The recent<a href="https://www.congress.gov/bill/119th-congress/house-bill/1/text">&nbsp;H.R. 1 budget reconciliation bill</a>&nbsp;signed into law on July 3, 2025 made a number of changes to farm programs and qualifications that would normally be addressed in a five year farm bill. One of these is&nbsp;payment limitations&nbsp;on federal programs (e.g. conservation, crop insurance subsidies, disaster payments, etc.) imposed on farms organized as S corporations (S corps) or limited liability companies (LLCs). The need for this change was highlighted in a previous&nbsp;Southern Ag Today&nbsp;<a href="https://southernagtoday.org/2024/05/09/paved-with-good-intentions-unintended-impacts-of-farm-bill-payment-limitations/">article</a>&nbsp;that called attention to the disparate treatment of certain entities. As noted in the article, modern-day payment limitations trace their origins to the 1970 Farm Bill.. Since that time, larger farms &#8211; those with multiple owners actively engaged in operations – often have required specialized structuring to allow their operating or landholding entity to capture more than one payment limitation to contribute to the overall operation.



Since the 2008 Farm Bill, LLCs and S corps have been treated as &#8220;individuals&#8221; and limited to one payment limit, regardless of the number of members or shareholders in the entity. This was the case even though for federal income tax purposes, these entities are considered &#8220;pass through&#8221; entities where the individual equity owners pay or take their pro-rata share of tax liability (or loss). Partnerships and joint ventures on the other hand were explicitly exempt from the payment limit, so each partner could receive payments up to their individual limitation and apply to the business of the partnership or joint venture (i.e. the farm operation). One distinction is that such arrangements are not considered entities in that they do not require registration and formation under state law. As such, partnership arrangements are not considered legal individuals, and they do not shield the equity owners from individual liability for actions of the partnership or other partners.Such lack of liability protection made operating as a partnership risky to the individual partners, perhaps not worth the risk simply to attain multiple payment limitations. A workaround legal arrangement came into practice, whereby the farm firm would operate as a partnership, but the individual partners would organize single member limited liability companies or S corps and assign their interest to their LLC or corporation, such that the LLC or corporation became the partner, rather than them in their personal capacity. This had the theoretical effect of shielding their personal assets from any tort litigation liabilities of the partnership. The arrangement looked like this:



<figure class="wp-block-image aligncenter size-full"><img loading="lazy" decoding="async" width="936" height="448" src="https://sat-wp.afpc.tamu.edu/wp-content/uploads/2025/08/5.32.5-1.jpg" alt="" class="wp-image-42400" srcset="https://sat-wp.afpc.tamu.edu/wp-content/uploads/2025/08/5.32.5-1.jpg 936w, https://sat-wp.afpc.tamu.edu/wp-content/uploads/2025/08/5.32.5-1-768x368.jpg 768w" sizes="auto, (max-width: 936px) 100vw, 936px" /></figure>



In this arrangement, instead of the farm being limited to one payment of $125,000, each individual LLC would qualify for a payment, so the farm operation could benefit from $375,000 in federal benefits (3 x $125,000).



The HB1 provision now places LLCs and S corps alongside partnerships and joint-ventures as pass-through entities for payment limitation purposes. Now, the farm may bypass the step of forming a partnership and organizing individual &#8220;partner entities,&#8221; and go straight to organizing the farm firm as one LLCs or S Corp. Each individual partner or shareholder who is &#8220;actively engaged in farming&#8221; will have their own payment limitation, so the farm firm benefits from the individual limitation multiplied by the number of members (LLC) or shareholders (S Corp). The limitation itself &#8211; previously set at $125,000 per individual &#8211; has also been raised to $155,000 per individual. The Secretary of Agriculture is authorized to increase this amount yearly with inflation.&nbsp;The simplified arrangement – along with the increased payment limit – may be formed as:



<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="936" height="342" src="https://sat-wp.afpc.tamu.edu/wp-content/uploads/2025/08/5.32.5-2.jpg" alt="" class="wp-image-42401" srcset="https://sat-wp.afpc.tamu.edu/wp-content/uploads/2025/08/5.32.5-2.jpg 936w, https://sat-wp.afpc.tamu.edu/wp-content/uploads/2025/08/5.32.5-2-768x281.jpg 768w" sizes="auto, (max-width: 936px) 100vw, 936px" /></figure>



Whether farm firms will reorganize may be a matter of cost priority. The higher costs of the arrangement under the old rules came in the form of tax accounting for both the partnership and each individual partner entity, annual filing fees with the secretary of state, plus increased paperwork with the county Farm Service Agency office. For brand new operations, reduced legal fees and state filing fees should offer savings.



