Authors: K. Aleks Schaefer and Rylee Smith



Last week, the USDA announced it would resume Mexican cattle imports under a phased reopening beginning in August. This is a somewhat controversial, but scientifically sound choice. When the United States suspended imports of live cattle from Mexico, the objective was straightforward: keep New World Screwworm (NWS) out of the country for as long as possible. The policy accepted significant economic costs in exchange for delaying one of the livestock industry&#8217;s most damaging pests.



That question looks very different today. With NWS now confirmed inside the United States (USDA APHIS, 2026), policymakers are no longer deciding whether the border closures prevent introduction; they are deciding whether the restrictions provide enough benefit to justify their economic costs. Our previous research estimated the economic cost of the border closures and how much delay in pest establishment would be required for those costs to be worthwhile (Sumner et al., 2026). Those findings provide a framework for evaluating today&#8217;s policy debate.



Border Closures Significantly Tightened Feeder Cattle Supplies: Mexico has long served as one of the largest suppliers of feeder cattle to U.S. feedlots, with roughly 1.2 million head imported annually before the restrictions (Sumner et al., 2026). When the border closed, those cattle disappeared from the market. At the largest point of disruption, monthly imports were more than 150,000 head below what historical market relationships would have predicted (Sumner et al., 2026).



Feeder Cattle Prices Climbed Well Above Expected Levels: With fewer feeder cattle entering the United States, domestic supplies tightened quickly. Our analysis shows that the border closures pushed feeder cattle prices much higher than expected. Prices initially followed normal market trends but increased rapidly, reaching nearly $100 per hundredweight above what would have been expected by July 2025 (Sumner et al., 2026).



Border closures put substantial upward pressure on feeder cattle prices. Changes in Mexican cattle imports had lasting effects on feeder cattle prices, demonstrating how closely U.S. and Mexican cattle markets are connected (Sumner et al., 2026).



Figure 1. Impacts of the import ban on U.S. Feeder Cattle Markets



<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="1328" height="520" src="https://sat-wp.afpc.tamu.edu/wp-content/uploads/2026/07/6.31.4.png" alt="" class="wp-image-44532" srcset="https://sat-wp.afpc.tamu.edu/wp-content/uploads/2026/07/6.31.4.png 1328w, https://sat-wp.afpc.tamu.edu/wp-content/uploads/2026/07/6.31.4-1024x401.png 1024w, https://sat-wp.afpc.tamu.edu/wp-content/uploads/2026/07/6.31.4-768x301.png 768w" sizes="auto, (max-width: 1328px) 100vw, 1328px" /><figcaption class="wp-element-caption">Source: Authors&#8217; calculations using LMIC and USDA AMS data.</figcaption></figure>



With confirmed cases of New World Screwworm now detected within the United States (USDA APHIS, 2026), policymakers face a different decision. The question is no longer whether the border can keep the pest out entirely, but whether continued restrictions on Mexican cattle imports meaningfully slow its spread, reduce the likelihood of reinfestation from neighboring regions, or provide enough additional time for response efforts to outweigh the ongoing costs on the cattle industry.



Over nine months, the border closures reduced feeder cattle imports, tightened supplies, and increased feeder cattle prices (Sumner et al., 2026). Those impacts continue to accumulate with restrictions in place.



Policymakers must weigh the market disruptions against the biosecurity benefits that the restrictions provide. If the remaining benefits are limited, the economic case for prolonged border closures becomes weaker. If, however, the restrictions significantly reduce additional introductions, protect infestation-free regions, or improve the effectiveness of eradication efforts, continued restrictions may still generate benefits.



Biosecurity policies are rarely static. As conditions change, so should the economic questions used to evaluate them. The challenge is no longer asking &#8220;Did the border closure buy enough time?&#8221; It is asking &#8220;How much additional protection does the closure provide today and is that protection worth its continuing economic cost?&#8221;



REFERENCES



Sumner S., Jones S., Islam T., and Schaefer K.A. (2026) “Delaying the Inevitable? U.S. Screwworm Closures and Feeder Cattle Market Dynamics,” Applied Economic Perspectives and Policy, <a href="https://doi.org/10.1002/aepp.70111">https://doi.org/10.1002/aepp.70111</a>.



