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What’s in Costco’s Secret Sauce?

Walk into any Costco warehouse, and you’re greeted by towering pallets and the familiar hum of discovery. As you navigate the wide aisles, one name stands out again and again: Kirkland Signature.

From coffee beans to baby wipes, and meats to athletic wear, that red, white, and black logo seems omnipresent. But have you ever stopped to wonder what’s really behind that label? We were fortunate enough to speak with an insider to find out — a former food buyer with a 30-year career with Costco. Let’s peek beyond the towering aisles to see what she has to share.

What is Kirkland Signature?

It’s not your typical generic store brand.

Kirkland Signature is the culmination of a meticulous, quality-obsessed journey that involves dedicated buyers, savvy consumers, and some surprisingly big names in the industry.

And they replicate it among their 890 stores worldwide while still meeting the demands of the local markets it serves all the while maintaining its top trusted brand status.

Kirkland Signature isn’t just successful –  it’s a behemoth, reportedly the “largest consumer packaged brand in the world.”

Not only does this line of products account for about 25% of Costco’s revenues, but its sales outpace giants like Campbell’s, Hershey’s, and Kellogg’s — combined. All the while maintaining smaller margins than your local supermarket.

A Food Buyer’s Journey

So, how does this happen? It starts with Costco’s food buyers, just like the one we spoke with. She started her career overseeing 12 Costco locations, which then grew to managing food purchasing decisions for a whopping 59 locations across California and Hawaii.

Her Costco career path was a culinary adventure, beginning with candy and sundries; moving to pet food; then beer, and wine; the freezer section (where she tasted lasagna every week for six months before finding ‘the one’); and then the refrigerated section before moving back to candy, with the addition of snacks and healthier-for-you items.

Her experience, like other buyers, gave her insights into consumer spending and food trends. She was the first to introduce trending products such as organic juices and Greek yogurts. She saw the potential with Harmless Harvest Coconut Water, Country Archer Jerky, and RXBars. Eventually some of these continued to earn the coveted Kirkland Signature badge.

All buyers are required to be problem solvers. When protein bars weren’t selling well because the pharmacy department selected and managed the products, our buyer — armed with a newly acquired nutrition degree — took over, moved it to the packaged foods section. She then proceeded to revitalize the category to top-seller status, ensuring all Costco warehouses across the country follow suit.

It’s a place where commitments matter, backed by thorough contracts, high standards, and where values and family ties run deep.

In fact, our buyer’s son, daughter-in-law, and even grandkids work there. And guess where the son and daughter-in-law met? During a pizza-making class on their first day at work. And there’s another Costco-initiated family wedding in the works, too.

The Kirkland Gauntlet: Earning the Signature

What happens when a food buyer has a gap to fill, a trend to introduce, or an amazing product to bring in? With Costco’s unparalleled demand for quality, it’s never as simple as just placing an order.

The first step is the easy part: the taste test. Buyers bring in samples, taste them, and then discuss findings in bi-weekly conferences with their fellow regional buyers. If there’s interest, they might split a pallet to test its sales within their stores.

Once a product gets the initial green light for the coveted Kirkland Signature label, it faces a rigorous benchmarking process. It must meet or exceed the quality of the leading national brands. If it can do that and offer better value, it’s in the running.

This commitment to quality resonates deeply with consumers, who pay a premium to access these stores. So why do people trust Kirkland Signature just as much as national brands? It boils down to several factors:

  • Reputation & Consistency: Costco has built trust over time by consistently delivering quality. People know what to expect.
  • Quality & Value: The brand delivers on the promise of high quality at a lower price, a crucial factor, especially when wallets feel tighter.
  • Transparency & Ethics: Consumers appreciate Costco’s straightforward pricing and ethical practices, trusting that they aren’t being unduly gouged or supporting companies with poor labor practices. Increasingly, ethical sourcing and corporate social responsibility matter, especially to younger shoppers.

Big Names Behind the Label

Here’s where things get really interesting. How does Costco achieve that national-brand-beating quality? Often, by partnering with those very same partners. And many of those same brands are right there on the same shelf, buddied up with their Kirkland Signature counterpart.

The idea is simple:

If a Kirkland Signature product is going to sit on the shelf alongside established names, it has to prove its worth in both performance and quality.

Most retailers fear product cannibalization, but Costco leans into it. Every Kirkland Signature product must be better than its name-brand cohort and at a lower price. What makes these partnerships unique versus other store brands is that these aren’t just co-branding exercises. Often, the Kirkland version is a unique formulation, like a specific Starbucks coffee blend developed exclusively for Costco.

With this strategy, Costco gets top-tier manufacturing expertise without the capital expense, and the partner brands gain access to Costco’s massive, loyal membership base and huge volume orders.

Costco’s Kirkland Signature partnerships are a win-win situation that reinforces Costco’s reputation as a provider of premium products at competitive prices.

But do you still prefer Smithfield-branded pork products, even though the “Kirkland Signature” version is made by the same producer? No worries…just look at the branded product right next to it. But buyer beware: get ready to shell out more bacon at checkout.

The Quality Police: Audits, Inspections, and Non-Negotiables

Partnering with big names isn’t enough; maintaining quality requires constant vigilance. Costco’s quality control process is legendary for its rigor, which is why this process can take up to two years before you see a new Kirkland Signature product grace its shelves.

And it doesn’t stop there.

It starts with traceability.

Costco needs to know where everything comes from. Our buyer mentioned sending teams to shrimp farms in Vietnam and coffee plantations in Hawaii and Costa Rica. This extends to pet food, too, where standards are arguably even stricter now, with Costco’s consumer-centric philosophy recognizing pets as family members.

Traceability systems must allow products to be tracked back to their source rapidly, often tested with mock recalls requiring completion within two hours.

Then come the audits.

Costco’s audit team travels directly to manufacturing plants to ensure they meet not only industry regulations but also Costco’s own stringent requirements. Approved certification bodies conduct annual audits. But they don’t stop there; they also perform unannounced inspections to see how things operate daily. They might even send their own people to shadow third-party audits.

