has raised five children as a widow while continuing to grow her business, homeschooling them and instilling values of hard work, accountability and problem-solving. Hawbaker has shown that both family and career can thrive together, making her a powerful role model for women across agriculture.

As one admirer described her journey, “She is the embodiment of a strong female achieving the American dream through grit, innovation and unwavering faith.”

Leadership On and Off the Farm

Hawbaker's influence reaches well beyond her own farm. She hosts grazing and conservation field days, mentors international agricultural fellows, and serves on boards including the American Forage and Grasslands Council, the Michigan Forage Council, the Michigan Milk Producers Association, and GreenStone Farm Credit Services.

According to Women in Agribusiness, Hawbaker embodies the full spirit of the Women in Agribusiness Demeter Award: a proven leader, a woman of notable achievement, and a mentor who lifts others up — all while leading with purpose, faith and unwavering determination.

AFBF and the Demeter Award

The American Farm Bureau Federation promoted the Female Farmer Demeter Award of Excellence opportunity among Farm Bureau’s strong network of female farmers across the United States and provided support and recognition through the full award lifecycle, including covering travel and lodging for Hawbaker to accept her award at the 2026 Women in Agribusiness Summit.

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Key Takeaways

• USDA’s September Farm Sector Income Forecast provided the first state-level estimates for 2025 farm economic conditions. State-level projections were provided for gross farm income, production expenses and net farm income.

• A handful of states dominate farm income and expenses. California ($72 billion), Iowa ($47 billion), and Texas ($43 billion) led gross farm income, and the top 10 states accounted for more than half of both national gross income and production expenses.

• Net farm income is similarly concentrated. California ($26 billion), Texas ($15 billion), Iowa ($10 billion), and Nebraska (more than $8 billion) together made up over 30% of the national total and the top 10 states accounted for nearly 60% of U.S. net farm income.

USDA’s September Farm Sector Income Forecast provided updated projections for 2026 farm income but also provided the first state-level estimates for gross farm income, production expenses and net farm income (a broad measure of overall farm profitability) for 2025. These updated forecasts revealed that during 2025 U.S. inflation-adjusted net farm income climbed by nearly $32 billion, or 23%, to $167 billion. This is increase was driven by record livestock-based cash receipts as well as ad hoc federal support from USDA’s congressionally approved programs authorized under the American Relief Act of 2025.

State-Level Gross Farm Income

Buried beneath the headline net farm income projections for 2026, we find that inflation-adjusted U.S. gross farm income in 2025 is now forecast at $653 billion, an increase of 5%, or nearly $34 billion, from 2024’s inflation-adjusted value. As the nation’s largest agricultural producer, it is no surprise that California led the country with gross farm income of $72 billion in 2025, down only slightly from 2024’s estimate. Following California, Iowa was the nation’s second-largest contributor to real gross farm income at $47 billion – an increase of 9% year-over-year, attributable to higher cattle-based income and increased federal support compared to the year prior. Rounding out the top three, Texas contributed $43 billion to national gross farm income, and like Iowa was higher than 2024 due to livestock-based income and higher federal support.

Interestingly, the top 10 states in the U.S. in terms of agricultural income accounted for more than 50% of the nation’s real gross farm income. Rounding out the top 10 states in terms of real gross farm income are Nebraska ($41 billion), Kansas ($33 billion), Minnesota ($29 billion), Illinois ($26 billion), North Carolina ($20 billion), Indiana ($19 billion) and Wisconsin ($19 billion).

Production Expenses and Real Net Farm Income

It’s no secret that input costs have continued to put pressure on farm income; as Congress and the administration have responded on two separate occasions to provide relief; first through ECAP and then through the Farmer Bridge Assistance program. During 2025, inflation-adjusted farm production expenses total $486 billion and were the highest in California, followed by Iowa, Nebraska and then Texas. Similar to revenues, the top 10 agricultural states in terms of production expenses, accounted for more than 50% of production expenses nationwide.