USDA APHIS.&nbsp;2026.&nbsp;“Confirmed Detections of New World Screwworm.”&nbsp;<a href="https://www.aphis.usda.gov/animals/animal-health/livestock-and-poultry-disease/current-status/us-confirmed-cases-new-world">https://www.aphis.usda.gov/animals/animal-health/livestock-and-poultry-disease/current-status/us-confirmed-cases-new-world</a>.



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Recommended citation format: Schaefer, K. Aleks, and Rylee Smith. &#8220;<a href="https://southernagtoday.org/2026/07/27/reopening-the-border-to-mexican-cattle-imports-is-the-right-decision/">Reopening the Border to Mexican Cattle Imports is the Right Decision.</a>&#8221; Southern Ag Today 6(31.4). July 30, 2026. <a href="https://southernagtoday.org/2026/07/27/reopening-the-border-to-mexican-cattle-imports-is-the-right-decision/">Permalink</a>

Reopening the Border to Mexican Cattle Imports is the Right Decision

Authors: William E. Maples and Adam Rabinowitz



When choosing where and when to deliver grain, producers often first focus on the posted price. However, the highest posted price may not always result in the highest net return. Grain moisture, buyer discounts, delivery distance, fuel costs, labor, and wait times can all affect the final value of a load. Here we discuss the impact of delivery decisions on the final price of grains.&nbsp;



Grain Moisture



Most corn and soybean buyers use a standard moisture level when purchasing grain. Corn is commonly priced at 15 percent moisture, while soybeans are typically priced at 13 percent moisture. Grain delivered above the standard moisture level is generally subject to a discount because wetter grain contains more water and less marketable dry matter. However, delivering grain below the standard moisture level can also reduce producer returns because the additional dry matter is typically sold without receiving a premium or an adjustment in the number of bushels delivered.



Figure 1 illustrates the effect of corn moisture on revenue using an assumed moisture discount schedule and a base price of $4.50 per bushel. At 16 percent moisture, the producer would receive a moisture discount of approximately 9 cents per bushel, reducing the effective price to $4.41 per bushel. As moisture increases, the discount becomes larger. At 18 percent moisture, the estimated discount increases to approximately 29 cents per bushel, reducing the effective price to $4.21 per bushel.



Moisture levels below 15 percent also affect revenue, although the loss does not appear as a direct discount for the producer. In this example, delivering corn at 14 percent moisture instead of 15 percent results in a loss of approximately 5 cents per bushel. The lower-moisture corn contains more dry matter per delivered bushel, but the producer is still paid based on the same standard bushel weight. Therefore, the additional dry matter is delivered without additional compensation.



Distance and Wait Times



Delivery distance and elevator wait time can also affect which grain buyer provides the highest net return. Table 1 compares several delivery scenarios that differ by distance and unloading time. As expected, total delivery cost increases as distance increases. In this example, Buyer 1 is located 10 miles away, while Buyer 4 is 25 miles away. Delivering to Buyer 4 costs approximately 10 cents more per bushel than delivering to Buyer 1.



Although Buyer 1 has a longer wait time of 30 minutes compared with 10 minutes for Buyer 4, the added waiting cost is smaller than the transportation cost associated with the additional distance. This suggests that distance is the primary driver of delivery cost in the example. However, wait time still matters, especially during harvest when delays can reduce the number of loads moved in a day and can increase the potential for weather related losses. Producers should consider total delivery time, including both travel and unloading, rather than focusing on either factor alone.



Alternative Delivery Times



An alternative to delivery at harvest involves the storage of grain, but this isn’t always the best answer either.&nbsp;&nbsp;Previous&nbsp;Southern Ag Today&nbsp;articles have discussed both the flexibility that storage can provide, as well as the additional costs for extra drying, shrinkage, quality deterioration, and additional handling (Duncan and Smith 2022; Maples 2022).&nbsp;&nbsp;However, on-farm storage is generally limited in the southern region (Pittman and Rabinowitz 2025). Producers can then consider delayed pricing contracts, commercial storage, and re-ownership positions (Smith 2022). Thus, several options can exist to delay delivery for an expected better price, but these also must be carefully evaluated.