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Branan, Andrew. &#8220;<a href="https://southernagtoday.org/2025/07/21/new-federal-law-simplifies-payment-limitations/">New Federal Law Simplifies Payment Limitations.</a>&#8221; Southern Ag Today 5(32.5). August 8, 2025. <a href="http://new-federal-law-simplifies-payment-limitations">Permalink</a>

New Federal Law Simplifies Payment Limitations

Brazil is shifting from a bulk commodity supplier to a premium beef exporter. In June 2025, it reached a turning point: certification as free of foot-and-mouth disease (FMD) without vaccination (PAHO, 2025). The upgrade opened doors to high-value markets like Japan and South Korea. A Japanese delegation visited days later, and a deal with Vietnam quickly followed (Brasil, 2025).



While expanding access to Asia, Brazil also made significant inroads into the U.S. market. In May alone, it shipped 175 million pounds of beef to the U.S., five times the volume of May 2024. As shown in Figure 1, Brazilian beef exports more than doubled year-to-date, driving a 60% surge in total U.S. beef imports (USDA–ERS, 2025).



<a>The U.S. imposed a 50% tariff on imports from Brazil in July</a>. With existing duties, the effective rate jumped to 76.4%. Brazil’s top exporters, Minerva, JBS, and Naturafrig, paused shipments and redirected product to Asia and the Middle East (Reuters, 2025a). Industry losses could top $1 billion in the second half of 2025 (Reuters, 2025b). The U.S. also launched a Section 301 investigation into Brazil’s trade practices (USTR, 2025). Though nearly 700 Brazilian products were exempted, beef remained on the list (The White House, 2025).



At the same time, the U.S. reinforced its trade presence in Asia, signing new agreements with Japan, the Philippines, and Indonesia. Figure 2 shows Asia remains the top market for U.S. beef exports (USDA–ERS, 2025).



While U.S. beef continues to command a premium, high prices and limited supply may create openings for Brazil in select Asian markets. With lower costs and upgraded health credentials, Brazil could appeal to buyers seeking value without sacrificing quality. Brazil’s pivot toward premium exports positions it to compete on perceived value, not just price. Still, U.S. beef holds strong brand recognition, deep trade ties, and a track record of consistency, advantages that remain critical in Tokyo, Seoul, and Hanoi.



Figure 1. Year-to-date U.S. Beef Imports by Volume (million pounds) and Origin, January-May 2024 and 2025&nbsp;



<figure class="wp-block-image aligncenter size-full"><img loading="lazy" decoding="async" width="872" height="596" src="https://sat-wp.afpc.tamu.edu/wp-content/uploads/2025/08/5.32.4.png" alt="" class="wp-image-42390" srcset="https://sat-wp.afpc.tamu.edu/wp-content/uploads/2025/08/5.32.4.png 872w, https://sat-wp.afpc.tamu.edu/wp-content/uploads/2025/08/5.32.4-768x525.png 768w" sizes="auto, (max-width: 872px) 100vw, 872px" /><figcaption class="wp-element-caption">Source: USDA, Livestock, dairy and poultry outlook (2025)</figcaption></figure>



Figure 2. U.S. Beef Exports by Volume (metric tons) and Countries, 2020 to 2024 



<figure class="wp-block-image aligncenter size-full"><img loading="lazy" decoding="async" width="936" height="490" src="https://sat-wp.afpc.tamu.edu/wp-content/uploads/2025/08/5.32.4-2.png" alt="" class="wp-image-42391" srcset="https://sat-wp.afpc.tamu.edu/wp-content/uploads/2025/08/5.32.4-2.png 936w, https://sat-wp.afpc.tamu.edu/wp-content/uploads/2025/08/5.32.4-2-768x402.png 768w" sizes="auto, (max-width: 936px) 100vw, 936px" /><figcaption class="wp-element-caption">Source: USDA</figcaption></figure>



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References



ASBIA – Associação Brasileira de Inseminação Artificial. (2025).&nbsp;Anuário ASBIA 2025.&nbsp;<a href="https://asbia.org.br/wp-content/uploads/Anuario/ASBIA_anuario_2025.pdf">https://asbia.org.br/wp-content/uploads/Anuario/ASBIA_anuario_2025.pdf</a>