Inflation-adjusted net farm income, the difference between gross farm receipts and total production expenses, is a broad measure of the overall health of the farm economy. During 2025, inflation-adjusted net farm income totaled $167 billion and was up $32 billion from the prior year – again driven by strong returns in the livestock sector and increased federal support. Net farm income was the highest in California at $26 billion, followed by Texas at $15 billion, Iowa at $10 billion and Nebraska at more than $8 billion. These four states alone accounted for more than 30% of the nation’s net farm income in 2025.

Summary

USDA's September Farm Sector Income Forecast delivered the first state-level estimates of 2025 farm income, providing insight into the distribution of income, federal support, and production expenses across the U.S.

Gross farm income rose 5% to $653 billion, led by California at $72 billion, followed by Iowa at $47 billion and Texas at $43 billion, the latter two both supported by stronger livestock income and higher federal support. Importantly, the top 10 states generated more than half of the nation's gross farm income and accounted for more than half of production expenses. Net farm income was highest in California ($26 billion), Texas ($15 billion), Iowa ($10 billion), and Nebraska (more than $8 billion), which together accounted for over 30% of the national total.

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American Farm Bureau Federation President Zippy Duvall tonight applauded the executive order signed by President Trump to ease limits on the use of tax-exempt dyed diesel fuel to give farmers a break.

"We thank President Trump for recognizing that what happens at the fuel pump directly affects what happens on the farm and therefore at dinner tables across America. Allowing dyed diesel fuel to be used over-the-road will bring welcome relief for farmers because every cent per gallon matters when you're running a fleet of grain trucks or hauling cattle hundreds of miles.

“As we detailed in a letter to the president last week, this effort will bring much needed price relief for farmers as they work to complete harvest across the U.S. The federal highway diesel tax is currently more than 24-cents per gallon, so it’s a big deal to farmers to be able to use tax exempt diesel more broadly to get their harvest to market. We appreciate that the president listened to farmers and responded.”

Read last week’s letter to the president here.

Read a Farm Bureau Intel on the impact of diesel prices during harvest here.

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Key Takeaways

• Passed by Congress in 1921 to police unfair practices, price manipulation and monopoly in livestock markets, the Packers and Stockyards Act has lost force as its authority has been moved repeatedly between agencies and its direct line to the Secretary of Agriculture has weakened.
• Since the 2008 farm bill, each administration has proposed or finalized rules that the next one withdrew or Congress defunded.
• The Biden-era rules survived repeated defunding attempts, but USDA proposed in March 2026 to push back the Biden-ear Poultry Grower Payment Systems & Capital Improvement rule to December 2027. AFBF opposed that delay because it would weaken protections for producers.

Background

Congress passed the Packers and Stockyards Act (PSA) in 1921. At that time, the cost of living post-World War I had significantly increased, and President Woodrow Wilson instructed the Federal Trade Commission (FTC) to investigate the meat packing industry from the “hoof to the table” to identify and prevent market manipulation.

When the PSA was implemented, it gave the secretary of agriculture the direct ability to regulate specified activities of businesses engaged in the marketing of livestock, meat and poultry through the Packers and Stockyards Administration. This included prohibiting packers from engaging in unfair practices, giving undue preferences, manipulating price and supply, and creating a monopoly.

Over time, the Packers and Stockyards Administration’s ability to directly report to the secretary was eroded. In 1927, the Packers and Stockyards Administration became part of the Bureau of Animal Industry, which in turn eventually became part of USDA’s Agricultural Marketing Service (AMS). Over the next few decades, the Packers and Stockyards Administration alternated between being its own entity or under the umbrella of another agency. This continued until 1994 when the administration became the Packers and Stockyards Division (PSD) and merged with the Federal Grain Inspection Service to become the Grain Inspection, Packers and Stockyards Administration (GIPSA). Most recently, PSD was swept into AMS’ Livestock and Poultry Division as part of the ongoing USDA reorganization.

Evolution of the PSA

Over the last 105 years, the PSA has changed several times to adapt to changes in livestock production and marketing. The last meaningful changes to the PSA came in 2002, and since then, there have been multiple attempts to make changes through congressional appropriation and authorization authorities.