Suppliers must meet minimum audit scores for the product’s relevant categories, such as Food Safety or Traceability. Any audit scores falling below a certain threshold necessitate the implementation of a corrective action plan, demonstrating Costco’s commitment to continuous improvement and addressing any identified deficiencies.

Failure to meet standards has real consequences. Our buyer recalled nixing a deal with a bakery found making breadcrumbs in a kiddie swimming pool. Another manufacturer struggled with proper line cleanouts between different flavored granola bars, a critical step to prevent allergen cross-contamination. Issues like inadequate hand-washing areas or unfair wages can also jeopardize a partnership.

Plus regulated food safety inspections.

Beyond physical inspections, suppliers must implement robust food safety systems, like Hazard Analysis and Critical Control Points (HACCP) protocols and the Global Food Safety Initiative (GFSI).

This includes allergen control, regular microbiological testing of the environment and finished products, pest management programs, and often X-ray inspection of finished goods.

Crucially, every ingredient is thoroughly tested before acceptance for nutritional value and potential toxins. This relentless testing ensures safety and contributes to that consistent “signature taste”.

Sealing the deal.

All this is formalized in detailed supplier agreements. These contracts cover everything – product specs, delivery terms, quality standards, ethical sourcing, and pricing. Costco holds the cards; they won’t be bound by supplier terms that deviate from their own, and any changes require a formal written agreement. Suppliers also need to prove they can handle Costco’s massive order volumes.

Costco’s relationship with its suppliers is characterized by a “tough but fair” approach.

The company’s low product offerings and high sales volume give it significant leverage with suppliers.

Sourcing the Globe

Where do the ingredients for Kirkland Signature products come from? Everywhere and anywhere the best quality can be found. While many ingredients are sourced domestically for traceability reasons, Costco goes global when needed.

Organic Lemonade might use lemons from Argentina, Spain, and California, with sugar from South America. Pet food might use potato protein from Germany or chicory root from Belgium. Kirkland Extra Virgin Olive Oil meets international standards and is often sourced from California.

Chocolate involves traceable cocoa beans, often from the Ivory Coast, focusing on sustainability and labor. Tilapia is raised without antibiotics in deep-water reservoirs near the equator by a zero-waste-committed company.

The brand’s philosophy is clear: only the best ingredients will do.

Costco is able to manage these products from all over the globe with its warehouses that play a central role in its distribution network. The company operates centralized warehousing operations to supply its stores, ensuring a smooth flow of goods.

Tackling the Trends

Costco also keeps a close pulse on what its members want. They pay for their annual membership after all, so they should have a say in where their dollars go.

The food buyers assess sales data and gather member feedback to spot trends – organic, gluten-free, keto, pet health, you name it. Their frequent meetings give them the opportunity for idea generation and collaboration to continually be at the forefront of trends, sometimes even before they happen.

For instance, our buyer recalls assessing a particular brand of non-dairy, shelf-stable coffee creamer, one of Costco’s popular office food products. Upon closer examination, she found that this one product was made with dozens of ingredients during a time when consumers started demanding just a few, readily identifiable ingredients listed on a package.

She spent two weeks working directly with the vendor at their plant to reformulate and taste-test what would become their Natural Bliss line. Initially, it didn’t fly off the shelves, but years later, as consumer awareness of ingredients grew, it became a massive hit – a testament to foresight and staying ahead of consumer trends.

Sustainability is also increasingly woven into the fabric of Kirkland Signature. Costco aims for all Kirkland packaging to be recyclable, reusable, or compostable by 2025, reflecting a commitment to environmental responsibility that resonates with modern consumers.

What about tariffs?

The anticipated tariff increases may prove to be a sourcing test for Costco as consumers look for more ways to stretch their shrinking dollars. Though our buyer had never experienced a period akin to what many of us are expecting, she expects pricing to be less volatile than you’d see in grocery stores.

Source: Mintel

She also reminded us that tariffs have been in place for years. Costco has navigated these ongoing issues with the help of its ironclad contracts, bulk ordering, and pricing expectations.

More Than Just a Label

So, the next time you toss that giant bag of Kirkland Signature trail mix or bottle of olive oil into your cart, take a moment. You’re not just buying a product; you’re buying the result of an intricate dance involving sharp-eyed buyers, global sourcing expeditions, partnerships with industry leaders, relentless quality checks, and a deep understanding of what shoppers truly value.

And that, in a Kirkland Signature nutshell, is the secret to its success.

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Farm Bill for Dummies

What is the Farm Bill?

The Farm Bill is the comprehensive federal legislation that lays out our food and agricultural policies.  Think of it as a blueprint, or rules of the road, for guiding the production of the food consumers here and around the world depend upon.

The Farm Bill dates back to 1933, when in an effort to help farmers devastated during the Great Depression, Congress passed the Agricultural Adjustment Act, providing basic commodity supports. Farm legislation traditionally has been renewed every five to six years, expanding with each bill to cover an ever-wide range of national policy objectives.

What’s in it?

Think of the Farm Bill as a great big bus – with enough seats from everyone from the farm field to the dinner plate, from the American heartland to the most distant export market.

From its initial focus as an economic support plan for farmers, the Farm Bill has grown, pardon the expression, like a weed. The last farm bill, Agricultural Improvement Act of 2018, included 12 separate titles and ran over 800 pages.

From its humble origins, the Farm Bill now lays out a basic blueprint for commodity supports, crop insurance, farm credit, conservation programs, rural development, bioenergy, commodity market regulation, research and extension services, trade promotion, forestry, horticulture, food safety and nutrition – and more.  The table of contents for the last Farm Bill ran 16 pages – longer than the average piece of legislation placed before Congress.

The sheer scope of the legislation makes it one of the most complex and daunting tasks facing Congress.

The number of voices that must be heard in drafting the legislation has grown in lockstep with the bill’s span of goals and objectives. And with each Farm Bill, the task of finding consensus grows more and more demanding. Differences on policies and especially spending priorities have led to simple year-long extensions of the 2018 law.