Brasil. Presidência da República. (2025, April 1).&nbsp;President Lula announces opening of Vietnam&#8217;s market to Brazilian beef.&nbsp;<a href="https://www.gov.br/planalto/en/latest-news/2025/04/president-luiz-inacio-lula-da-silva-announces-opening-of-vietnams-market-to-brazilian-beef">https://www.gov.br/planalto/en/latest-news/2025/04/president-luiz-inacio-lula-da-silva-announces-opening-of-vietnams-market-to-brazilian-beef</a><a></a>



Datamar News. (2025, July 31).&nbsp;Possible opening of Japanese market to Brazilian beef will apply only to five states. https://datamarnews.com/noticias/possible-opening-of-japanese-market-to-brazilian-beef-will-apply-only-to-five-states/



Office of the United States Trade Representative. (2025, July).&nbsp;USTR announces initiation of Section 301 investigation of Brazil’s unfair trading practices.&nbsp;<a href="https://ustr.gov/about/policy-offices/press-office/press-releases/2025/july/ustr-announces-initiation-section-301-investigation-brazils-unfair-trading-practices">https://ustr.gov/about/policy-offices/press-office/press-releases/2025/july/ustr-announces-initiation-section-301-investigation-brazils-unfair-trading-practices</a>



Pan American Health Organization. (2025, June 6).&nbsp;Bolivia and Brazil certified free of foot-and-mouth disease without vaccination.&nbsp;<a href="https://www.paho.org/en/news/6-6-2025-bolivia-and-brazil-certified-free-foot-and-mouth-disease-without-vaccination">https://www.paho.org/en/news/6-6-2025-bolivia-and-brazil-certified-free-foot-and-mouth-disease-without-vaccination</a>



Reuters. (2025a, July 30).&nbsp;U.S. tariffs prompt Brazilian meatpackers to reassess beef exports. https://datamarnews.com/noticias/u-s-tariffs-prompt-brazilian-meatpackers-to-reassess-beef-exports-says-abiec/



Reuters. (2025b, July 29).&nbsp;Brazil beef-packers estimate $1 billion in losses if U.S. tariffs apply. https://www.reuters.com/world/americas/brazil-beef-packers-estimate-1-billion-losses-if-us-tariffs-apply-2025-07-29/



The White House. (2025, July 30).&nbsp;Addressing Threats to The United States by The Government of Brazil.&nbsp;The White House.&nbsp;<a href="https://www.whitehouse.gov/presidential-auctions/2025/07%20/addressing-threats-to-the-us/">https://www.whitehouse.gov/presidential-auctions/2025/07 /addressing-threats-to-the-us/</a>



U.S. Department of Agriculture, Economic Research Service. (2025, July 17).&nbsp;Livestock, dairy, and poultry outlook: July 2025&nbsp;(LDP-M-373).&nbsp;<a href="https://www.ers.usda.gov/publications/pub-details/?pubid=106890">https://www.ers.usda.gov/publications/pub-details/?pubid=106890</a>



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Calil, Yuri, and Felipe Martins Moreira. &#8220;<a href="https://southernagtoday.org/2025/07/21/u-s-brazil-beef-trade-at-a-crossroadse/">U.S.–Brazil Beef Trade at a Crossroads.</a>&#8221; Southern Ag Today 5(32.4). August 7, 2025. <a href="http://u-s-brazil-beef-trade-at-a-crossroads">Permalink</a>

U.S.–Brazil Beef Trade at a Crossroads

Since 2011, the USDA’s Farm Service Agency (FSA) has provided monthly reports of crop acreage beginning in August.&nbsp;&nbsp;&nbsp;This information is based on farmer reports of planted, prevented planted, and failed acres received and summarized to date.&nbsp;&nbsp;A final acreage summary is released in January.&nbsp;&nbsp;Beginning in October (occasionally in September), these data are used by USDA’s National Agricultural Statistics Service (NASS) for comparison to survey-based planted acreage estimates in the monthly&nbsp;Crop Production&nbsp;report.&nbsp;



In this article, we examined the relationship between the preliminary August FSA planted acreage and final FSA planted acreage for cotton.&nbsp;&nbsp;We also looked at the relationship between final FSA planted acreage and NASS planted acreage.