The combination of moisture, delivery costs, and delivery timing can make a difference for producers when comparing prices of delivered grains. The bottom line is to look past the posted price and make sure to consider the other options and associated costs when deciding where and when to market the grain.



<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="1894" height="1423" src="https://sat-wp.afpc.tamu.edu/wp-content/uploads/2026/07/6.31.3-1.png" alt="" class="wp-image-44520" srcset="https://sat-wp.afpc.tamu.edu/wp-content/uploads/2026/07/6.31.3-1.png 1894w, https://sat-wp.afpc.tamu.edu/wp-content/uploads/2026/07/6.31.3-1-1024x769.png 1024w, https://sat-wp.afpc.tamu.edu/wp-content/uploads/2026/07/6.31.3-1-768x577.png 768w, https://sat-wp.afpc.tamu.edu/wp-content/uploads/2026/07/6.31.3-1-1536x1154.png 1536w" sizes="auto, (max-width: 1894px) 100vw, 1894px" /></figure>



Table 1. Estimated transportation costs and net price across four grain buyers



<figure class="wp-block-table is-style-stripes has-small-font-size"><table><tbody><tr><td class="has-text-align-center" data-align="center">Buyer</td><td class="has-text-align-center" data-align="center">One-way distance (miles)</td><td class="has-text-align-center" data-align="center">Wait &amp; unload time (minutes)</td><td class="has-text-align-center" data-align="center">Fuel cost (¢/bu)</td><td class="has-text-align-center" data-align="center">Truck overhead (¢/bu)</td><td class="has-text-align-center" data-align="center">Labor cost (¢/bu)</td><td class="has-text-align-center" data-align="center">Total delivery cost (¢/bu)</td><td class="has-text-align-center" data-align="center">Posted price ($/bu)</td><td class="has-text-align-center" data-align="center">Price less delivery cost (4/bu)</td></tr><tr><td class="has-text-align-center" data-align="center">Buyer 1</td><td class="has-text-align-center" data-align="center">10</td><td class="has-text-align-center" data-align="center">30</td><td class="has-text-align-center" data-align="center">1.40</td><td class="has-text-align-center" data-align="center">4.80</td><td class="has-text-align-center" data-align="center">1.24</td><td class="has-text-align-center" data-align="center">7.45</td><td class="has-text-align-center" data-align="center">$4.50</td><td class="has-text-align-center" data-align="center">$4.43</td></tr><tr><td class="has-text-align-center" data-align="center">Buyer 2</td><td class="has-text-align-center" data-align="center">15</td><td class="has-text-align-center" data-align="center">10</td><td class="has-text-align-center" data-align="center">2.11</td><td class="has-text-align-center" data-align="center">7.20</td><td class="has-text-align-center" data-align="center">1.10</td><td class="has-text-align-center" data-align="center">10.40</td><td class="has-text-align-center" data-align="center">$4.50</td><td class="has-text-align-center" data-align="center">$4.40</td></tr><tr><td class="has-text-align-center" data-align="center">Buyer 3</td><td class="has-text-align-center" data-align="center">20</td><td class="has-text-align-center" data-align="center">5</td><td class="has-text-align-center" data-align="center">2.81</td><td class="has-text-align-center" data-align="center">9.60</td><td class="has-text-align-center" data-align="center">1.28</td><td class="has-text-align-center" data-align="center">13.69</td><td class="has-text-align-center" data-align="center">$4.50</td><td class="has-text-align-center" data-align="center">$4.36</td></tr><tr><td class="has-text-align-center" data-align="center">Buyer 4</td><td class="has-text-align-center" data-align="center">25</td><td class="has-text-align-center" data-align="center">10</td><td class="has-text-align-center" data-align="center">3.51</td><td class="has-text-align-center" data-align="center">12.00</td><td class="has-text-align-center" data-align="center">1.68</td><td class="has-text-align-center" data-align="center">17.19</td><td class="has-text-align-center" data-align="center">$4.50</td><td class="has-text-align-center" data-align="center">$4.33</td></tr></tbody></table><figcaption class="wp-element-caption">Assumptions:&nbsp;Fuel price of $4.00 per gallon, truck capacity of 950 bushels, fuel efficiency of 6 miles per gallon, fixed truck cost of $1.74 per mile, repair and tire cost of $0.54 per mile, and transportation costs based on a round trip.&nbsp;</figcaption></figure>