How much does it cost?

As the Farm Bill has grown in size, so has the price tag. The total five-year tab for the 2018 Farm Bill is estimated at about $428 billion dollars, according to the Congressional Budget Office during the last round of Farm Bill deliberations. That’s about $1,300 for every American over those 5 years, or roughly $260 per person per year.

That number again?

$428,000,000,000

As high as the numbers are, the five-year cost of the Farm Bill remains only 9 percent of the 2025 federal budget – and less than 2 percent of the federal budget on an annual basis.

In fact, it’s a pittance compared to federal spending.  Social Security spending ran about $1.354 trillion in 2023. Healthcare clocked in at $889 billion, Medicare another $848 billion in that year. Our national defense budget hit $820 billion, with another $302 billion for veterans benefits. Even interest on the national debt ($658 Billion) topped the cost of the five-year Farm Bill. Still, nearly a half-trillion taxpayers dollars should garner some attention – and it has.

Where does the money go?

Now before anyone goes all ballistic over how rich this makes the American farmer, let’s take a look behind those numbers.

The latest data from the Economic Research Service at the U.S. Department of Agriculture notes that the overwhelming majority of spending comes through four specific areas (or titles) the bill.

Three are mainstream farmer-oriented program areas – commodity price supports, crop insurance and conservation. These three make up about 23 percent of the total Farm Bill tab.

Where does the rest go? All those other areas cited above – research, regulatory oversight, trade promotion and the like – make up about 1 percent of the bill.

The remaining 76 percent of spending goes to nutrition programs.

Yes, three-quarters of our Farm Bill spending is devoted to the Supplemental Nutrition Assistance Program (SNAP, formerly known as the Food Stamp Program), and programs such as the National School Lunch Program, the Special Supplemental Nutrition Program for Women, Infants and Children (WIC), and others.

Programs authorized through what’s known as mandatory funding aren’t subject to the annual appropriations process in Congress. They are funded through the Commodity Credit Corporation and respond to market conditions and other economic considerations.

Discretionary funding covers programs with a price lid and require specific congressional action to exceed them through additional appropriations. The SNAP program is mandatory funding. As as more people sign on to the program, the costs automatically go up as well.

In other words, it’s very difficult – and maybe politically impossible — to shut off the spigot of taxpayer dollars.

What’s the math for consumers and taxpayers?

As we noted, the average American pays about $260 each year to cover the costs of the 2018 Farm Bill, according to figures from USDA, the CBO and other government sources.  For a family of four, that is just over $1,000 per year.

 If SNAP costs were eliminated from the calculation, those figures drop by almost $200, to roughly $60 per person per year.  For the family of four, the cost would decrease to $210 per year, a reduction of $790. 

If SNAP costs are kept in the Farm Bill, and the projected increases in costs prove true, the average per-person and family of four costs of the farm bill will increase beyond the $260 and $1,000 estimates.

So what’s the holdup on a new Farm Bill?

Congress has made a serious run at a new Farm Bill for more than two years, but with not quite getting over the finish line. The last Farm Bill technically expired during the national tumult surrounding the Covid outbreak, and the transition from a Democrat to Republican administration made agreement among legislators even more difficult. An extension and use of continuing resolutions added to congressional appropriations helped extend the bill.

But plain old politics also contributes to the impasse.

For some time, the rising costs of SNAP flew under the radar as federal spending on health care soared, and overall federal spending expanded at what many consider an alarming rate due to Covid and other factors. But a major debate is nonetheless present over the rising price tag for the Farm Bill, with the SNAP program the primary target for budget-conscious legislators. Questions about the likely need for some form of direct financial assistance for farmers due to the continuing global furor over tariffs and trade also are very much a part of the farm policy debate.

Critics of the SNAP program have floated the idea of separating the program from any new Farm Bill. Such a step would dramatically lower the price tag. But more experienced legislations say the nutrition and food assistance programs are in the bill for a very important reason.

Proponents of keeping SNAP within the bill point to the need to appeal to House and Senate legislators with largely urban and suburban constituents.  Absent the link to SNAP, they warn, there is a risk of push-back from those inexperienced in the importance of solid food and farm policies.

Or to put it more bluntly, there is a risk of Democrats from blue states looking for leverage against Republicans from red states in the Midwest and south. It’s a high-stake game of poker, with the Farm Bill sitting in the center or the table.

In simple terms: don’t be entirely surprised if a new and better Farm Bill remains elusive in 2025.

What will the Farm Bill cost in the future?

The future price tag can’t be accurately estimated at this time, obviously.  There simply are too many uncertainties about the decision to be made by a Congress made up of a high percentage of Farm Bill virgins – that is, legislators who have never before been through the process of crafting omnibus farm legislation. More than one-third of the U.S. Senate is made up of senators elected since the last Farm Bill was passed. In the House, the percentage is almost double – 67 percent.

After two years of frustrating delays in addressing the need for new farm and food legislation, Congressional and Administration leaders pledge their best efforts to see the Farm Bill through to completion in 2025.

The stakes are high.

Farmers need to know the rules of the road, and the policy directions that will shape their planting and marketing plans in an era of economic stress throughout the farm economy.

Consumers need to know that their food is available, safe, nutritious and affordable, which means some clarity in the way plans to reduce staff and funding in various food-related programs and agencies will play out.

Put the taxpayer on that list, too. Simply locking in the existing Farm Bill policies means the price tag for the Farm Bill will continue to escalate.

The world needs to know how reliable the United States can be as a supplier.

The cost of SNAP and comparable food-assistance programs administered by USDA already is estimated to rise to $110 billion in 2025 by the Congressional Budget Office.

The Congressional Research Service (CRS) estimated a 10-year continuation of existing law would cost $1.4 trillion, with the SNAP share of the tab rising to 81 percent. CRS pointed out that such spending would be an increase of about $600 million.