While FSA acreage data represents a census of planted acreage enrolled in farm programs, the FSA acreage data does not function as official USDA planted acreage estimates (because not all farms are enrolled in the farm programs administered by the FSA).&nbsp;The official planted acreage estimates are the responsibility of NASS, the statistical agency of the USDA. &nbsp;



As a starting point, we reviewed the relationship between the August and final (i.e., January) FSA planted acreage estimates for cotton (upland and Pima combined).&nbsp;&nbsp;As noted in Figure 1, reporting during August 2020&nbsp;was off significantly due to the reporting extension during the COVID pandemic. The data pre-2020 and post-2020 indicate all but a small percentage of planted acreage for cotton is generally reported to the FSA by August.&nbsp; For example, over the 2015-2019 period, the average ratio of preliminary to final FSA planted acreage for cotton was 98.9 percent.&nbsp; In recent years, 2021-2024, the average ratio increased to 99.7 percent in August. Arguably the period 2021-2024 is the most representative part of the sample for making 2025 forecasts.&nbsp;



Figure 1. Ratio of August to Final January FSA Estimate of U.S. Cotton Planted Acreage, 2015-2024



<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="1918" height="1072" src="https://sat-wp.afpc.tamu.edu/wp-content/uploads/2025/08/5.32.3-11.png" alt="" class="wp-image-42383" srcset="https://sat-wp.afpc.tamu.edu/wp-content/uploads/2025/08/5.32.3-11.png 1918w, https://sat-wp.afpc.tamu.edu/wp-content/uploads/2025/08/5.32.3-11-1024x572.png 1024w, https://sat-wp.afpc.tamu.edu/wp-content/uploads/2025/08/5.32.3-11-768x429.png 768w, https://sat-wp.afpc.tamu.edu/wp-content/uploads/2025/08/5.32.3-11-1536x858.png 1536w" sizes="auto, (max-width: 1918px) 100vw, 1918px" /></figure>



We also looked at the relationship between the final FSA planted acreage and final NASS planted acreage (Table 1).  In the years 2015-2024, the acreage relationship is quite consistent.  For cotton, the final FSA estimate of planted acreage averages 98.2 percent of final NASS planted acreage with a range of 0.9 percent.   The consistency of the relationships can be attributed to the fact that enrollment in FSA farm programs varies relatively little from year to year.



TablTable 1. U.S. Planted Acres of Cotton Estimated by NASS and Reported to FSA, 2015-2024



<figure class="wp-block-table is-style-stripes has-small-font-size"><table><tbody><tr><td>Year</td><td>NASS</td><td>FSA</td><td>Difference</td><td>FSA/NASS(%)</td></tr><tr><td>2015</td><td>8,580,500</td><td>8,450,939</td><td>129,561</td><td>98.5%</td></tr><tr><td>2016</td><td>10,073,500</td><td>9,927,191</td><td>146,309</td><td>98.5%</td></tr><tr><td>2017</td><td>12,717,500</td><td>12,413,314</td><td>304,186</td><td>97.6%</td></tr><tr><td>2018</td><td>14,081,300</td><td>13,824,448</td><td>256,852</td><td>98.2%</td></tr><tr><td>2019</td><td>13,722,700</td><td>13,405,957</td><td>316,743</td><td>97.7%</td></tr><tr><td>2020</td><td>12,086,000</td><td>11,834,619</td><td>251,381</td><td>97.9%</td></tr><tr><td>2021</td><td>11,206,500</td><td>11,025,710</td><td>180,790</td><td>98.4%</td></tr><tr><td>2022</td><td>13,749,000</td><td>13,530,779</td><td>218,221</td><td>98.4%</td></tr><tr><td>2023</td><td>10,230,000</td><td>10,077,091</td><td>152,909</td><td>98.5%</td></tr><tr><td>2024</td><td>11,183,000</td><td>10,997,089</td><td>185,911</td><td>98.3%</td></tr><tr><td>&nbsp;</td><td>&nbsp;</td><td>&nbsp;</td><td>&nbsp;</td><td>&nbsp;</td></tr><tr><td>Average</td><td>&nbsp;</td><td>&nbsp;</td><td>214,286</td><td>98.2%</td></tr><tr><td>Low</td><td>&nbsp;</td><td>&nbsp;</td><td>129,561</td><td>97.6%</td></tr><tr><td>High</td><td>&nbsp;</td><td>&nbsp;</td><td>316,743</td><td>98.5%</td></tr><tr><td colspan="5">Source: USDA Farm Service Agency and&nbsp;<a>National Agricultural Statistics Service</a>.</td></tr></tbody></table></figure>



