Authors: Karen L. DeLong, Professor &amp; Carlos Trejo-Pech, Associate Professor &#8211; University of Tennessee Institute of Agriculture



Southern Ag Today&nbsp;has reported extensively on the difficulties experienced by row crop farmers around the country given low commodity prices and persistent high input prices. America’s sugar farmers are facing those same challenges, plus a sudden increase in high-tier (Tier 2) sugar imports that is leading them to financial distress. Deliberto, Hilbun and DeLong (2025) have documented the decline in U.S. sugar farms. From 1997 through 2022, the number of U.S. sugarbeet and sugarcane farms decreased by 54% and 31%, respectively, and since 2016, sugar production in Hawaii, Texas and California has ceased to exist. Since 2000, roughly 40% of U.S. sugar mills, refineries, and sugarbeet factories have also closed (Deliberto and DeLong, 2025).&nbsp;



Contrary to most U.S. row crop commodities, the U.S. is a net importer of sugar (Deliberto, DeLong and Fischer, 2024). In fact, under World Trade Organization (WTO) and trade agreements, 40 sugar-exporting countries are granted access to the U.S. market through a Tariff Rate Quota (TRQ) system at a near-zero duty (Deliberto, DeLong, and Fischer, 2024). If the market needs more sugar, the TRQ can be increased to meet consumer needs. If countries want to export sugar beyond those amounts, they can do this through the “out-of-quota”, high-tier (Tier 2), sugar duty. For simplicity, we will refer to this as the Tier 2 tariff throughout the remainder of the paper.&nbsp;



The Tier 2 tariff is 15.36 cents per pound for raw sugar and 16.21 cents per pound for refined sugar (USDA Economic Research Service 2026a). Historically, the Tier 2 tariff was effectively prohibitive, and relatively low amounts of sugar were exported to the United States using this tariff (Figure 1). However, the world sugar market contains such large quantities of subsidized surplus sugar that foreign sugar producers are now exporting sugar to the United States through the Tier 2 tariff (USDA Economic Research Service, 2026b; USDA Foreign Agricultural Service, 2026).&nbsp;Figure 1 shows how Tier 2 imports have increased by over 1,400% since fiscal year (FY) 2018, going from only 64,000 short tons raw value (STRV) to 928,429 STRV by FY 2025<a href="applewebdata://FE2F6B68-542A-492B-AA2C-821FD7690ABB#_ftn1">[1]</a>. While the reciprocal tariffs imposed by the Trump Administration have started to moderate Tier 2 imports (as shown by the decrease from FY2024 to FY 2025), the Tier 2 import volumes are still at a high level, which threatens the economic viability of domestic sugar producers. In addition, the reciprocal tariffs are now in question given the recent Supreme Court ruling against President Trump’s use of the International Emergency Economic Powers Act (IEEPA) to impose the additional tariffs. Thus, sugar farmers continue to face an influx of foreign sugar, and that is resulting in enormous financial losses to domestic sugar farmers. In fact, on April 15, 2026, the American Sugar Alliance (ASA) filed comments with the U.S. Trade Representative asking the U.S. government to use Section 301 authorities to address, “the unreasonable and discriminatory acts, policies, and practices of sugar-producing countries that have harmed U.S. sugar producers, refiners, and workers (American Sugar Alliance, 2026).”



Figure 1. U.S. Tier 2 Over Quota Sugar Imports by Fiscal Year. 



<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="2158" height="1155" src="https://sat-wp.afpc.tamu.edu/wp-content/uploads/2026/04/6.17.4-1.png" alt="" class="wp-image-43842" srcset="https://sat-wp.afpc.tamu.edu/wp-content/uploads/2026/04/6.17.4-1.png 2158w, https://sat-wp.afpc.tamu.edu/wp-content/uploads/2026/04/6.17.4-1-1024x548.png 1024w, https://sat-wp.afpc.tamu.edu/wp-content/uploads/2026/04/6.17.4-1-768x411.png 768w, https://sat-wp.afpc.tamu.edu/wp-content/uploads/2026/04/6.17.4-1-1536x822.png 1536w, https://sat-wp.afpc.tamu.edu/wp-content/uploads/2026/04/6.17.4-1-2048x1096.png 2048w" sizes="auto, (max-width: 2158px) 100vw, 2158px" /><figcaption class="wp-element-caption">Source: USDA Foreign Agricultural Service (2026)</figcaption></figure>



The U.S. Tier 2 tariff rates were last updated over 25 years ago, in 2000, which likely contributes to why they are significantly less effective in preventing over-quota imports, especially since price levels have approximately doubled during that time due to inflation (U.S. Bureau of Labor Statistics, 2026). Due to the increase in Tier 2 imports, coupled with high input costs, domestic sugar prices are now significantly below sugar farmers’ cost of production (Deliberto and DeLong, 2023). As stated by the ASA (2026), “Without containing this flood [of subsidized foreign sugar imports], the U.S. industry is facing catastrophe, with [loan] forfeitures likely starting within a matter of months and closures following.”