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Food’s Huge Stake in Global Tariff Battle

President Trump called April 2, 2025, “Liberation Day,” citing a national emergency from the continuing trade imbalance between the United States and 185 countries, out of 195 in the world. The President announced an aggressive program of tariff increases and especially aggressive reciprocal tariffs against those countries deemed to have unacceptably inequitable trade relationships with the United States.

The reasons behind Liberation Day seem obvious enough. The United States had a trade deficit in goods – meaning more in the value of imports than in exports – of an estimated $1.2 trillion in 2024.  The Trump Administration’s objective is to bring jobs back to the U.S. and rebalance those tariffs that are higher in other countries than we have here. The largest deficits were with China ($295 billion), Mexico ($172 billion), and Vietnam ($123 billion). (Estimates of the deficits vary slightly among different sources but generally align with these numbers.)

The other compelling reason was the tariff imbalance.  For instance, the EU remains a major customer for U.S. agricultural exports but responded to the initial U.S. tariff action on steel and aluminum by announcing plans in March for their own aggressive tariffs on imports, affecting an estimated $20 billion in U.S. products, on top of $9 billion in tariffs on aluminum and steel from the United States. Targets include soybeans, beef, sugar, dairy and pork – including a tariff of 25 percent on corn, and as yet undetermined level for soybeans.

Trying to follow the evolving tariff proposals is like watching a jigsaw puzzle being assembled in real time—with new pieces added every day, and no one quite sure what the final picture will be.

Current trade situation 

Over the past year, the EU has purchased roughly 3.4 million tons of U.S. corn, mainly for use in their livestock feeding. Total 2024 sales of U.S. corn to the EU were valued at $359 million. The EU soy market is even larger, with imports of U.S. soybeans, meal and oil worth roughly $3 billion and accounting for over 10 percent of all U.S. soy exports.

U.S. agricultural exports to the EU have long faced significant roadblocks as EU legislators sought to protect their rural and farming sector. Phytosanitary standards and other food-safety claims have been used to prohibit or prescribe the food products allowed to be imported, on top of protective tariff levels from 6 to more than 30 percent.

The red numbers are nothing new.  In the month of February 2025, we had a deficit of $122.7 billion — a stark contrast to the last time we had a trade surplus of $15.9 billion back in 1975.  Coupled with rising federal deficits, the trade imbalance has been a thorny fiscal issue policymakers have been reluctant to tackle, due largely to the enormous implications for the national economy and the global international economic system. Presidential candidate Trump promised to take action, and President-elect Trump lived up to his word.

In the weeks since Liberation Day, the promised tariffs have roiled the international trade system and entire economic order. Critics quickly questioned the value of imposing such tariffs on two of the country’s most important trading partners.  The Administration and tariff supporters promptly noted that the highest agricultural trade deficits are with Mexico ($18.8 billion) and Canada ($12.5 billion).

In 2024, the United States is now on pace to reach a $39 billion agricultural trade deficit, the worst in our history.

This 2024 deficit is larger than any trade surplus year besides 2011.

– Andrew Rechenberg, Coalition for a Prosperous America, January 16, 2025

As might well be expected with such a dramatic step, the tariff announcement quickly produced more questions than clear answers. When would they actually begin? What products might be exempt? What are the chances for bilateral trade agreements to avoid or moderate the actual tariffs? The roster of questions continues to grow, with increasing uncertainty apparent in markets worldwide. 

How will tariffs affect farmers & producers?

Put agriculture at the top of the list of those seeking answers. Farmers still must make plans – on what to plant, what inputs, such as fertilizer coming from Canada, are needed and available (and at what price), how to anticipate market volatility and structure the marketing plans they need to find profitability amid low commodity prices and still-high input costs.

How do farmers weather the possible loss of key export markets, especially for soybeans, right now and potentially well into the future?  The U.S. currently exports approximately 50% of the soybean crop to other countries, China as the primary one.

Food manufacturers, distributors and retailers wonder about the reliability of supplies of all sorts of products, coffee, fish, spices and an extensive list of important items whose foreign origins are normally invisible to the consumer.  How much of a cost increase can I absorb, and how much must I pass along to the next link in the marketing chain?

But we don’t have to panic about our fruits and vegetables as they are USMCA compliant and not subject to the new tariff rates.  For example, the U.S. imports about 59% of fresh fruit and 35% of vegetables from other countries, notably Mexico, Guatemala, Costa Rica, and Canada.  Well, maybe we can panic about tomatoes — now a casualty of the trade war, a 10% increase in the price of tomatoes is a possibility for the 70% of tomatoes brought in from Mexico.

What do corn, soybeans, and China have to do with tariffs?

Exports around the world are a large portion of demand for US agricultural products. They help balance the trade deficit. The U.S. has spent a lot of time and effort to expand market access.  As a result, just about 65% of US soybean production is exported in the form of seed or finished products like soybean oil, soybean meal, meat, and biofuels.  About 30 percent of corn is exported in the form of grain or finished products like ethanol, meat, and dried distiller’s grains feed.

The top three countries targeted for tariffs to date: Mexico, Canada, and China, are also our top three markets for agricultural exports at $30.3 billion, $28.3 billion, and $24.7 billion, respectively, in 2024.

– Betty Resnick, Economist, American Farm Bureau Federation, March 18, 2025

For agriculture, this is much about China.

Before the US-China trade war began in 2017, 40-50% of all global soy going into China was from the US and Brazil was 50%; now (2024) 20% of China’s soy comes from the US, 70% is Brazilian origin. The US has lost ground in China due to the growth in Brazil.

China’s place atop the list of countries facing the highest reciprocal tariffs has attracted extensive attention. The American Farm Bureau estimates that the cumulative tariffs imposed by China on U.S. agricultural products will climb to 71.5 percent for soybeans. As the New York Times observed, “More than half of U.S. soybean exports went to China last year, but the price just went up 135 percent under the tariffs China installed in response to President Trump’s 145 percent tax on Chinese imports.”

Relief for farmers?