In 2025, historic spring rainfall disrupted cotton planting in some states, which has made for a challenging year.  Many industry observers questioned the NASS June Acreage survey that delivered much higher-than-expected cotton acreage estimates for the Midsouth region. The findings in USDA’s first monthly acreage report of 2025 will be of particular interest to the cotton industry.  The report will be released on August 12th and can be found at this link:  <a href="https://www.fsa.usda.gov/tools/informational/freedom-information-act-foia/electronic-reading-room/frequently-requested/crop-acreage-data">FSA Crop Acreage Data</a>. The information in these reports is widely followed by the market for clues about possible future revisions to the official USDA planted acreage estimates. Based on recent history, this report is expected to provide a strong indicator for overall cotton acreage in 2025. 



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Stiles, H. Scott. &#8220;<a href="https://southernagtoday.org/2025/07/21/examining-august-fsa-data-to-forecast-final-cotton-acreage/">Examining August FSA Data to Forecast Final Cotton Acreage.</a>&#8221; Southern Ag Today 5(32.3). August 6, 2025. <a href="https://sat-wp.afpc.tamu.edu/?p=42379">Permalink</a>

Examining August FSA Data to Forecast Final Cotton Acreage

In a recent <a href="https://southernagtoday.org/2025/06/17/beef-x-dairy-placements/">Southern Ag Today article</a>, the topic of beef x dairy (BxD) placements was discussed (Wyatt and Martinez, 2025). In that article, the authors highlight that the number of BxD calves has been increasing since 2016. If the number of BxD calves has been increasing over that time frame, then the breeding decision to use beef semen versus dairy semen, should have an impact on cattle semen sales. 



Annually, the National Association of Animal Breeders (NAAB) releases a report that includes domestic, export, and import sales for beef and dairy semen. Figure 1 displays the breed makeup of domestic US dairy semen sales from 2010-2024.&nbsp;



Figure 1. Domestic US Dairy Semen Sales. 



<figure class="wp-block-image aligncenter size-full"><img loading="lazy" decoding="async" width="1993" height="1003" src="https://sat-wp.afpc.tamu.edu/wp-content/uploads/2025/08/5.32.2-1.png" alt="" class="wp-image-42373" srcset="https://sat-wp.afpc.tamu.edu/wp-content/uploads/2025/08/5.32.2-1.png 1993w, https://sat-wp.afpc.tamu.edu/wp-content/uploads/2025/08/5.32.2-1-1024x515.png 1024w, https://sat-wp.afpc.tamu.edu/wp-content/uploads/2025/08/5.32.2-1-768x387.png 768w, https://sat-wp.afpc.tamu.edu/wp-content/uploads/2025/08/5.32.2-1-1536x773.png 1536w" sizes="auto, (max-width: 1993px) 100vw, 1993px" /><figcaption class="wp-element-caption">Source: NAAB</figcaption></figure>



In 2010, total domestic dairy semen sales were 21.6 million units and increased to 23.6 million (9.25% increase) in 2015. Since 2016, there has been a negative trend in overall units of domestic dairy semen sold. In 2024, there were approximately 16.1 million units sold, which is a 31.77% decrease since 2015. Holstien genetics make up the largest share of domestic dairy semen sales, followed by Jersey genetics. In 2010, Holstein sales made up 89% of domestic sales, while Jersey sales were 9%. In 2024, Holstein sales made up 82% of domestic sales, whereas Jersey sales were 13%.&nbsp;



In contrast to domestic sales, there has been an increase in units of dairy semen exported. In 2010, there were approximately 14.8 million units of semen exported (Figure 2). In 2024, 30.8 million units of semen were exported, which is a 108% increase during that time frame. Holstein genetics constitute majority of these sales, and Jersey genetics are the second most. Top destinations for these sales are China, Brazil, Mexico, Argentina and the United Kingdom (United States Department of Agriculture-Foreign Agricultural Service, 2025).&nbsp;&nbsp;&nbsp;&nbsp;



Figure 2. US Dairy Semen Export Sales. 