The global sugar market is one of the most distorted global markets, driven by a variety of foreign subsidies that result in overproduction around the world (LMC International, 2021; Hudson, 2019). Congress has long regarded sugar as an essential and strategic ingredient in the U.S. food supply and has expressed commitment to maintaining a strong domestic sugar industry to ensure our nation’s food security (Cammack, 2023). While U.S. sugar policy has helped to maintain at least some domestic sugar production, DeLong, Deliberto, and Fischer (2023) explain how reports have criticized U.S. sugar policy for keeping the U.S. price of sugar above the global price of sugar.&nbsp;



While it is well known that consumers prefer domestically produced foods, including sugar (Lewis et al., 2016), sugar-using firms argue that they are negatively impacted by not being able to access the heavily subsidized global sugar market. Therefore, we have conducted extensive research analyzing how U.S. sugar prices affect sugar-using companies and whether changes in U.S. sugar prices affect sugar containing product (SCP) prices. In one recent study (DeLong and Trejo-Pech, 2022), we found that changes to sugar prices were not statistically significant in determining the prices of SCPs. In that study, we analyzed 379 SCPs and found that, on average, the cost of sugar represented less than five percent of the total SCP price, even though sugar consisted of 48% of the SCP’s weight. In a more recent study (Trejo-Pech, DeLong and Johansson, 2023), we found that sugar-using firms’ financial performance was superior to that of their publicly traded agribusiness peers and that U.S. sugar policy does not hinder the financial success of sugar-using firms.&nbsp;



Why does this matter today? As U.S. farmers call on Congress and the Trump Administration to modernize the Tier 2 tariff schedule by raising the Tier 2 tariff rates from the levels last updated in 2000, there is already speculation about whether this policy adjustment will affect the affordability of food, particularly SCPs. As we’ve shown time and again, the price of sugar has very little bearing on the prices (or affordability) of SCPs. The real question we should be asking is,&nbsp;“what are the implications if we allow the flood of Tier 2 imports into the country to continue? Are we willing to cause more domestic sugar farmers to go out of business?”&nbsp;



As previously stated, consumers overwhelmingly prefer domestically sourced sugar over foreign sugar (DeLong, Deliberto, and Fischer, 2023; Lewis et al., 2016). It’s also likely that sugar-using companies benefit from a domestically available supply of sugar (Trejo-Pech, DeLong and Johansson, 2023)<a href="applewebdata://D3EB120A-0264-4745-B350-67ABA6C66767#_ftn1">[1]</a>. If the United States fails to act promptly to address the surge of foreign sugar entering the market, both consumers and sugar-using companies will have no choice over where their sugar originates. They will soon be forced to rely on foreign countries because the domestic sugar industry is at risk of disappearing altogether.&nbsp;



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<a href="applewebdata://D3EB120A-0264-4745-B350-67ABA6C66767#_ftnref1">[1]</a>&nbsp;For example, one can look at the volatility of the cocoa market to see what happens when a country depends on an international market for an essential ingredient (Villacis and Dimas, 2026).



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<a href="applewebdata://FE2F6B68-542A-492B-AA2C-821FD7690ABB#_ftnref1">[1]</a>&nbsp;This level of Tier 2 imports is substantial considering, for example, in FY24 total U.S. sugar imports were 3,840,000 STRV with 1,175,884 being Tier 2 imports. This indicates that Tier 2 imports represented approximately 31% of U.S. sugar imports in FY24 (USDA, 2026).&nbsp;



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References:



American Sugar Alliance. 2026. Docket No. USTR-2026-0067: Request for Comments on the Section 301 Investigations of Acts, Policies, and Practices of Certain Economies Relating to Structural Excess Capacity and Production in Manufacturing Sectors. Retrieved from:&nbsp;<a href="https://sugaralliance.org/wp-content/uploads/2026/04/2026-04-15-ASA-Sec-301-Excess-Capacity-Submission.pdf">https://sugaralliance.org/wp-content/uploads/2026/04/2026-04-15-ASA-Sec-301-Excess-Capacity-Submission.pdf</a>



Cammack, Kat. 2023. Press Release: Representatives Kat Cammack and Dan Kildee Introduce Resolution to Zero Out Harmful Foreign Sugar Subsidies. Retrieved from:&nbsp;<a href="https://cammack.house.gov/media/press-releases/representatives-kat-cammack-and-dan-kildee-introduce-resolution-zero-out">https://cammack.house.gov/media/press-releases/representatives-kat-cammack-and-dan-kildee-introduce-resolution-zero-out</a>



Deliberto, M. and K.L. DeLong. 2023. “Examining Sugarcane and Sugarbeet Production Costs.”&nbsp;Southern Ag Today. December 11, 2023.&nbsp;<a href="https://southernagtoday.org/2023/12/11/examining-sugarcane-and-sugarbeet-production-costs/">https://southernagtoday.org/2023/12/11/examining-sugarcane-and-sugarbeet-production-costs/</a>



Deliberto, M., B. Hilbun, and K.L. DeLong. 2025. “Sugarbeet and Sugarcane Production and Farm Trends.”&nbsp;Southern Ag Today. June 25, 2025.&nbsp;<a href="https://southernagtoday.org/2025/06/25/sugarbeet-and-sugarcane-production-and-farm-trends/">https://southernagtoday.org/2025/06/25/sugarbeet-and-sugarcane-production-and-farm-trends/</a>