References:



Duncan, Hence, and S. Aaron Smith. “Estimating the Cost of a Grain Bagging System“.&nbsp;Southern Ag Today&nbsp;2(31.3). July 27, 2022. <a href="https://southernagtoday.org/2022/07/estimating-the-cost-of-a-grain-bagging-system/">https://southernagtoday.org/2022/07/estimating-the-cost-of-a-grain-bagging-system/</a>



Maples, William E. “On-Farm Grain Storage in Southern States“.&nbsp;Southern Ag Today&nbsp;2(38.1). September 12, 2022.&nbsp;<a href="https://southernagtoday.org/2022/09/on-farm-grain-storage-in-southern-states/">https://southernagtoday.org/2022/09/on-farm-grain-storage-in-southern-states/</a>



Pittman, Wilton, and Adam Rabinowitz. “Marketing Challenges from Storage Capacity and Excess Supply.”&nbsp;Southern Ag Today&nbsp;5(36.3). September 3, 2025.&nbsp;<a href="https://southernagtoday.org/2025/09/03/marketing-challenges-from-storage-capacity-and-excess-supply/">https://southernagtoday.org/2025/09/03/marketing-challenges-from-storage-capacity-and-excess-supply/</a>



Smith, S. Aaron. “<a href="https://southernagtoday.org/2022/09/marketing-strategies-if-producers-do-not-have-access-to-on-farm-storage/">Marketing Strategies if Producers Do Not Have Access to On-Farm Storage.</a>” Southern Ag Today 2(40.1). September 26, 2022. https://southernagtoday.org/2022/09/26/marketing-strategies-if-producers-do-not-have-access-to-on-farm-storage/



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Recommended citation format: Maples, William E., and Adam Rabinowitz. &#8220;<a href="https://southernagtoday.org/2026/07/27/considerations-when-making-grain-delivery-decisions/">Considerations When Making Grain Delivery Decisions</a>.&#8221; Southern Ag Today 6(31.3). July 29, 2026. <a href="https://southernagtoday.org/2026/07/27/considerations-when-making-grain-delivery-decisions/">Permalink</a>

Considerations When Making Grain Delivery Decisions

Two key reports were released on Friday that provide new insights into cattle herd dynamics and feedlot inventories. USDA-NASS published the mid-year Cattle Inventory report and the monthly Cattle on Feed report. Notably, this is the second consecutive year for the July Cattle Inventory report. It was one of several reports USDA-NASS suspended in 2024 due to budget constraints. Overall, the July report showed a small increase in total cattle inventories, increasing by 200 thousand head from 94.0 million in 2025 to 94.2 million in 2026.



For me, one of the bigger surprises was the 2026 beef cow estimate. USDA estimates July 2026 beef cow inventories at 28.45 million head, down 1%, or 200 thousand head. Most were expecting to see a slight increase in beef cow numbers. One of the main factors to look at before this report is released is January through June beef cow slaughter as a percent of January beef cow inventories. In 2026, through June, beef cow slaughter totaled 1.02 million head, or 3.7% of January beef cow inventories. That is the lowest slaughter rate going back to the 1980s.



The 2026 calf crop is estimated at 32.5 million head, 2.0% smaller than the 2025 calf crop. This total includes 23.9 million calves born in the first half of the year and an expected 8.6 million to be born in the second half. If realized, this will be a very small calf crop and would set us up for further declines in beef production.



Most were looking to this report for signs of herd expansion. One variable to look at is the number of beef replacement heifers. NASS estimated 3.8 million beef heifers held for replacement, a 3.0% increase from last year. This is only an increase of 100 thousand head. We are still a long way away from beef replacement heifer numbers that would signal widespread herd expansion. Drought is still limiting that from happening.