USDA Secretary Brooke Rollins has been engaged with various leaders across the agricultural sector, discussing how to deal with the potentially adverse economic effects of the tariff action. Officials acknowledge the need to offer assistance, but details on just how much aid to provide, how to deliver it, and most of all how to pay for it still are under discussion.

Producers received an estimated $28 billion in financial support during the 2018 trade disputes. Officials worry that the price tag could be even higher this time around. Commodity prices remain well below estimated costs of production and input prices, while a bit lower this year, nonetheless still represent a substantial expense.

Worries about supplies of fertilizers such as potash from Canada and other suppliers also remain, despite progress in carving out some tariff exemptions.  Moreover, unlike the last time around, when the dispute centered on China, the global extent of the proposed tariffs also will affect the ability to market to other customers around the world, especially many of the key traditional markets facing tariffs above 10 percent.

Some officials continue to argue that income from the tariffs will help provide additional funds, but that income has yet to be realized. Hopes to fund the economic support through USDA’s Commodity Credit Corporation (CCC) are also being discussed. But the actual amount of money available under the CCC’s $30 billion authority is still in question.

The prospect of approaching Congress for additional funds poses big political issues, as both the House and Senate work to resolve an already contentious budget blueprint – not to mention how taxpayers would respond to spending more for farm relief amid the drive for spending cutbacks and fiscal balance.

And the consumer?

The effort to address the long-standing problem of the trade imbalance won’t come without a cost to the American consumer, at least as the negotiations needed for resolution of the problem play out and global markets stabilize.

According to the political website The Hill, the Tax Foundation estimates the tariffs could result in a de facto tax increase of $1,900 for each U.S. household in 2025, unless the issue is resolved quickly.  That figure includes the added cost of everything subject to the tariffs, not just food.

The Atlanta Federal Reserve estimates tariffs of 25 percent for Mexico and Canada on products ranging from beef, pork, grains, potatoes and canola oil (Canada) and vegetables, fruit, beverages and spirits (Mexico) could result in an increase of 1.63 percent in costs.

Threats to impose a 20.9 percent tariff on tomatoes from Mexico when the existing tomato import agreement expires in July could lead to a noticeable jump in prices, according to the Fresh Produce Association of the Americas.

While most economists seem to agree higher tariffs mean higher prices, few agree on exactly how much of an increase to expect. They point to the open question of how much of the higher costs portions of the food chain are willing to absorb and how much they feel compelled to pass along.

The answer may be some time coming, and still subject to further decisions and actions taken by the Trump Administration in refining and finalizing its trade strategy.

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Transcript – Digging In: The Future of Food

Click here to listen to the podcast episode, and visit our D2D podcast page to check out our other episodes. Happy reading!

For us to successfully and sustainably feed our global population, the farm and agriculture community must have a good working relationship with governments. They also need the consumer to understand where their food comes from and how it is grown and made. Only then, will farmers be profitable and be able to continue to adopt to a changing climate and exciting new technologies.

First, let’s start with the basics:
You are all one of 600 million farmers in the world, and almost 2 million in the United States. The average farm size is 466 acres. Of course, we hear of the demise of the family farm, but if you look at farmland in 1885, when you first began, total acreage was 354 million, the size of Alaska, and today it is 876 million acres. About the size of Alaska, California, Texas, and Nebraska. 95% are family farms. Each year, on average, one U.S. farm feeds 170 people in the world.

We can appreciate Elon Musk with DOGE, SpaceX, and Tesla. Or Jensen Huang with Nvidia – the scaffolding of AI. But without the basics of food, we would go the way of the Mayan Civilization.

Our history is replete with advances in food production. Beginning with the shift from hunters to gatherers to mass cultivation. But going from chasing animals down with a bow and arrow to driving a John Deere tractor took about 13,000 years. Then, our population was 5 million and today we are 8.2 billion. In the next five years we will add the entire population of the United States to the world. In the next 15 years, we will add three more United States’ population to the world for a total of 9.7 billion people.

What makes this exciting is that the changes in agriculture are moving at the speed of light. In the next 15 years, we will make more advancements in agriculture than we have in the past 13,000 years. We have amazing innovative technology, better inputs, and more responsible production and natural resource management tools.

We also have the moral obligation to keep people and animals alive and healthy by increasing our agricultural production by 50%. We must be even more efficient as demand for food will exceed freshwater supply by 40%.

Today, we grow and produce 3,000 calories for each of the 8.2 billion people around the world. As an aside, on average, we eat 2,000 calories and we throw away the remaining 1,000 calories. I am sure you have heard about food waste.

Population and income levels drive food. Once you begin making more than $3,000 a year, you incorporate more protein into your diet.. Protein, mainly from cows, chickens, pork, all need to be fed – primarily corn and soybeans.

The world produces about 9.9 billion metric tons or primary crops each year. If you were to put all the food we grow on a freight train, it would circle the earth about 50 times.

To feed the growing population, and it’s need for protein, we need between 45 – 55 million metric tonnes a year. Just for fun, we go back to the train. For corn, the train goes from Minneapolis to the North Pole. For soybeans, it goes from Minneapolis to Singapore.

Let’s talk about the role of government: today is food security, tariffs, and biofuels.

The first thing I would like you to remember is the importance of global food security. You will do anything when you and your family are hungry. If you think people will get into fist fights over a tank of gas, just imagine what you might do to make sure your family is fed. If you are a Somalian, you could become a pirate. If you live in Venezuela, where over 87% of the population received some sort of food subsidy, you would turn to crime. The number one cause of hunger around the world is not lack of food, it is civil wars, inter-country conflict, and governmental interference.

Take one of our most favorite foods: chocolate. The U.S. supply chain of $4 billion starts in West Africa where governmental interference has stripped farmers of healthy profits and where child labor is an issue. Now, add on four years of underperforming yields due to weather and climate and it is no surprise that the price of cocoa has gone from 2,000 a ton to a high of 12,000/ton earlier this year. I can assure you that the farmer is not getting even $2,000.. Because of government mismanagement, cocoa is picking up its beans and headed elsewhere, mostly likely Brazil. Of course the recent trade announcement has only created more uncertainly as Ivory Coast and Ghana face 21% and 10% tariffs to export their cocoa to the U.S.