Deliberto, M., and K.L. DeLong. 2025. “The 2025 Sugar Market Domestic Supply and Outlook.”&nbsp;Southern Ag Today. May 28, 2025.&nbsp;<a href="https://southernagtoday.org/2025/05/21/the-2025-sugar-market-domestic-supply-and-outlook/">https://southernagtoday.org/2025/05/21/the-2025-sugar-market-domestic-supply-and-outlook/</a>



Deliberto, M., K.L. DeLong, and B.L. Fischer. 2024. “Navigating U.S. Sugar Imports From 70 Countries.”&nbsp;Southern Ag Today. April 18, 2024.&nbsp;<a href="https://southernagtoday.org/2024/04/18/navigating-us-sugar-imports-from-70-countries/">https://southernagtoday.org/2024/04/18/navigating-us-sugar-imports-from-70-countries/</a>



DeLong, K.L. and C. Trejo-Pech. 2022. “Factors Affecting Sugar-Containing-Product Prices.”&nbsp;Journal of Agricultural and Applied Economics, 54(2): 334-356.&nbsp;<a href="https://doi.org/10.1017/aae.2022.12">https://doi.org/10.1017/aae.2022.12</a>



DeLong, K.L., M. Deliberto, and B.L. Fischer. 2023. “Evaluation of the Recent Government Accountability Office Sugar Program Report.”&nbsp;Southern Ag Today. November 30, 2023.&nbsp;<a href="https://southernagtoday.org/2023/11/30/evaluation-of-the-recent-government-accountability-office-sugar-program-report/">https://southernagtoday.org/2023/11/30/evaluation-of-the-recent-government-accountability-office-sugar-program-report/</a>



Hudson, D. (2019), An Examination of Foreign Subsidies and Trade Policies for Sugar, Texas Tech University, Lubbock, Texas, pp. 1-32, BP-19-01.



Lewis, K.E., C. Grebitus, and R. Nayga, Jr. 2016. “U.S. Consumer Preferences for Imported and Genetically Modified Sugar: Examining Policy Consequentiality in a Choice Experiment.”&nbsp;Journal of Behavioral and Experimental Economics, 65:1-8.&nbsp;<a href="https://doi.org/10.1016/j.socec.2016.10.001">https://doi.org/10.1016/j.socec.2016.10.001</a>



LMC International. World Sugar Prices vs Costs of Production. Oxford: LMC International, 2021.



Trejo-Pech, C.J.O., K.L. DeLong, and R. Johansson. 2023. “How Does the Financial Performance of Sugar-Using Firms Compare to other Agribusinesses? An Accounting and Economic Profit Rates Analysis.”&nbsp;Agricultural Finance Review, 83(3): 453:477. https://doi.org/10.1108/AFR-08-2022-0103



U.S. Bureau of Labor Statistics. 2026. CPI Inflation Calculator. Retrieved from:&nbsp;<a href="https://www.bls.gov/data/inflation_calculator.htm">https://www.bls.gov/data/inflation_calculator.htm</a>



USDA Economic Research Service. 2026a. Sugar and Sweeteners-Policy. Retrieved from:&nbsp;<a href="https://www.ers.usda.gov/topics/crops/sugar-and-sweeteners/policy#sugar">https://www.ers.usda.gov/topics/crops/sugar-and-sweeteners/policy#sugar</a>



USDA Economic Research Service. 2026b. Sugar and Sweetener Yearbook Tables, Table 1. Retrieved from:&nbsp;<a href="https://www.ers.usda.gov/data-products/sugar-and-sweeteners-yearbook-tables">https://www.ers.usda.gov/data-products/sugar-and-sweeteners-yearbook-tables</a>



USDA Foreign Agricultural Service. 2026. Sugar Monthly Import and Re-Export Data. Retrieved from:&nbsp;<a href="https://www.fas.usda.gov/data/search?reports%5B0%5D=report_commodities%3A34&amp;reports%5B1%5D=report_type%3A13285">https://www.fas.usda.gov/data/search?reports%5B0%5D=report_commodities%3A34&amp;reports%5B1%5D=report_type%3A13285</a>



USDA. World Agricultural Supply and Demand Estimates Report. 2026. Retrieved from:&nbsp;<a href="https://www.usda.gov/about-usda/general-information/staff-offices/office-chief-economist/commodity-markets/wasde-report">https://www.usda.gov/about-usda/general-information/staff-offices/office-chief-economist/commodity-markets/wasde-report</a>



Villacis, A. and L. Dimas. 2026. “Valentines’ Day and Chocolate in 2026: Love, Price, and the Cocoa Market.” Ohio State University, Q112026. Retrieved from:&nbsp;<a href="https://aede.osu.edu/sites/aede/files/AEDEbulletin_chocolate.pdf">https://aede.osu.edu/sites/aede/files/AEDEbulletin_chocolate.pdf</a>