<figure class="wp-block-image aligncenter size-full"><img loading="lazy" decoding="async" width="1993" height="1003" src="https://sat-wp.afpc.tamu.edu/wp-content/uploads/2025/08/5.32.2-2.png" alt="" class="wp-image-42375" srcset="https://sat-wp.afpc.tamu.edu/wp-content/uploads/2025/08/5.32.2-2.png 1993w, https://sat-wp.afpc.tamu.edu/wp-content/uploads/2025/08/5.32.2-2-1024x515.png 1024w, https://sat-wp.afpc.tamu.edu/wp-content/uploads/2025/08/5.32.2-2-768x387.png 768w, https://sat-wp.afpc.tamu.edu/wp-content/uploads/2025/08/5.32.2-2-1536x773.png 1536w" sizes="auto, (max-width: 1993px) 100vw, 1993px" /><figcaption class="wp-element-caption">Source: NAAB</figcaption></figure>



Since 2010, the market trend for imported dairy semen varies (figure 3). In 2010, there were about 220 thousand units of semen imported, 19 thousand consisting of Norwegian Red. In 2024, imports were at the lowest volume in the previous 14 years, with 101 thousand units, and over half of the imports being Norwegian Red genetics. 



Figure 3. US Dairy Semen Import Sales. 



<figure class="wp-block-image aligncenter size-full"><img loading="lazy" decoding="async" width="1993" height="1003" src="https://sat-wp.afpc.tamu.edu/wp-content/uploads/2025/08/5.32.2-3.png" alt="" class="wp-image-42376" srcset="https://sat-wp.afpc.tamu.edu/wp-content/uploads/2025/08/5.32.2-3.png 1993w, https://sat-wp.afpc.tamu.edu/wp-content/uploads/2025/08/5.32.2-3-1024x515.png 1024w, https://sat-wp.afpc.tamu.edu/wp-content/uploads/2025/08/5.32.2-3-768x387.png 768w, https://sat-wp.afpc.tamu.edu/wp-content/uploads/2025/08/5.32.2-3-1536x773.png 1536w" sizes="auto, (max-width: 1993px) 100vw, 1993px" /><figcaption class="wp-element-caption">Source: NAAB</figcaption></figure>



The figures above highlight various trends for dairy semen sales. Domestic sales have trended lower since 2016, which is likely due to BxD production. Exports have increased over time, highlighting the value of US dairy genetics. Imports are low in volume but have increased in Norwegian Red genetics.



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References



Wyatt, Parker, and Charley Martinez. &#8220;<a href="https://southernagtoday.org/2025/06/17/beef-x-dairy-placements/">Beef x Dairy Placements.</a>&#8221; Southern Ag Today 5(29.2). July 15, 2025. Permalink



National Association of Animal Breeders. 2025. “Semen Sales Report 2010-2024.”



United States Department of Agriculture-Foreign Agricultural Service. 2025. “Global Agricultural Trade System Database.” Internet site: <a href="https://apps.fas.usda.gov/gats/default.aspx">https://apps.fas.usda.gov/gats/default.aspx</a> (Accessed  July 2025).



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Mundy, D. Eli, and Charley Martinez. &#8220;<a href="https://southernagtoday.org/2025/07/21/dairy-semen-market-trends/">Dairy Semen Market Trends.</a>&#8221; Southern Ag Today 5(32.2). August 5, 2025. <a href="http://dairy-semen-market-trends">Permalink</a>

Dairy Semen Market Trends

Much has been written recently about the strength of the current cattle market. With beef cow inventory at a 60+ year low and demand being very strong, cow-calf operations are clearly in the driver’s seat. Calf values are more than double what they were three years ago, which speaks to considerable opportunity for cow-calf operators to invest in their cowherds. Expansion is often the first opportunity that comes to mind in a strong calf market, and there is likely merit in expansion, if doing so is consistent with the goals of the operation. However, some producers may not be interested in growing the size of their cowherds due to land constraints, management limitations, or other reasons. The following are a few other investment opportunities worth consideration.



Genetics&nbsp;– Some producers may choose to use the current increase in cow-calf revenues to improve the genetics of their herds. Investment in genetics often has long-run implications, resulting in more valuable calves to sell over multiple years. Sires certainly come to mind, but the current calf market combined with the strong cull cow prices may provide an opportunity to cull a bit harder and also purchase some higher quality females.