This brings us to the importance of trade.
The U.S. agriculture trade is in a deficit of $37b from a trade surplus of $35b as of 2014. We still export about 20% of our agricultural products. Most of that is big ag: corn, soybeans, canola, cotton.. For every $1.00 of ag exports, we have $2.00 of domestic economic activity. What happened to our agriculture?

Part of the story is the stronger dollar making imports cheaper. We still make enough calories to feed every American, but we are importing more products such as tropical fruits, coffee, and cocoa that we don’t produce here. For instance, bananas our our number one import. We like international variety in our imported beer and wine: think Corona Beer and European vineyards. And because our labor costs are higher than other countries, we are importing more vegetables and processed foods that we could profitably make here.

Without fair trade, U.S. farmers are under economic stress. There is a global surplus of soybeans and corn, futures are down, and the uncertainty of Trump’s new tariff policy is foreboding. . Our top trading partners are where the tariffs are going to hurt the most: Canada, Mexico, for imports and China for exports.

Uncertainty is difficult. At what point will the immigration and fentanyl issues be resolved? How long will Trump use tariffs for leverage against Chinese investment in Canada and Mexico?

What impact will retaliatory tariffs have? Particularly with China? US corn and soybeans are export dependent. 51% of our soybeans are exported to China, Argentina, Japan, Mexico and Spain. Think about that, half of our soybean crop is part of the tariff war.

Brazil is our number one competitor and together we supply over 80% of global soybeans for animal feed and cooking oil. Tariff wars cause us to lose market share. After the US-China trade war in 2017, the US market share of soybeans to China went from about 45% to 20% whereas Brazil’s is now 70%.

With Corn, 30% is exported in the form Mexico, Japan, China, Columbia, and Canada.

Besides trade, how did we get to this global surplus? All roads lead to oil.

Since the oil shocks and the environmental awakening of the 1970s, we have seen steady growth and farmer dependence on ethanol and other biofuels. Today about 40% of our corn crop is used for ethanol and 45% of soybean oil is used for biofuels.

Biofuels are one of the reasons of our oversupply. Since the 70s, farmers have added yield and acreage to accommodate the fuel and food needs of our country and the world. Biofuels are critical for farmer profitability. Breakeven for corn is around $5.25 bushel, today’s price is 4.68/bu. For soybean breakeven is about $12.50 bushel, today, we are at $9.97/bu. You can see the immediate effect of tariffs and biofuel uncertainty and record global stocks.

The Trump 2.0 Administration is more favorable, toward biofuels than his first administration. On his first day, he released the American Energy policy that ‘unleashes America’s affordable and reliable energy.” The U.S. leads the world in biofuel production. Back to the train, each year, this train would go half-way around the Earth’s circumference.

As I mentioned earlier, food consumption is expected to increase – and so is global energy. It is anticipated to increase by about 24% over the next 15 years. Demand for AI data centers and electric vehicles are certainly part of it but the bulk will be rising demand in and China (depending on how they handle the tariffs), SE Asia, India, and S.America. Are biofuels part of the conversation?

One positive piece of news is the coalition between big energy and big ag working together to push the EPA to increase the biofuel mandate. The conversation around energy will be interesting in the coming days or months given OPEC might reduce production by 400,000 barrels a day.

The question for farmers, is , Will there be a subsidy? The Inflation Reduction Act, while overall controversial, did have a $1.25 credit for biofuel production. Trump also gave farmers $28 billion to offset the China trade war of 2017. There is talk today of giving farmer’s tariff funds to offset any additional China import issues.

What is the answer for farmers? Tariffs and biofuels policies are a challenge at the moment. But the anticipated global growth can balance this out. Of course, there will always be weather disruptions. No one, with any pride, likes a handout. We are in a unique economic time – and not just for agriculture. It is an interesting situation for sure

As I mentioned, food unites all of us. Growing food sustainably is important.

There is a lot of emphasis on regenerative agriculture. Keeping your soil healthy, enhancing your crop nutrients, not letting water run off your fields and increasing your yield – is no easy feat. It can mean. no-till farming and cover crops which in turn means healthier soil and less synthetic inputs. The beauty of regenerative agriculture is that it can be uniquely applied to each farmer, location, weather pattern, and differentiated crops.

General Mills, Pepsi, Unilever, Walmart, Danone, Nestle are just a few CPG companies that have committed to sourcing ingredients from regenerative ag. Cargill, and, I don’t like to admit, ADM also, and other buyers partner with farmers to help them make the financial commitment for regen ag.

Now comes the exciting technology: Precision Agriculture uses technology to manage farms more efficiently by using real time data to make informed and immediate decisions about where to apply fertilizer, pesticides, water, and seeds on distinct parts of the field.

John Deere is solving both the agricultural labor issue and addressing sustainability. I was speaking with Aaron Wetzel, VP of Production & Precision Ag Production systems at John Deere. They have asked themselves, ‘How do we best help our customers be more successful?” The answer? Technology. They are not just a tractor company anymore. A few years ago, they paid hundreds of millions of dollars to hire just 65 software engineers from Silicon Valley. Their investment has paid off. It is not easy to remake yourself from a plow to a software company after 180 years

They have See and Spray technology on their tractors which enables each spray nozzle to recognize a weed, spray it, all without herbicide drifting to nearby plants. Their farmers have reduced their chemical inputs by 60%. For more on John Deere, I am putting a plug in for a Dirt to Dinner podcast I did with Aaron.

John Deere Isn’t the only one on the field. AGCO, Trimble, CASE, and DJI Agriculture are just a few at the forefront of this revolution, developing integrated solutions that combine advanced software platforms with sophisticated machinery.