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DeLong, Karen L., and Carlos Trejo-Pech. &#8220;<a href="https://southernagtoday.org/2026/02/05/how-to-ensure-a-domestic-sugar-industry-increase-the-tier-2-sugar-tariff/">How to Ensure a Domestic Sugar Industry: Increase the Tier 2 Sugar Tariff.</a>&#8221; Southern Ag Today 6(17.4). April 23, 2026. <a href="https://southernagtoday.org/2026/02/05/how-to-ensure-a-domestic-sugar-industry-increase-the-tier-2-sugar-tariff/">Permalink</a>

How to Ensure a Domestic Sugar Industry: Increase the Tier 2 Sugar Tariff

Authors: Julio Bellodi Cortarelli and Grant Gardner



Brazil’s rapid expansion in corn-based ethanol production has important implications for U.S. corn markets. While Brazil has long been the world’s second-largest ethanol producer (RFA, 2025), it has historically relied on sugarcane. By 2024, roughly 20% of Brazil’s ethanol output came from corn (EPE, 2025), driven largely by expansion of the safrinha crop in the Center-West.



As more Brazilian corn is pulled into ethanol production and feed use, export availability may fluctuate. In some years, this could ease competition with U.S. corn, but it also introduces more volatility into global supply dynamics. For U.S. producers, that makes these trends worth watching. Importantly, corn is not simply replacing sugarcane one-for-one in Brazil’s ethanol sector. Rather, it is helping expand total ethanol production, especially in the Center-West, while sugarcane remains the dominant feedstock nationally.



One key distinction is how we measure this growth. The 20% figure reflects actual ethanol production. Figure 1 shows processing capacity, the maximum volume mills are designed to handle, not what they necessarily use each year.



Safrinha corn is planted after soybeans, which gives ethanol mills more flexibility throughout the year. Unlike sugarcane, which must be processed shortly after harvest, corn can be stored. That allows mills to better manage input costs and production timing and has supported the rapid growth in corn ethanol production.



That growth shows up in projected capacity. Corn processing capacity begins at roughly 23 million metric tons in 2026 and is projected to rise between 33 and 55 million metric tons by 2035, depending on investment conditions and market scenarios. Brazil&#8217;s 2025/26 corn harvest totaled 141.16 million metric tons, so projected 2026 capacity represents about 16% of total production. Domestic corn consumption grew 7.8% compared to the previous harvest, driven primarily by ethanol expansion (Conab, 2026).



Sugarcane capacity, by contrast, is expected to remain relatively stable, even though it is still much larger than corn processing capacity. As shown in Figure 1, most of the growth in ethanol capacity through 2034 comes from corn. New investment is concentrated in the Center-West, particularly in Mato Grosso, where safrinha production is concentrated.



Of the 24 operating corn ethanol plants in Brazil, 20 are located in the Center-West region, with Mato Grosso leading in both existing and planned capacity (UNEM, 2025). Figure 2 highlights this clustering. Despite record safrinha production in 2024/25, domestic corn prices have remained relatively stable. That suggests ethanol demand, particularly in northern Mato Grosso, is helping support local prices (Notícias Agrícolas, 2025). As more corn is used domestically, export availability is likely to fluctuate more than in the past, which could reshape Brazil’s role in global corn trade and reduce competition with U.S. corn in some years (Colussi, Schnitkey, and Paulson, 2025).



Corn has moved from a secondary crop to a more important ethanol feedstock in Brazil’s Center-West. Farmers are now forward contracting corn ahead of harvest, much like soybeans, reflecting confidence in sustained demand and prices. As more production is used domestically, export availability becomes less predictable, increasing the potential for volatility in global markets and U.S. corn futures.



What to watch is straightforward: ethanol investment, plant utilization, and domestic feed demand. These factors will increasingly drive Brazil’s corn balance sheet as the sector matures.



Sugarcane trends reinforce this shift but are not the main story. While more sugarcane is being directed toward sugar production in 2025/26, U.S. imports likely will depend on ongoing legal challenges to tariffs imposed by the Trump Administration. Regardless, additional supply will move into global markets.



The bottom line is that Brazil’s ethanol story is increasingly a corn story. That shift introduces new uncertainty into global trade flows and creates both risks and opportunities for U.S. market participants.



Figure 1. Ethanol Production Capacity (Sugarcane and Corn) in millions of tons. Made by the authors based on Brazilian Energy Research Company (EPE, 2025).



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Figure 2. Location of Corn Ethanol Plants in Brazil. União Nacional do Etanol de Milho (2025).