The July Cattle on Feed report also includes the number of heifers on feed, which allows us to calculate their share of total feedlot inventories. In July 2026, heifers on feed were estimated at 4.25 million head, accounting for 37.4% of total feedlot inventories. This is down from 38.1% in July 2025. For context, in 2015, heifers made up just 32.5% of feedlot inventories.



Overall, the July cattle inventory report is bullish, though I suspect much of the news in the report will be overshadowed by news last week that the U.S. will begin a phased reopening of the southern border to allow imports of feeder cattle. I’m sure there will be lots of opinions about that development that will influence markets this week.&nbsp;



<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="479" height="306" src="https://sat-wp.afpc.tamu.edu/wp-content/uploads/2026/07/6.31.2.png" alt="" class="wp-image-44514"/></figure>



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Recommended citation format: Mitchell, James. &#8220;<a href="https://southernagtoday.org/2026/07/27/where-did-the-cows-go/">Where did the Cows Go?</a>&#8221; Southern Ag Today 6(31.2). July 28, 2026. <a href="https://southernagtoday.org/2026/07/27/where-did-the-cows-go/">Permalink</a>

Where did the Cows Go?

Authors: Andrew Wright and Manuel Garcia



Many producers hire custom operators to perform production activities on their farms. The costs of these services vary by state, service, and provider, and are often not publicly advertised. For this reason, many state extension services survey producers and custom operators to estimate the cost of custom services in their states. In February of this year, Texas A&amp;M AgriLife Extension published its most recent survey of custom rates in Texas. The results offer additional insight into how rising costs have affected farmers&#8217; bottom lines in the state.



The survey was conducted from August through October 2025 and is based on responses from 391 individuals, including producers, custom operators, farm managers, and extension agents. While we cannot summarize all results here, we can highlight some general conclusions about row-crop operations.&nbsp;



Figure 1 summarizes the average percentage change in the reported custom rate for each category of operations included in the survey since 2020, the last time this survey was conducted. On average, the largest cost increases were observed in the tractor rental and application services categories. Custom rates for row crop operations (i.e., tilling, planting, harvesting, and application services) increased by 30 to 39 percent in Texas.



As we consider these results, we might ask two questions: 1) How do the observations from the Texas survey compare with the general rise in costs across the national economy, and 2) How do the Texas custom rates compare with those of other Southern states?&nbsp;



To help answer the first question, Figure 1 also includes two measures from the Producer Price Index (PPI), which tracks the average change in selling prices producers receive for their output. The first measure shown in the figure is the percentage change in the average annual PPI from 2020 to 2025 across all goods and services. The second shows the percentage change in the average annual PPI for farm machinery and equipment manufacturing over the same period. Both measures fall within the range of increases we’ve seen for custom rates for row-crop operations in Texas.&nbsp;&nbsp;



The second question is more difficult to answer. Many states conduct surveys of custom rates, like the Texas survey (see Table 1 for links to the most recent reports on custom rates in other southern states). Table 2 compares selected Texas custom rates from our most recent survey with those for similar activities in other states.&nbsp;



Overall, the custom rates reported for Texas are not dissimilar to those reported in other states. However, keep in mind these surveys are not conducted on the same schedule or using the same methods, so direct comparisons are limited.



Most of the custom rates we report here for Texas include the cost of machinery, fuel, and operator labor. Therefore, it is reasonable to assume that the increase in custom rates we observe can be explained in large part by increases in the retail price of farm machinery, higher interest rates (the cost of financing machinery purchases), and, more recently, higher fuel costs.



While it is no secret that farm operating expenses have risen recently, the conversation typically focuses on fertilizer, fuel, and chemical costs. The 2026 Texas Custom Rate Survey highlights a broader rise in operating expenses beyond these categories. That said, we think it is important to note that since 2020, the sticker price for new and used farm machinery has increased significantly as well. While custom rates have certainly increased, many producers may still find it more cost-effective to hire custom work than to finance machinery purchases and perform these operations themselves.