2008 Farm Bill

The 2008 farm bill expanded the PSA by adding provisions specific to swine and poultry growers. Several key provisions of this expansion were:

• A contract poultry grower or swine producer can cancel a contract within three days of the contract being executed;
• Integrators must provide growers information about facility upgrades (capital investment disclosures);
• Contract disputes must be carried out in the U.S. District Court where the alleged dispute occurred; and
• USDA was directed to enact regulations to establish criteria the secretary will consider in determining undue or unreasonable preference; reasonable notice to poultry growers of any suspension or delivery of birds under the contract; when a requirement of additional capital investments constitutes a violation of the act; and if a reasonable amount of time has been given for a producer or grower to remedy a breach of contract.

2010 Rulemaking

USDA’s subsequent proposed rule, released in 2010, was broadly opposed by industry stakeholders, including the National Cattlemen’s Beef Association, National Chicken Council,National Turkey Federation, National Pork Producers Council and the American Meat Institute. AFBF’s filed comments were neutral given the ambiguity surrounding several provisions dealing with undue or unreasonable preferences.

Parts of the rule were finalized in December 2011 with an effective date of Feb. 7, 2012. Due to industry pushback, Congress stepped in and defunded the most contentious parts of the rule regarding unfair or undue preferences in fiscal years 2012 through 2015.

Both the Obama and Trump administrations proposed new rules that were rescinded by their successors in the White House. 

USDA Rulemaking and Congressional Actions 2021-2025

In 2021, President Biden signed an executive order launching a whole-of-government approach to promoting competition and reducing consolidation in the American economy. As part of the executive order implementation, USDA proposed and finalized three rules to promote fairness, transparency and competition within the livestock sector. Two of the three rules were specific to broiler production, while the third rule on market integrity is applicable to all species, e.g., cattle, hogs and poultry.

USDA withdrew a proposed fourth rule to address competition and unfair practices in the marketplace, or “harm to competition.”

Attempts to defund these rules through the appropriations process in fiscal years 2023 through 2026 failed to result in any meaningful changes to USDA implementing and enforcing them..

However, in March 2026, USDA issued a proposed rule to delay the implementation date of the Poultry Grower & Capital Improvement Systems final rule from July 1, 2026, to Dec. 31, 2027. AFBF submitted comments in opposition.

Executive Order

On Sept. 4, 2026, President Trump issued Executive Order 14424 directing the secretary of agriculture to do a comprehensive policy and regulatory review and report within 60 days on “current enforcement actions, resources needs, and a plan for heightened enforcement for the coming year” and a “review of existing regulations, guidance, and enforcement policies under the Act, as appropriate and consistent with applicable law, revise them to strengthen protections for producers and ensure effective deterrence of prohibited conduct.”

The executive order was carefully crafted to give the maximum amount of regulatory flexibility to USDA to revise or terminate these regulations. This is due in part to Executive Order 14192. Signed by the president on Jan. 31, 2025, the order states that any time an agency “publicly proposes for notice and comment or otherwise promulgates a new regulation, it shall identify at least 10 existing regulations to be repealed.”

In July, USDA updated its Agency Rule List for 2026 to include rescissions of the three finalized PSA rules. By signing the executive order, the president sent a signal to the secretary of agriculture that necessary and needed reforms to the PSA are not an administration priority, a concern for Farm Bureau because of the increased regulatory and market uncertainty it creates for farmers and ranchers who are already up against so many challenges.

• USDA/AMS—Proposed Rule Stage—Inclusive Competition and Market Integrity under the Packers and Stockyards Act – Rescission (AMS-FTPP-25-0014)
• USDA/AMS—Proposed Rule Stage—Transparency in Poultry Grower Contracting and Tournaments – Rescission (AMS-FTPP-25-0015)
• USDA/AMS—Proposed Rule Stage Poultry Grower Payment Systems and Capital Improvement Systems – Rescission (AMS-FTPP-22-0046)

Conclusion

More than 100 years in, the Packers and Stockyards Act requires periodic changes to protect farmers and ranchers from unfair and anti-competitive practices in the marketplace as marketing practices for livestock change over time.

The repeal of recent Packers and Stockyards Act regulations creates policy uncertainty and continues the regulatory back and forth that hinders the promotion of fair competition in the livestock industry.