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Sources:



Colussi, Joana, Gary Schnitkey, and Nick Paulson.&nbsp;2025. &#8220;Ethanol Boom Drives Sharp Rise in Brazil&#8217;s Corn Consumption.&#8221;&nbsp;Farmdoc Daily&nbsp;15 (69). <a href="https://farmdocdaily.illinois.edu/2025/04/ethanol-boom-drives-sharp-rise-in-brazils-corn-consumption.html">https://farmdocdaily.illinois.edu/2025/04/ethanol-boom-drives-sharp-rise-in-brazils-corn-consumption.html</a>



Companhia Nacional de Abastecimento (CONAB). 2026. Acompanhamento da safra brasileira: Grãos – Safra 2025/26, 7º levantamento. <a href="https://www.gov.br/conab/pt-br/atuacao/informacoes-agropecuarias/safras/safra-de-graos/boletim-da-safra-de-graos/7o-levantamento-safra-2025-26/e-book_boletim-de-safras-7o-levantamento_2026.pdf">https://www.gov.br/conab/pt-br/atuacao/informacoes-agropecuarias/safras/safra-de-graos/boletim-da-safra-de-graos/7o-levantamento-safra-2025-26/e-book_boletim-de-safras-7o-levantamento_2026.pdf</a>



Empresa de Pesquisa Energética (EPE). 2025. Relatório Síntese 2025. <a href="https://www.gov.br/mme/pt-br/assuntos/secretarias/sntep/publicacoes/balanco-energetico-nacional/ben-2025/relatorio-sintese/Sintese_BEN2025/view">https://www.gov.br/mme/pt-br/assuntos/secretarias/sntep/publicacoes/balanco-energetico-nacional/ben-2025/relatorio-sintese/Sintese_BEN2025/view</a>



Notícias Agrícolas. 2025. &#8220;Demanda do etanol é o que está sustentando os preços do milho no Brasil.&#8221; September 30, 2025. <a href="https://www.noticiasagricolas.com.br/noticias/milho/408456-demanda-do-etanol-e-o-que-esta-sustentando-os-precos-do-milho-no-brasil.html">https://www.noticiasagricolas.com.br/noticias/milho/408456-demanda-do-etanol-e-o-que-esta-sustentando-os-precos-do-milho-no-brasil.html</a>



Renewable Fuels Association (RFA). 2025. &#8220;Annual Ethanol Production.&#8221; <a href="https://ethanolrfa.org/markets-and-statistics/annual-ethanol-production">https://ethanolrfa.org/markets-and-statistics/annual-ethanol-production</a>



União Nacional do Etanol de Milho (UNEM). 2025. &#8220;Biorrefinarias no Brasil.&#8221; <a href="https://etanoldemilho.com.br/biorrefinarias-no-brasil/">https://etanoldemilho.com.br/biorrefinarias-no-brasil/</a>



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Cortarelli Bellodi, Julio, and Grant Gardner. &#8220;<a href="https://southernagtoday.org/2026/02/05/brazils-expanding-corn-ethanol-sector-implications-for-u-s-corn-markets/">Brazil&#8217;s Expanding Corn Ethanol Sector: Implications for U.S. Corn Markets.</a>&#8221; Southern Ag Today 6(17.3). April 22, 2026. <a href="https://southernagtoday.org/2026/02/05/brazils-expanding-corn-ethanol-sector-implications-for-u-s-corn-markets/">Permalink</a>

Brazil’s Expanding Corn Ethanol Sector: Implications for U.S. Corn Markets

Last year was an interesting year for the cattle industry, which came with its own set of rewards and challenges for cattle producers. The first quarter of 2026 has not fallen short of keeping things interesting, for lack of a better term. Continued drought conditions, rising input costs due to the Iran war, and uncertainty as to how long high market prices will last are all contributing to the slow movement towards rebuilding the cow herd.



As of April 14, 2026, the U.S. Drought Monitor indicated that 100% of the Southeast is experiencing some level of drought, with 75% of the region experiencing severe or extreme drought. Areas of exceptional drought are occurring in the Florida Panhandle and in South Georgia. Prolonged drought conditions combined with the unusual freezing temperatures at the beginning of the year have resulted in stressed forages and weed emergence. Compensating for limited forages makes it challenging to maintain an existing herd’s nutritional requirements, further hindering the decision to increase herd numbers. We have officially transitioned from La Nina into an ENSO-neutral pattern that is expected to quickly move into El Niño this summer, hopefully bringing some much-needed rain soon.



In addition to drought conditions, fertilizer and fuel costs have risen well above year ago levels due to the Iran war. Average diesel fuel prices in April are 55% higher than in April 2025, with prices reaching over $6.00/gallon in some areas. March prices in the Southeast for potash, UAN, and urea, were 5%, 52%, and 50% higher year over year, respectively. Increases in fertilizer costs will influence decisions on how much fertilizer to purchase this year, potentially resulting in reductions in forage quality and yield. Without adequate forage and with increases in input costs, the thought of increasing herd numbers moves to the back of the line.&nbsp;



Cattle prices, with the exception of a few corrections at the start of the year, are continuing to hold strong. Prices the week of April 13th&nbsp;for 500–600-pound steer calves in the Southern Plains were 31% higher than April 2025 and 128% higher than the 5-year average. Strong consumer demand and tightening supplies are supporting high prices and will eventually encourage retention and expansion. Decisions have already been made to stabilize by holding more heifers back this year as we saw in the USDA Cattle Inventory report. But rising costs and forage availability could prolong the shift from stabilizing to rebuilding if the resources are not there to support the growth. Nonetheless, another year of profitable returns to cow-calf producers is expected amidst another “interesting” year in the cattle industry.