Figure 1. Average percentage increases in Texas custom rates, 2020-2026



<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="968" height="400" src="https://sat-wp.afpc.tamu.edu/wp-content/uploads/2026/07/6.31.1-1.png" alt="" class="wp-image-44453" srcset="https://sat-wp.afpc.tamu.edu/wp-content/uploads/2026/07/6.31.1-1.png 968w, https://sat-wp.afpc.tamu.edu/wp-content/uploads/2026/07/6.31.1-1-768x317.png 768w" sizes="auto, (max-width: 968px) 100vw, 968px" /></figure>



Table 1. Links to recent custom rate surveys conducted in southern states



<figure class="wp-block-table has-small-font-size"><table><tbody><tr><td>State</td><td>Year</td><td>Link</td></tr><tr><td>TX</td><td>2026</td><td><a href="https://agecoext.tamu.edu/resources/custom-rate-survey/">https://agecoext.tamu.edu/resources/custom-rate-survey/</a></td></tr><tr><td>OK</td><td>2021-2022</td><td><a href="https://extension.okstate.edu/fact-sheets/print-publications/cr/cr-205-farm-and-ranch-custom-rates-2021-2022.pdf">https://extension.okstate.edu/fact-sheets/print-publications/cr/cr-205-farm-and-ranch-custom-rates-2021-2022.pdf</a></td></tr><tr><td>AR</td><td>2025</td><td><a href="https://www.uaex.uada.edu/publications/PDF/fsa-21.pdf">https://www.uaex.uada.edu/publications/PDF/fsa-21.pdf</a></td></tr><tr><td>MS</td><td>2024</td><td><a href="https://extension.msstate.edu/sites/default/files/publications/P4048_web.pdf">https://extension.msstate.edu/sites/default/files/publications/P4048_web.pdf</a></td></tr><tr><td>GA</td><td>2024</td><td><a href="https://agecon.uga.edu/content/dam/caes-subsite/ag-econ/documents/extension/Decision%20Aids/Georgia%20Custom%20Rate%20Survey%20Summary%202024.pdf">https://agecon.uga.edu/content/dam/caes-subsite/ag-econ/documents/extension/Decision%20Aids/Georgia%20Custom%20Rate%20Survey%20Summary%202024.pdf</a></td></tr><tr><td>TN</td><td>2023</td><td><a href="https://utia.tennessee.edu/publications/wp-content/uploads/sites/269/2024/07/D239.pdf">https://utia.tennessee.edu/publications/wp-content/uploads/sites/269/2024/07/D239.pdf</a></td></tr><tr><td>KY</td><td>2024</td><td><a href="https://agecon.mgcafe.uky.edu/sites/agecon.ca.uky.edu/files/CustomMachineryRatesApplicableKentucky%282024%29.pdf">https://agecon.mgcafe.uky.edu/sites/agecon.ca.uky.edu/files/CustomMachineryRatesApplicableKentucky%282024%29.pdf</a></td></tr></tbody></table></figure>