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Key Takeaways

• USDA’s September Hogs and Pigs report confirmed a smaller U.S. hog herd with total inventories near 74.3 million head, about 2% below a year ago, while the breeding herd remains historically tight.

• Hog farmers continue to resist major expansion but have not entered widespread liquidation. Farrowing intentions point to little growth potential through early 2027.

• USDA lowered pork export expectations for both 2026 and 2027, citing softer global demand and increasing competition from Canada and Brazil, particularly in Mexico, the largest foreign market for U.S. pork.

• Hog farm profitability remains positive but vulnerable. Rising feed costs, driven by higher corn prices, are narrowing margins and could trigger herd liquidation if hog prices continue to weaken.

The U.S. hog market is sending mixed signals for the remainder of 2026. Hog supplies continue to tighten as farmers resist expansion. Yet lower futures prices are signaling concerns that pork demand may be weakening faster than supplies are shrinking.

USDA’s September Hogs and Pigs report reinforced this reality. The total inventory of hogs and pigs on Sept. 1 was 74.3 million head, about 2% below last year, but up about 1.6% from revised estimates for last quarter’s report. 2026 inventory numbers were down in every market weight category. Breeding inventories remained tight, pig crops were smaller and farrowing intentions point toward slight growth in 2027.

Tight Breeding Herd, But no Evidence of Broad Liquidation

The breeding herd was estimated to be 5.87 million head, down 62,000 head, or 1%, from last year and is the smallest since 2013. The June-August pig crop was estimated at 34.5 million head, down about 1.5% from a year ago. This was the result of fewer farrowings during the same time, estimated to be about 2.89 million, down 2.7% from a year ago. Pigs saved per litter were 11.96 —slightly more than 1% above 11.82 a year ago, partially offsetting the lower farrowings. None of this data suggests expansion in the hog sector, but it also doesn’t suggest major liquidation that is typically tied to a decline in supply.

Recent production trends help explain why ample supplies remain available even with a smaller herd. According to USDA's September Livestock, Dairy and Poultry Outlook, August federally inspected hog slaughter totaled approximately 9.9 million head, down 2.1% from a year earlier. Yet pork production declined by less than 1%. This was largely due to average dressed weights that were 212 pounds per head, about 3 pounds heavier than August 2025. These factors led USDA to estimate 2026 pork production at 27.77 billion pounds, nearly 1% above 2025 levels.

The disconnect between herd size and pork production is one reason behind weakness in the futures markets. Traders appear increasingly convinced that there will not be a shortage of butcher hogs moving into 2027.

Export Demand Losing Momentum

Demand is becoming harder to ignore as the industry moves closer to 2027. About 30% of all U.S. pork production is exported, making international demand a critical source of value for U.S. hog farmers. USDA’s September Livestock, Dairy and Poultry Outlook further reduced quarterly export forecasts for both 2026 (7.11 billion pounds) and 2027 (7.19 billion pounds) due to stronger competition and softer demand in several key markets. Mexico warrants the most attention because it accounts for roughly 40% of U.S. pork exports. USDA data show July pork shipments to Mexico totaled 207 million pounds, down 2% from a year ago at the same time. USDA’s Foreign Agricultural Service (FAS) August Global Agricultural Information Network (GAIN) report indicates that Mexican pork production continues to expand as disease pressures ease and producers adopt improved technology and biosecurity practices.

Mexico isn’t the only market showing signs of pressure. July exports to South Korea fell nearly 30% year-over-year as European suppliers, particularly Spain, continue capturing market share. Stronger competition from the European Union, Canada and Brazil has reduced opportunities for U.S. pork and contributed to USDA’s lower export outlook.

Weekly export data tells a similar story. While export volumes remain respectable, shipments have increasingly shifted toward lower-value cuts. USDA noted that hams accounted for nearly 14% of export loads in August, more than double their share a year ago, as exporters moved product amid sharply weaker ham prices. The bottom line is pork exports are still flowing, but not at the volumes or values needed to create meaningful scarcity in the global pork market.