Facilities&nbsp;– Working facilities are crucial resources for cow-calf operations for numerous reasons. Value-added opportunities such as health protocols, post-weaning programs, castration, implants, etc. are made much easier with quality working facilities. The same is true for receiving, sorting and loading of cattle. If facilities have historically been a constraint, the current market may be providing an opportunity to make improvements and position the operation to sell higher value calves in the future.



Grazing systems&nbsp;– Winter feeding days are typically the most expensive days for cow-calf operations as stored feed (hay) is being fed. Improved grazing systems (interior fencing, additional water sources, portable mineral feeders, etc.) allow for more efficient use of existing forage during the grazing season. This has the potential to increase the number of grazing days and reduce the number of hay feeding days. In most cases, this results in lower costs per cow per year and puts an operation in a better position when calf prices fall.



Debt service / financial management&nbsp;– Strong markets also provide an opportunity to make financial moves that set an operation up for the long run. Increased revenues may allow an operation to pay down some debt and thereby lower their cost structure going forward. Similarly, it may provide an opportunity to build some working capital and lower dependence on operating loans. In both cases, future interest expenses are reduced, which has implications for profitability.



To be clear, the purpose of this article was not to discourage expansion. There are likely operations that need to do just that. But I also live in an area where land constraints are real and know that expansion is not always feasible. Plus, I have seen situations where operations expanded during strong markets and wished they had not done so a few years later. The main point is that the current calf market provides a significant opportunity for a cow-calf operation to position itself for the long-run, and that will look different for each one of them.



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 Burdine, Kenny. &#8220;<a href="https://southernagtoday.org/2025/07/21/cowherd-expansion-is-not-the-only-way-to-capitalize-on-a-strong-calf-market/">Cowherd Expansion is Not the Only Way to Capitalize on a Strong Calf Market</a>.&#8221; Southern Ag Today 5(32.1). August 4, 2025. <a href="http://cowherd-expansion-is-not-the-only-way-to-capitalize-on-a-strong-calf-market">Permalink</a>

Cowherd Expansion is Not the Only Way to Capitalize on a Strong Calf Market

Last week, the Trump administration reignited the legal fight over farm animal confinement laws by filing a new lawsuit challenging California’s egg-related regulations. The complaint argues that California’s laws are invalidated by the Egg Products Inspection Act (EPIA).



The DOJ claims California’s laws are preempted by the EPIA, a 1970 federal law ensuring the safety, quality, and labeling of eggs and egg products in interstate commerce. The EPIA authorizes USDA to set national standards for egg grading, sanitation, labeling, and packaging.



Challenged Provisions The lawsuit challenges Proposition 12, Proposition 2, and AB 1437. Prop 2 (2008) imposed space requirements for pregnant sows, veal calves, and laying hens. AB 1437 (2010) extended those standards to all eggs sold in California. Prop 12 (2018) further expanded these laws, regulating the production and sale of veal, egg, and pork products, requiring minimum space per animal, and banning the sale of products from animals confined more restrictively.&nbsp;



Standards Preemption



The DOJ relies on the EPIA’s preemption clause, which bars states from imposing additional or conflicting requirements. Under 21 U.S.C. § 1052(b), no state may impose standards “in addition to” or “different from” federal standards for egg “quality, condition, weight, quantity, or grade.”



DOJ argues California’s laws regulate egg “condition” and “quality,” defined by USDA regulations. DOJ points to AB 1437’s stated purpose—to protect consumer health—as an attempt to regulate inherent egg properties. It also cites Prop 12’s stated concern for health, safety, and foodborne illness risk.



Labeling Preemption DOJ also claims California’s regulations conflict with EPIA’s labeling preemption. California requires specific terms in shipping manifests and bans “cage free” labeling unless eggs meet its standards. DOJ argues these are labeling rules that differ from USDA’s.



Next Steps DOJ seeks a judgment declaring the California laws preempted and unenforceable. California will likely file a response, and a request for an injunction may follow.



For a more detailed analysis, click&nbsp;<a href="https://nationalaglawcenter.org/challenge-to-californias-hen-housing-laws/">here</a>&nbsp;for a NALC blog post.&nbsp;



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Rumley, Beth. &#8220;<a href="https://southernagtoday.org/2025/07/21/challenge-to-californias-hen-housing-laws/">Challenge to California’s Hen Housing Laws</a>.&#8221; Southern Ag Today 5(31.5). August 1, 2025. <a href="https://sat-wp.afpc.tamu.edu/?p=42349">Permalink</a>

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