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<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="2560" height="1736" src="https://sat-wp.afpc.tamu.edu/wp-content/uploads/2026/04/diesel-prices-scaled.png" alt="" class="wp-image-43811" srcset="https://sat-wp.afpc.tamu.edu/wp-content/uploads/2026/04/diesel-prices-scaled.png 2560w, https://sat-wp.afpc.tamu.edu/wp-content/uploads/2026/04/diesel-prices-1024x694.png 1024w, https://sat-wp.afpc.tamu.edu/wp-content/uploads/2026/04/diesel-prices-768x521.png 768w, https://sat-wp.afpc.tamu.edu/wp-content/uploads/2026/04/diesel-prices-1536x1042.png 1536w, https://sat-wp.afpc.tamu.edu/wp-content/uploads/2026/04/diesel-prices-2048x1389.png 2048w" sizes="auto, (max-width: 2560px) 100vw, 2560px" /></figure>



<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="2560" height="1736" src="https://sat-wp.afpc.tamu.edu/wp-content/uploads/2026/04/6.17.2-diesel-prices-scaled.png" alt="" class="wp-image-43812" srcset="https://sat-wp.afpc.tamu.edu/wp-content/uploads/2026/04/6.17.2-diesel-prices-scaled.png 2560w, https://sat-wp.afpc.tamu.edu/wp-content/uploads/2026/04/6.17.2-diesel-prices-1024x694.png 1024w, https://sat-wp.afpc.tamu.edu/wp-content/uploads/2026/04/6.17.2-diesel-prices-768x521.png 768w, https://sat-wp.afpc.tamu.edu/wp-content/uploads/2026/04/6.17.2-diesel-prices-1536x1042.png 1536w, https://sat-wp.afpc.tamu.edu/wp-content/uploads/2026/04/6.17.2-diesel-prices-2048x1389.png 2048w" sizes="auto, (max-width: 2560px) 100vw, 2560px" /></figure>



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U.S. Department of Agriculture. (2026).&nbsp;Fertilizer prices by region.&nbsp;<a href="https://agtransport.usda.gov/Fertilizer/Fertilizer-Prices-by-Region/8bgf-5mdv/about_data">https://agtransport.usda.gov/Fertilizer/Fertilizer-Prices-by-Region/8bgf-5mdv/about_data</a>



U.S. Department of Agriculture. (2026).&nbsp;Weekly On-Highway Diesel Fuel Prices.&nbsp;<a href="https://agtransport.usda.gov/Fertilizer/Fertilizer-Prices-by-Region/8bgf-5mdv/about_data">https://agtransport.usda.gov/Fertilizer/Fertilizer-Prices-by-Region/8bgf-5mdv/about_data</a>



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Baker, Hannah. &#8220;<a href="https://southernagtoday.org/2026/02/05/resilient-calf-prices-rising-input-costs-relentless-drought/">Resilient Calf Prices, Rising Input Costs, &amp; Relentless Drought.</a>&#8221; Southern Ag Today 6(17.2). April 21, 2026. <a href="https://southernagtoday.org/2026/02/05/resilient-calf-prices-rising-input-costs-relentless-drought/">Permalink</a>

Resilient Calf Prices, Rising Input Costs, & Relentless Drought

Authors: Gracen Briges, Kelli Russell, and Mykel Taylor



Agricultural lenders play a key role in farm operations. According to the USDA ERS, about 60% of midsize farms and 75% of large farms&nbsp;<a>carry</a>&nbsp;debt, highlighting the importance of the farmer-lender relationship. But how do farmers portray these relationships? We conducted 74 in-depth&nbsp;interviews&nbsp;with 98 farmers and ranchers in four states (Alabama, Kansas, Montana, and North Carolina). Interview participants included midsize and large-scale operations producing a diverse range of crop and livestock products. Participants’ description of their lender relationships tended to fall into three types: trusting and collaborative, strained and tense, and transactional and unstable. Here’s what they told us.



Trusting and Collaborative Relationships



Farmers described a wide range of positive relationships and experiences with their lenders, often emphasizing trust. Many characterized their relationships as “good,” “very good,” or even “great.”&nbsp;&nbsp;In most cases, lenders were described as partners, advisors, and collaborators invested in the farm or ranch operation&#8217;s well-being. Farmers emphasized the importance of transparent, open communication, as one farmer explained, “I want them to tell me if I&#8217;m being dumb [in] a decision I&#8217;m making.” Long-term relationships&nbsp;<a>were</a>&nbsp;common. One producer described his long-term relationship, “I’ve had the same one since I got a checkbook when I was in high school.” Others noted the importance of responsiveness, one farmer noting he could “pick up the phone and call &#8217;em even if it&#8217;s after hours at night.” Many reported that they were willing to pay a slightly higher interest rate for a lender with an understanding of agriculture.&nbsp;



Strained and Tense Relationships



Some farmers shared examples of lender interactions that made them feel especially tense or stressed, often related to the bank’s financials being prioritized over understanding the realities of farming. As one farmer explained, “I just know that&nbsp;<a>they&#8217;re</a>&nbsp;a salesman. They&#8217;re just trying to sell me money,” and another added, “They&#8217;re out for themselves.” These situations often created a fear of denial or being judged, especially during financially difficult&nbsp;<a>years</a>. And as one pointed out, sometimes the lending institutions were also part of the stress, not a solution to it, stating, “They came calling for money earlier than I expected.” These negative relationships clearly added management constraints, uncertainty, and increased stress.&nbsp;