Demand Weakness Eventually Requires Lower Prices

Right now, demand appears to be cooling faster than pork supplies are tightening. Alongside higher expected production, USDA’s monthly Cold Storage report estimates that stocks of pork in warehouse freezers are up 12% from 2025 levels.

Domestic demand may also be facing additional challenges. Proposition 12 appears to have created a lasting reduction in California pork demand. Researchers found sustained retail pork price increases and a decline in California's share of U.S. pork purchases from 8.5% to 7.1% following implementation. Because California is such a large pork market, even modest reductions in purchases can have big impacts on overall pork demand.

Meanwhile, USDA’s September Outlook notes that August live hog prices averaged $69.43 per hundredweight, nearly 11% below year-ago levels, while the wholesale pork cutout averaged $98.83 per hundredweight, down more than 14% from August 2025.

Much of the weakness in the cutout comes from hams and bellies. USDA reported that late-August ham prices were more than 31% below year-ago levels while belly prices were nearly 17% lower. Together, those cuts account for about 41% of the total carcass value, meaning weakness in just those two primal cuts can have a big impact on overall pork prices.

Meatpackers are feeling the pressure as well. USDA estimates that gross processor spreads averaged about $25.50 per head in August compared to $33.69 per head during the same time a year ago. Even though processors are paying less for hogs, slow demand has eroded profitability throughout the supply chain.

Hog farmers have not yet responded with strong liquidation. Sow herd reductions remain gradual rather than aggressive, and producers continue marketing heavier hogs instead of substantially reducing production capacity. If export demand continues to struggle alongside domestic consumer demand, lower prices and more aggressive liquidation could occur.

Rising Feed Costs Threaten Producer Margins

The financial outlook for producers remains mixed. Iowa State University's farrow-to-finish profitability estimates continue to indicate positive returns for much of 2026, but USDA’s latest outlook notes that current price forecasts are putting many hog farmers at or near break-even levels. USDA projects 2026 hog prices to average about $65 per hundredweight and 2027 prices near $64 per hundredweight. The pork cutout has declined roughly 20%, or about $21 per hundredweight, since September 2025 due to lower prices for hams and bellies.

At the same time, feed costs are beginning to move higher due to rising prices for grain, like corn. The University of Illinois FarmDoc analysis estimates average swine feed costs could rise nearly 10% in 2027 compared with 2026, assuming current grain price projections hold.

Feed costs are particularly important because feed accounts for as much as 70-75% of operating costs for hog farmers. Even modest increases in corn prices can quickly erode profitability when hog prices are declining.

For now, margins remain positive enough to discourage widespread liquidation. However, if hog prices fall at the same time feed costs rise, the industry's willingness to maintain current production levels could change rapidly.

Outlook Through 2026

The data contained in USDA’s September Hogs and Pigs report confirmed what futures have been signaling for months: A smaller breeding herd has not translated into significantly tighter pork supplies. Heavier market weights and improved productivity continue to offset a smaller hog inventory.

At the same time, export demand is becoming less reliable. Competition from Brazil, Canada and Europe is growing, while key markets like Mexico and South Korea are showing signs of slower demand growth.

For now, positive margins are giving hog farmers little reason to aggressively liquidate herds. But that support could become less certain if feed costs continue to climb and hog prices continue to erode. Heading into 2027, demand is positioned to play a much larger role in determining market direction than herd size alone.

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As farmers and ranchers face record-high diesel costs, American Farm Bureau Federation President Zippy Duvall today called on the president to take several steps to lower prices at the pump, including a temporary suspension of the federal highway diesel tax.

“Higher diesel expenses are hitting farmers at one of the most fuel-intensive times of the year – harvest,” wrote Mr. Duvall in a letter to President Trump. “Diesel is essential for the American economy and for farmers. Everything on the farm, from running tractors, combines and irrigation equipment to transporting crops, livestock and inputs requires diesel. Farmers and ranchers cannot postpone harvest or simply stop using diesel when prices rise.”

The national average on-highway diesel price has reached $6.38 per gallon, while farm diesel in the heart of the Corn Belt climbed to nearly $6 per gallon. The federal highway diesel tax is currently more than 24 cents per gallon. Farm Bureau also urged the administration to waive federal penalties for emergency use of dyed diesel on highways. At least 10 states have taken similar actions to combat fuel prices.