I see the future, and it is robotics. The autonomous tractors are the real revolution. Basically, these are just gigantic robots moving down the field. The John Deere tractors can till, plant seeds, and harvest on their own. They have 16 cameras for a 360-degree view, powered by 2 NVidia chips. Farmers can precisely farm from the dinner table, from a conference, reducing labor, inputs, and of course, increasing yield.

These autonomous machines rely on inputs such as cameras, light radar, satellites, density altitude, and other environmental sensors. They learn, make spot decisions, and then move some type of actuator like a wheel, a sprayer, an arm, or any part of a robot. This information goes into the cloud to help train other machines. But not just like machines. A John Deere combine can train a John Deere lawn mower or a construction vehicle.

What used to take days and lots of labor to harvest anything from lettuce to Brussels sprouts, now can take only minutes. Machines are not just more efficient; they have an autonomous life of their own. Greenfield robotics is an AI powered robot pulling weeds all day and all night. No herbicide and no labor needed. Farm-ng has an automated robot that can tailor seeding, weeding, and compost spreading to a specific crop. It can cut down weekly labor by 50-80%. Robotics Plus, purchased by Yamaha Motor, combines data analytics and automation in the field to produce growing insights for farmers.

Who would have thought that agriculture would be the forefront of physical AI.

These machines are not just on the field. I think of the ‘factory of the future’ where labor is needed for dangerous jobs, heavy lifting, or monotonous tasks such as packing fruit. I have seen entire sections of processing plants, that used to have 50 people, are incredibly productive without a human in sight. That is the future of agriculture – and many other industries.

To be honest, no one is ordering a brand new autonomous John Deere tractor if their corn and soy is underwater. I mentioned the importance of government policy. I mentioned that the way we are farming is changing at the speed of light. What is equally important is consumer education.

Misinformed people make bad decisions – about their diets and ultimately the health and well-being of their families. They support quick fixes to complex problems – and risk undoing much of the incredibly productive, efficient food system that we have today. I honestly think people think we should deliver our eggs via bicycles and cook with beef tallow.

I will do a speed finish with just a few examples of misinformation:

  • GMOs let the world meet its food needs, sustainably. There are no health issues to humans, soil, or water with GMOs. Which leads to glyphosate.
  • Roundup Ready, if used correctly, in your backyard or on the farm field is safe for humans, water, and soil. Regenerative agriculture works the best with genetically modified crops to be resistant to glyphosate.
  • Oilseeds, canola, soy, corn, and palm are fine to cook with. It is all about the smoke point, not the oil ingredients
  • Organic still has chemicals. They are just ‘natural’.
  • You must eat a bathtub full of red M&Ms every day in order to be negatively impacted from the red dye.
  • Processed food is not terrible if you eat it as a treat and not depend on it as a food.
  • Eggs are one of the best whole nutritious foods.

As a farmer, or investor in farmland, you are the ones who feed us every day. Successful agricultural profits, like most other businesses, with less regulation, fair trade policies, and educated consumer choices. There is not one country in the world that doesn’t rely on imports or exports for food and agriculture. The U.S. has built the best food system the world has ever seen by embracing change and making it work for us, not against us.

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Digging In: The Future of Food

In her speech, Lucy highlighted the remarkable growth in agricultural output alongside a surging global population and the imperative for increased production. She also discussed the impact of governmental policies, particularly concerning trade, tariffs and biofuels, on the profitability of American farms.

Lucy also dug into the transformative role of technology, such as precision agriculture and autonomous robotics, in enhancing efficiency and sustainability, and ended with the need for consumer education to understand food production and supporting informed choices.

Click here to access the transcript of this episode, and visit our D2D podcast page to listen in on our other episodes. Happy listening!

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Digging In with John Deere’s Aaron Wetzel

A key theme throughout Aaron and Lucy’s discussion is John Deere’s enduring success.

This is largely attributed to its commitment to customers, focus on quality and innovation, and doing things the right way by creating value for the customer, addressing labor challenges, and promoting sustainability through technology.

In this way, Wetzel details how John Deere has transformed itself from a machinery manufacturer to a customer-centric technology company. With proprietary technologies like See & Spray for precise weed control and advancements in automation across agriculture, turf, and construction, John Deere leverages machine learning across its strong dealer network.

Looking forward, John Deere aims to remain customer-focused and utilize AI to improve operations and help feed a growing population.

Click here to access the transcript of this episode.

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Transcript: Digging In with John Deere’s Aaron Wetzel

Lucy Stitzer: Welcome to our Dirt to Dinner podcast with Aaron Wetzel, Vice President at John Deere with their Production and Precision Ag Production Systems. Growing up on a farm in Illinois, Aaron has over three decades of experience at John Deere. He is a seasoned leader and expert in the global ag industry, holding roles across sales, marketing, finance, and product development. Speaking with Aaron, I was so impressed with John Deere’s running journey from the self-scouring steel plow in 1837 to the John Deere tractors to the company’s evolution into a pure technology company serving their farmer customers. We welcome Aaron Wetzel.

Good morning, Aaron. Thank you so much for joining Dirt to Dinner and we are very excited to have you on our podcast. Why don’t you tell us a little bit about yourself and a little bit about your introduction to John Deere?

Aaron Wetzel: I have been fortunate to work for John Deere now 37 years. I always like to say I started when I was 10, but that’s not real. I  started right in the middle of my college studies at Augustana College. I was studying accounting and became a summer student working at our corporate offices in Molen, Illinois. And that  ultimately transferred into full-time employment.

On my graduation, upon working for Deere, I started in the accounting finance function. I quickly realized that accounting was not necessarily what I wanted to do. It was a great foundation to have, but I wanted to  make the beans instead of count beans. And so I moved into the sales and marketing function and worked my way through the organization.

I’ve been fortunate in my career to work internationally. I lived and worked in Europe for a few years and also lived and worked in Latin America primarily in Brazil running our Brazil operations for several years from 2007 to 2012. I’ve worked in not only sales and marketing but in manufacturing and product development.