Table 2. Comparison of custom rates across similar activities in southern states



<figure class="wp-block-table has-small-font-size"><table><tbody><tr><td>&nbsp;</td><td>&nbsp;</td><td colspan="5">Average rate ($/acre)</td></tr><tr><td>Category</td><td>Custom work</td><td>Texas (2026)</td><td>Arkansas (2025)</td><td>Mississippi (2024)</td><td>Georgia (2024)</td><td>Kentucky (2024)</td></tr><tr><td rowspan="2">Land tillage</td><td>Disk/Disk-harrow</td><td>&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;24.2&nbsp;</td><td>&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;15.3&nbsp;</td><td>&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;16.8&nbsp;</td><td>&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;21.7&nbsp;</td><td>&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;20.0&nbsp;</td></tr><tr><td>Field Cultivator</td><td>&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;19.0&nbsp;</td><td>&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.5&nbsp;</td><td>&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;16.5&nbsp;</td><td>&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;15.9&nbsp;</td><td>&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;19.0&nbsp;</td></tr><tr><td rowspan="3">Fertilizer application</td><td>Liquid fertilizer</td><td>&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.8&nbsp;</td><td>&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;16.5&nbsp;</td><td>&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12.3&nbsp;</td><td>&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;18.4&nbsp;</td><td>&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.0&nbsp;</td></tr><tr><td>Aerial fertilizer</td><td>&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13.6&nbsp;</td><td>&nbsp;</td><td>&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13.6&nbsp;</td><td>&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;25.1&nbsp;</td><td>&nbsp;</td></tr><tr><td>Dry fertilizer</td><td>&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13.4&nbsp;</td><td>&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.6&nbsp;</td><td>&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.0&nbsp;</td><td>&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13.0&nbsp;</td><td>&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.5&nbsp;</td></tr><tr><td rowspan="3">Combine</td><td>Combine corn</td><td>&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;34.7&nbsp;</td><td>&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;66.6&nbsp;</td><td>&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;47.0&nbsp;</td><td>&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;58.5&nbsp;</td><td>&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;42.0&nbsp;</td></tr><tr><td>Combine soybeans</td><td>&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;39.7&nbsp;</td><td>&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;43.1&nbsp;</td><td>&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;43.0&nbsp;</td><td>&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;54.7&nbsp;</td><td>&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;40.0&nbsp;</td></tr><tr><td>Combine wheat/small grains</td><td>&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;31.3&nbsp;</td><td>&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;40.7&nbsp;</td><td>&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;41.0&nbsp;</td><td>&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;52.3&nbsp;</td><td>&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;38.5&nbsp;</td></tr><tr><td colspan="7">Note: Arkansas rates are based on: Disk harrow (28&#8242;), Field cultivator (24&#8242;), Liquid fert appl (8R-30), and combines for corn (6R-30), soybean (25&#8242; flex), and wheat/sorghum (22&#8242; rigid).</td></tr></tbody></table></figure>



References



U.S. Bureau of Labor Statistics, Producer Price Index by Commodity: All Commodities [PPIACO], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/PPIACO,&nbsp;June 20, 2026.&nbsp;&nbsp;



U.S. Bureau of Labor Statistics, Producer Price Index by Industry: Farm Machinery and Equipment Manufacturing [PCU333111333111], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/PCU333111333111,&nbsp;June 25, 2026.



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Recommended citation format: Wright, Andrew, and Manuel Garcia. &#8220;<a href="https://southernagtoday.org/2026/06/25/rising-custom-rates-add-to-producer-cost-pressures/">Rising Custom Rates Add to Producer Cost Pressures.</a>&#8221; Southern Ag Today 6(31.1). July 27, 2026. <a href="https://southernagtoday.org/2026/06/25/rising-custom-rates-add-to-producer-cost-pressures/">Permalink</a>

Rising Custom Rates Add to Producer Cost Pressures

Authors: Kimberly L. Morgan and Maria Bampasidou



Specialty crop operations are navigating the complex intersection of economic, environmental, and regulatory pressures that continually test their financial resilience. Producers must strategically balance decisions related to farm size, geographic market access, crop diversification, and resource allocation while adhering to evolving local, state, and federal regulations. The foundational economic principle of maximizing revenue while minimizing costs is straightforward in theory but executing it in practice demands careful evaluation of both internal capabilities and external market conditions.



Labor scarcity and technological adaptation represent two of the most pressing operational challenges facing specialty crop growers today. Because these crops require significant hands-on attention, especially during peak production cycles, securing a reliable and affordable workforce leads to sustainable growth of farm operations. Emerging technologies including robotics, precision agriculture tools, sensors, and AI-driven systems offer meaningful potential to improve productivity and reduce crop loss, but only when paired with a skilled workforce capable of deploying them effectively. Investing in education and training pipelines, from certification programs to technical degrees, is essential to developing the next generation of agricultural professionals who can operate at the intersection of traditional farming knowledge and modern innovation.



Potential pathways to fruition exist for specialty crop growers who prioritize data-driven decision-making, strategic market responsiveness, and collaborative industry relationships and are best positioned to manage risk and maintain competitiveness. Technologies like citrus under protected structure (CUPS) systems demonstrate how targeted innovation can simultaneously improve yield quality, accelerate growth, and provide resilience against pests and extreme weather events. However, technological investment alone is not sufficient, as long-term success also depends on the trusted partnerships and community commitments that have historically defined the industry. Farms that integrate careful planning, supply chain awareness, and strong professional networks will be better equipped to differentiate their products, control costs, and adapt to the economic uncertainties that define specialty crop production in 2026 and beyond.