Read the full letter here.

Read a Farm Bureau Intel on the impact of diesel prices during harvest here.

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Key Takeaways:

• America’s farmers and ranchers rely heavily upon diesel to plant, grow and harvest their crops, and to get them to market.

• Ongoing geopolitical conflicts have created supply chain bottlenecks, which have led to record-high diesel prices in recent weeks.

• Most farmers and ranchers use off-highway diesel, also known as red-dye diesel or farm diesel. This type of diesel fuel is exempt from state and federal highway taxes.

• Several states have recently taken steps to help farmers and ranchers suffering from the burden of high diesel prices by allowing for the temporary use of farm diesel on public roadways.

Diesel is used throughout agricultural production, powering tractors, combines, irrigation equipment and the trucks that move crops, livestock and farm inputs. With diesel prices rising sharply in recent weeks, fuel costs have become an even larger concern during one of the most fuel-intensive periods of the year.

A recent Farm Bureau analysis detailed the global supply disruptions and tight fuel markets behind the increase in diesel prices. For farmers, the effects show up directly in the cost of operating equipment and indirectly through higher transportation costs.

To illustrate the direct farm-level impact, Farm Bureau modeled fuel costs across several representative row crop and specialty crop farms. For each crop, the model combines average acres per farm from the 2022 Census of Agriculture with crop-specific diesel-use estimates drawn from university Extension budgets and production studies. That estimated seasonal fuel use is then multiplied by the change in the U.S. farm diesel price, which increased from $3.01 per gallon in September 2025 to $5.61 per gallon in September 2026, a gain of $2.60 per gallon. This analysis uses the Illinois farm diesel price reported by USDA AMS. Regional differences in fuel prices may result in higher costs for producers in other parts of the country.

The results show how a diesel fuel price increase can impact farmers differently during harvest. Per our analysis, the average corn farm covers 279 acres and uses an estimated 3.07 gallons of diesel per acre (for all harvest-related activities), resulting in 857 gallons of diesel used over the fall harvest period. At the $2.60-per-gallon price increase, that adds roughly $2,227 to the farm’s diesel bill.

For cotton, the model uses 542 acres and 2.03 gallons of diesel per acre, producing an additional harvest cost of about $2,861. A model rice farm is even more fuel-intensive, with 596 acres and an estimated 5.38 gallons per acre, resulting in an eye-popping $8,337 increase in diesel costs at harvest.

The impact also differs on a per-acre basis. With a $2.60-per-gallon increase in diesel prices, Farm Bureau estimates additional diesel costs of about $3.56 per acre for soybeans, $7.98 for corn, $5.28 for cotton, and $14 for rice. For farmers planting a winter wheat crop this fall, the model projects an additional $2.50 per acre in diesel costs.

Specialty crop farmers likewise face drastic price increases during harvest. Farm Bureau projects that a $2.60-per-gallon increase in diesel prices contributes to an estimated $18.23 per acre increase in harvest diesel costs for potatoes, $18.67 for almonds, and a staggering $57.59 per acre for apple growers. These harvest cost increases for 2026 arrive in the aftermath of historically high production costs for these three crops in 2025.

These estimates are intended to show the scale of the fuel price increase under representative production assumptions. Actual farm costs will vary with acreage, production practices, irrigation, equipment efficiency, tillage systems and how much work is custom hired. Higher diesel prices can also affect farmers beyond fuel used directly on the farm. Diesel is a major input in moving agricultural commodities and production inputs, meaning higher prices can increase rail fuel surcharges, barge transportation costs and trucking expenses, adding costs throughout the agricultural supply chain.

Why Farm Diesel is Different

One important feature of the diesel market is that fuel used on farms is often taxed differently from fuel used on public roadways. The federal government imposes 24.4 cents per gallon in taxes and fees on highway diesel. As of January 2026, state diesel taxes and fees averaged another 35.5 cents per gallon, bringing the combined federal and average state burden to nearly 60 cents per gallon. State taxes vary widely, and these figures do not include county or local taxes.