Transactional and Unstable Relationships&nbsp;



Other farmers described relationships that were neither positive nor negative. One farmer stated,&nbsp;“At the end of the day, it&#8217;s business strategy – not a relationship.” This group of producers was less concerned with relationships than with interest rates and tended to have minimal interactions with their banks as a strategy. However, drawbacks to this type of non-relationship were often acknowledged. A producer explained, “We switched 10 years ago for better interest rates, and I’ve had three different lenders in those 10 years.” Following the best interest rate led to having to constantly build a working relationship with a new lender. A second group cited lender turnover as the reason for having transactional or transitional relationships with their lender. Frequent personnel changes can leave ranchers and farmers constantly working to build trust with a newly hired lender. One farmer explained, “The problem I’ve had lately is a lot of loan officers are retiring, and it’s kind of making everything chaotic.” Even with capable new lenders, farmers expressed a cautious attitude with short relationships and little understanding of their specific agricultural operation. Regardless of the cause, the lack of long-term familiarity created uncertainty when making farm management decisions.&nbsp;



The Bigger Picture



The experiences of farmers and ranchers we interviewed reveal the importance of the lender relationship in farm management decisions. We learned that trust, communication, and a thorough understanding of agriculture in farmer-rancher/lender relationships are just as important as (if not more than) access to capital for farmers and ranchers. Strong, collaborative relationships can and do reduce uncertainty and help agricultural producers navigate the challenges of short and long-term planning. One farmer summed up her relationship with her lender by stating, “They have treated us unlike any other banking entity. They treated us like people and not numbers.” Other relationships that lack understanding or personal connection can create additional stress, uncertainty, and cautious decision-making. Recognizing these relationship dynamics helps highlight what farmers value most in their lenders.

“More Than a Number”: The Farmer Lender Relationship

Introduction



Crop and animal production can be an inherently dangerous field, with the Bureau of Labor Statistics estimating, in 2024, over 23,000&nbsp;<a href="https://www.bls.gov/web/osh/table-2-industry-cases-national.htm">nonfatal</a>&nbsp;injuries and approximately 300&nbsp;<a href="https://www.bls.gov/iif/fatal-injuries-tables/fatal-occupational-injuries-table-a-1-2024.htm">fatal</a>&nbsp;injuries associated with the industries. Workers’ compensation is a type of insurance coverage purchased by employers that compensates employees when they get injured while working. State law generally dictates which employers are required to obtain workers’ compensation, with varying requirements across the country. Some states like Alabama, Georgia, and Tennessee exempt employers of farm laborers from the state workers’ compensation requirements. Other states like Maryland and Florida only require some agricultural employers to purchase workers’ compensation policies.



While the state normally determines which employers are required to purchase workers’ compensation, the federal government has weighed in when employers utilize federal programs like the H-2A visa program. Under the H-2A program, employers are required to purchase workers’ compensation coverage regardless of state law requirements or exemptions. The H-2A program is jointly administered by three federal agencies – U.S. Department of State, U.S. Department of Labor (DOL), and U.S. Citizenship and Immigration Services. The H-2A program is authorized under the&nbsp;<a href="https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title8-section1188&amp;num=0&amp;edition=prelim">Immigration and Nationality Act</a>.&nbsp;



H-2A Program



The H-2A program allows employers to fill temporary seasonal agricultural jobs with foreign workers. To participate in the H-2A program, the job must be seasonal in nature, so jobs typically filled by H-2A workers include planting and harvesting crops and some livestock care and handling. The dairy and poultry industries typically cannot utilize the H-2A program because those are seen as year-round industries. However, there have been efforts in&nbsp;<a href="chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https:/agriculture.house.gov/uploadedfiles/alwg_final_report_-_3.7.23.pdf">Congress</a>&nbsp;to allow these year-round industries to access the program.&nbsp;



The U.S. Department of Agriculture has provided a&nbsp;<a href="https://www.farmers.gov/working-with-us/h2a-visa-program">website</a>&nbsp;that outlines all of the steps and costs associated with participating in the H-2A Program. One of the steps, among many, the employer must complete is filing the&nbsp;<a href="https://www.dol.gov/agencies/eta/foreign-labor/forms">Form ETA-790A</a>&nbsp;with the U.S. Department of Labor.&nbsp;&nbsp;The application form is then sent to the State Workforce Agency to approve or reject. The&nbsp;<a href="chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https:/www.dol.gov/sites/dolgov/files/ETA/oflc/pdfs/FR_07_Form_ETA-790A_11-30-2025.pdf">form</a>&nbsp;requires employers to certify that they “agree to provide workers’ compensation insurance coverage in compliance with State law covering injury and disease arising out of and in the course of the workers’ employment. If the type of employment for which the certification is sought is not covered by or is exempt from the State’s workers’ compensation law, the employer agrees to provide, at no cost to the worker, insurance covering injury and disease arising out of and in the course of the worker’s employment that will provide benefits at least equal to those provided under the State workers’ compensation law for other comparable employment.” So, if a state agricultural exemption applies to the employer but the employer is utilizing workers through the H-2A program, that employer would be required to purchase workers’ compensation or other comparable insurance coverage despite the state law exemption.