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Pathways to Profit Fruition for Southeastern U.S. Specialty Crops

Authors: Bart L. Fischer and Joe Outlaw



In June 2024, we wrote (<a href="https://southernagtoday.org/2024/06/06/examining-farm-bill-base-acre-proposals/">link</a>) about a novel new concept for adding base acres to farms that had been proposed in the House Ag Committee-passed version of the 2024 Farm Bill (Farm, Food, and National Security Act of 2024). The concept ultimately was adopted in the One Big Beautiful Bill Act (H.R. 1) that was signed into law by President Trump on July 4, 2025. As we noted in July 2025 (<a href="https://southernagtoday.org/2025/07/31/addressing-questions-about-additional-base-acres-in-the-one-big-beautiful-bill/">link</a>), the provision allowed up to 30 million additional base acres across the nation. Over the past year, USDA has been working to implement the provision. On June 1, 2026, USDA began notifying producers about the opportunity to add base acres to farms. The notification includes a “Base Allocation Summary” that provides the farm’s reported acres by covered commodity for any planted, prevented planted, failed, double crop, and subsequent acres (acres planted after an initial commodity)—along with the total number of acres of non-covered commodities—for each year from 2019 to 2023.&nbsp;&nbsp;While the calculations in the worksheet can be a little confusing to follow, the good news is that the additional base allocation will occur automatically (and can only increase the base acres on your farm—in other words, the additional base allocation cannot take base acres away from you nor reallocate existing base acres).&nbsp;&nbsp;Since the process is largely automated, you really only have to make some basic decisions by the August 31, 2026, deadline.&nbsp;&nbsp;Specifically, according to USDA, you should notify your local FSA office if:



<ul class="wp-block-list">
<li>the acreage history data in your Base Allocation Summary is incorrect or missing;</li>



<li>there are “subsequent acres” listed and you would like to choose the subsequent acreage for base allocation; or</li>



<li>you elect to opt out of receiving any additional base acres.</li>
</ul>



It is clear from the implementing rule and the Base Allocation Summary that the additional base allocation process first converts unassigned base acres on an acre-for-acre basis, so long as the converted acres do not exceed the total amount of additional allocation on the farm. To read more on the implications for unassigned base acres, see this February 2026 article by Dr. Amy Hagerman (<a href="https://southernagtoday.org/2026/02/19/bringing-unassigned-base-back-into-program-eligibility-for-cotton-producers/">link</a>). Finally, you will note that the Base Allocation Summary refers to “Potential Allocation” because USDA will have to apply an across-the-board pro-rata reduction if the total calculated additional base acre allocation exceeds 30 million acres. Notably, neither the 30-million-acre limit nor the pro-rata reduction apply to the converted unassigned base acres.



Beyond decisions about the allocation of additional base acres, producers will soon have to make the annual election and enrollment decisions for ARC and PLC for the 2026 crop year.&nbsp;&nbsp;This decision is typically made in the Spring before most crops are planted, but it has been delayed for the 2026 crop year as USDA has been implementing various provisions in the&nbsp;One Big Beautiful Bill Act. USDA has made it clear that they will announce ARC/PLC election/enrollment timeframes once the additional base acre allocation process has been completed. This is beneficial for producers because they will have much more knowledge about how the 2026 crop year is unfolding before having to make the decision. Once USDA announces the election/enrollment timeline, you can utilize the Agricultural &amp; Food Policy Center’s ARC/PLC decision tool (which will be available at this&nbsp;<a href="https://afpc.tamu.edu/tools">link</a>) to run the latest payment projections.&nbsp;&nbsp;While you can find a number of ARC and PLC payment projections online, we’d encourage you to use AFPC’s decision tool to compare both ARC and PLC projected payments and to make decisions based on your own level of risk tolerance.&nbsp;&nbsp;It is also important that you consider any implications for crop insurance as you are making your decisions about ARC and PLC.&nbsp;&nbsp;



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