How will tariff changes impact farmers?

While farmers are focused on the planting season, tariff increases with countries like China, Canada and Mexico are making them think even harder about their resulting harvests. 

Capital Farm Credit Chief Lending Officer Phil Peabody was a special guest on the KBTX Focus at Four program, addressing the impact of tariffs on agriculture.

The impacts can be positive or negative, depending on what they produce, when they produce it and where it will be sold, Peabody said.

“Agriculture is dependent on export markets. In 2024 USDA estimated that $176 billion worth of ag products were exported, so all of agriculture is paying attention,” Peabody said.

Cotton is one product that could see major impacts from increased tariffs.

“The world's processing capacity for cotton is no longer in the United States,” he said. “About 85% of our cotton crop is exported for processing and manufacturing. So, cotton producers are definitely concerned.”

Market volatility from the tariff news is the biggest issue, but Peabody said there are opportunities for producers to take advantage of pricing opportunities.

“Have a good marketing plan and some good, trusted sources of information. Also know the cost of inputs, know your costs, and know when you can lock in some profits,” he said.

In general, ag producers recognize that the administration is focused on getting long-term trade agreements in place, which could be ultimately be good for agriculture.

“There is hope that this will all work out in their favor, that the agreements that are ultimately negotiated are long-term, are stable and they give farmers not only access to existing markets but even to expanded markets.”

Farm Credit officials spoke this week during a hearing on the agricultural economy held by the Senate Committee on Agriculture, Nutrition and Forestry.

The hearing, titled Perspectives from the Field: Risk Management, Credit and Rural Business Views on the Agricultural Economy, featured a panel of five witnesses, including Tara Durbin, Chief Lending Officer of Farm Credit Mid-America (FCMA).

Durbin highlighted the diverse financial conditions facing American agriculture, noting challenges in row crop farming, volatility in cotton and rice and a positive trend in protein.

She further emphasized Farm Credit's support for farmers experiencing financial stress, which includes proactively restructuring debt, offering financial coaching and utilizing federal programs such as crop insurance and Farm Service Agency loan guarantee programs to help mitigate risk. 

“Whether they are producing grain, cotton or livestock, America’s farmers have weathered the storm before and will get through it,” Peabody said. “They've weathered it many, many, many times.”