A certifying officer (CO) at DOL and the State Workforce Agency will review the submitted forms and either approve or reject the application. Prior to DOL issuing the temporary agricultural labor certification, under DOL regulations, the “employer must provide the CO with proof of workers’ compensation insurance coverage meeting the requirements [outlined above], including the name of the insurance carrier, the insurance policy number, and proof of insurance for the entire period of employment, or, if appropriate, proof of State law coverage.”<a href="applewebdata://685EBFA1-A506-4178-BE97-232C08812CA8#_ftn1">[1]</a>



When an employer has both H-2A workers and domestic workers, workers’ compensation or comparable insurance benefits must be provided to all employees. An employer is prohibited from offering domestic workers less benefits than H-2A workers.<a href="applewebdata://685EBFA1-A506-4178-BE97-232C08812CA8#_ftn2">[2]</a>



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<a href="applewebdata://685EBFA1-A506-4178-BE97-232C08812CA8#_ftnref1">[1]</a>&nbsp;20 C.F.R. § 655.122(e) (2026).



<a href="applewebdata://685EBFA1-A506-4178-BE97-232C08812CA8#_ftnref2">[2]</a>&nbsp;20 C.F.R. § 655.122(a) (2026).



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Capaldo, Samantha. &#8220;<a href="https://southernagtoday.org/2026/02/05/understanding-workers-compensation-requirements-for-employers-of-h-2a-workers/">Understanding Workers’ Compensation Requirements for Employers of H-2A Workers.</a>&#8221; Southern Ag Today 6(16.5). April 17, 2026. <a href="https://southernagtoday.org/2026/02/05/understanding-workers-compensation-requirements-for-employers-of-h-2a-workers/">Permalink</a>

Understanding Workers’ Compensation Requirements for Employers of H-2A Workers

The Livestock Risk Protection Plan (LRP) provides protection against price declines for feeder cattle, fed cattle, and swine. A Southern Ag Today article from August 2025 (<a href="https://southernagtoday.org/2025/08/11/usdas-livestock-risk-protection-program-use-keeps-increasing/">USDA’s Livestock Risk Protection Program Use Keeps Increasing</a>) outlined LRP participation among cattle producers.&nbsp;&nbsp;The previous article highlighted increased LRP participation following USDA changes to LRP and improvement in market prices for feeder and live cattle.&nbsp;&nbsp;In terms of number of head of cattle, LRP participation increased 25% from 2023 to 2024 and 21% from 2024 to 2025.&nbsp;&nbsp;



LRP policies run on a fiscal year starting July 1 and ending June 30. With less than 3 months to go in the fiscal year 2026, this article serves as an update on LRP participation considering the expectation of sustained (and rising) cattle prices in 2026.&nbsp;&nbsp;The projected strong price forecast for cattle is driven by historically low cattle inventories and the anticipation of a slow herd rebuilding process, reduced supply of fed cattle for slaughter, and sustained beef demand.&nbsp;



The expectation of sustained or higher cattle prices begs the question: do producers continue to utilize (and pay premiums for) LRP to protect against price declines when a price decline seems unlikely?&nbsp;&nbsp;So far in FY2026, there are 5.93 million head covered by LRP policies compared to 6.03 million at this time in FY2025 – 1.65% fewer head.&nbsp;&nbsp;It seems cattle producers are on track to utilize LRP for roughly the same number of head as last year, showing producers are willing to spend money on an LRP policy to reduce downside risk and establish a price floor despite the well-supported expectation 2026 will see sustained, and even higher, cattle prices.&nbsp;



<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="2158" height="1622" src="https://sat-wp.afpc.tamu.edu/wp-content/uploads/2026/04/6.16.4.png" alt="" class="wp-image-43793" srcset="https://sat-wp.afpc.tamu.edu/wp-content/uploads/2026/04/6.16.4.png 2158w, https://sat-wp.afpc.tamu.edu/wp-content/uploads/2026/04/6.16.4-1024x770.png 1024w, https://sat-wp.afpc.tamu.edu/wp-content/uploads/2026/04/6.16.4-768x577.png 768w, https://sat-wp.afpc.tamu.edu/wp-content/uploads/2026/04/6.16.4-1536x1154.png 1536w, https://sat-wp.afpc.tamu.edu/wp-content/uploads/2026/04/6.16.4-2048x1539.png 2048w" sizes="auto, (max-width: 2158px) 100vw, 2158px" /></figure>



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Stewart, Natalie. &#8220;<a href="https://southernagtoday.org/2026/02/05/2026-lrp-participation-given-the-expectation-of-sustained-cattle-prices/">2026 LRP Participation Given the Expectation of Sustained Cattle Prices.</a>&#8221; Southern Ag Today 6(16.4). April 16, 2026. <a href="https://southernagtoday.org/2026/02/05/2026-lrp-participation-given-the-expectation-of-sustained-cattle-prices/">Permalink</a>

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