Diesel intended for qualifying tax-exempt uses, including farming, is dyed red and generally sold without the federal highway excise tax collected. Farmers commonly use dyed diesel in tractors, combines, irrigation pumps and other equipment operating off public roadways. If undyed diesel is instead used for a qualifying farm purpose, producers may also be eligible to claim a credit or refund.

That tax distinction can produce meaningful savings when multiplied across thousands of gallons of fuel, but it also comes with restrictions. Dyed diesel generally cannot be used in a truck traveling on public highways simply because that truck is being used for farm business. Federal tax and penalty provisions can apply when dyed fuel is knowingly used for a taxable purpose.

States Provide More Flexibility

Several states have recently taken emergency steps to give agricultural producers greater flexibility in using dyed diesel.

Louisiana acted on Sept. 23, temporarily suspending state penalties through Oct. 22 for qualifying farm and forest-product vehicles using dyed diesel on public roads. The order also directs the Louisiana Department of Revenue to request federal penalty relief from the IRS.

Alabama followed on Sept. 24, directing state law enforcement to halt enforcement of dyed-diesel restrictions for agricultural and timber operations for 120 days while also seeking federal relief.

Texas took similar action on Sept. 28, suspending state restrictions and associated penalties on the use of dyed diesel on Texas roads. The state also temporarily increased allowable weights for certain fuel, agricultural and timber loads.

Arkansas, Georgia, Indiana, Missouri, Montana, North Carolina, Nebraska, Oklahoma, Ohio and South Dakota have taken similar actions so far with many states considering action. However, while states can change their own enforcement practices or penalties, federal fuel tax requirements remain under federal jurisdiction.

Flexibility During Harvest

For farmers and ranchers, diesel is essential input that cannot be skipped when crops are ready to harvest, livestock need to be moved, or products need to reach their intended market. Farm Bureau analysis shows that a $2.60-per-gallon increase can translate into thousands of dollars in additional harvest fuel costs alone depending on the crop and production system.

With those costs rising, policymakers are looking for ways to provide immediate relief by reducing the tax burden on diesel and giving states greater flexibility to respond to local conditions. Temporary dyed diesel exemptions are one tool, but broader flexibility around state and federal fuel taxes could provide more direct relief to farmers and ranchers during periods of unusually high fuel costs.

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The American Farm Bureau Federation announced the opening of general registration today for the 2027 American Farm Bureau Convention. The convention will be held Jan. 8-13, 2027, in Charlotte, North Carolina.

The theme of the 108th consecutive American Farm Bureau Convention is “Driven to Lead. Fueled by Community.” The event will empower attendees with fresh ideas, new connections and inspiration to lead with purpose and strengthen their communities.

“The 2027 American Farm Bureau Convention will fuel attendees across agriculture and the Farm Bureau family as they lead, connect and make a difference in their communities,” said AFBF President Zippy Duvall. “I look forward to welcoming farmers and ranchers to Charlotte in January as we kick off another year of feeding and fueling America.”

Duvall will give his annual address to Farm Bureau members during the convention’s opening general session on Sunday morning, Jan. 10.

The convention will feature a full lineup of engaging workshops across four tracks: public policy, rural development, member engagement and consumer engagement. Topics will include the economic outlook for agriculture, hot public policy issues, ag workforce solutions, the midterm elections, consumer perceptions, tools to support farmer mental health, and artificial intelligence on the farm.

The trade show will feature a dynamic array of exhibitors showcasing the latest innovations in agricultural technology, tools and services.

Several optional farm- and ag-related day tours will give attendees an opportunity to explore the Tar Heel State. Stops include a grain company, an orchard, vineyards, dairy farms, greenhouses and an equestrian center. Attendees can also sign up to visit the historic Biltmore Estate, the Billy Graham Library, a research laboratory and race shops that prep cars for NASCAR events.

View the high-level American Farm Bureau Convention agenda to learn more. Members may register for the convention and tours through their state Farm Bureau. Registration is also available through AFBF. The official event hashtag is #AFBF27 and the event website is Convention.FB.Org.

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