I’ve worked in our financial services business as a chief marketing officer for John Financial and  today I lead our production and precision ag business. So really the culmination of coming together of our equipment and technologies and how we create value for customers. And so it’s as I look back as a farm kid from central Illinois never in my wildest dreams, what I have imagined, who have experienced what I’ve experienced and lived where I’ve lived, all as a result of my career at John Deere.

That’s a great story, a great career. And so tell me how John Deere has been running like a deer since 1845. So what values have kept you at John Deere and that have also kept John Deere going for over 180 years?

I would say first and foremost is our commitment to our customer. You know, I think that’s what has enabled Deere to exist for now nearly 200 years is through the thick and thin of agriculture in the good times and the bad times, Deere is there and working to support the customers that we serve, looking at the opportunities to help create value for them and  we’ve been doing that over and over and reinventing ourselves as a company over that almost 200-year history.

I think another thing that’s important is our focus on commitment to quality and innovation. We’re continually bringing the latest in technologies to our customers and that started in even in the iron space with the self-scouring plow back in 1837 that started the whole company and we’ve been very much focused on how do we bring that innovation but it’s it’s steeped in us having a deep understanding of the customers that we serve.

As I’ve worked across the globe I also think our commitment to  what we call all the how in doing things the right way has also enabled Deere to navigate through challenging times and make sure that we’re doing the things that are right for our customers and that’s what’s kept me at Deere and it’s been an amazing journey but at the end of the day what passions me to get out of bed every morning is what can we do to help create new value for customers and as a as a farm kid myself and making decisions as growing up in the mid-80s when it was a very challenging time in agriculture farming was not an option for me to be able to be in the industry and to be able to do what we do is really rewarding.

So creating value for the customer and that means helping them become more profitable, helping them with their labor and helping them be as sustainable as possible given the times really with the new technology starting as you said earlier with the plow, you know, changing the plow so instead of just going straight through it can dig up the earth a little bit better and make it easier for the farmer.

Were there some tough years. Were there lessons that you’ve learned that have carried you through to today?

Yeah, I would say, in agriculture is a series of really great times and a series of challenging times. And  that’s been the interesting piece during my 37-year history is I’ve seen both. I’ve seen the really positive euphoric times, but I’ve also worked through some challenging times. And for our business, it’s again staying focused on what the customers need. How do we create new opportunities to deliver value for them?

I think about working in Brazil during the 2008 financial crisis and a significant change in credit availability caused a tremendous decrease in  demand for products and we needed to get creative in how we manage our business, how we manage our inventories, but also keeping in mind what customers are going through. And so with with our financial services business. How did we step in and help them through a really challenging time by offering credit available to them?

That’s I think probably in the most critical times our John Financial, the financial services side of our business has been a real key  partner in working with our customers, especially during times of hardship and being able to work specifically with customers in their specific needs and then arranging payment options that need their cash flow requirements to be able to navigate through a challenging time. And I think that’s what’s helped Deere navigate over nearly 200 years of history is that real close connection we’ve built with our customers.

I can imagine that the John Deere financial was a lifeline for customers, especially in 2008. So all of your inventions are helping the farmer become more productive as I said earlier, more profitable, more sustainable. And how did you end up just focusing on the customer? Did you make a conscious effort with your focus is completely on the customer and anything that you invest in to grow is all pertaining to the customer.

I mean it sounds so obvious and it sounds so clear but was there ever a time in your history where you veered off and you had different focus and you were focused on more on machinery or doing something different than your eye only on the customer?

Yeah, it’s been a very long journey of transformation for our company. Lucy, you said it well. You know, if I look back 25, 30 years ago, we were a very product focused company and  machines, bigger, stronger, faster, wider machines to be able to maximize productivity for a person in the cab. And we optimized our business around each of those products, whether it’s a combine, a tractor, a planter, or a sprayer.

What’s been exciting over the past few years as we’ve really doubled down on our technology stack and reorganized our company around our customers. Like today, I’m responsible for the portfolio of opportunities to serve the large scale producers in our business. So, corn and soybean producers, sugarcane, small grains, and cotton producers globally. And so now we’re optimizing our business around what does the customer need?

And it’s that combination of the technology with the product to create that value. And that’s been a real exciting time for me to see that trans information take place, but it’s also helped our business accelerate some of our developments in the technology space to create that value for customers. And really, it’s bringing that technology to help us more precisely place seed, chemical, and nutrients in a time where customers are very much focused on their bottom lines and how do they optimize their inputs.

By doing that, a more precise placement, we’re seeing customers improve their yields because  you’re doing the job better, doing the job of planting better, you’re doing the job of spraying better. And that’s continuing to propel our investments to say how do we create those values in those particular production systems that  help those customers and help us. And so that transition of just being a singular product focus to now being a customer focus is aligning our investments. It’s aligning the organization  our channel and really more deeply understanding the challenges our customers face every day in field.

And you’re really helping the customers make the world a better place, feed more people on existing land sustainably. That’s a higher purpose than just making machines. So before we go into the technology, can you just explain to our listeners a little bit about what kind of crops the farmers harvest? You know, corn, soybeans, cotton, but you also work with lettuce farmers? So what’s the broad range of farmers? And then you also are in construction and timber.

We also have a business focused on turf. So as I said earlier, we’ve we’ll separate our businesses kind of into three separate categories. We have our what we call our production and precision ag business which is what I’m responsible for in creating value for customers that produce corn and soybeans, small grains. So that would be wheat, canola, lentils primarily in Canada, Australia, the great plain states of the US, Europe, sugarcane producers primarily Brazil but also Australia and parts of Asia and some in United States. And then cotton, a fiber that is important for the clothes that we wear and produced in the US, Asia, but also in Brazil predominantly.

And so we’re creating a portfolio of products to help customers produce those crops and technologies to help them do it more sustainably and with better focus on their input. So that’s the production precision ag business. The small ag and turf business we call is really focused on dairy and livestock customers. So bailing, mowing, as well as high value crops. So that would be lettuce producers, orange producers, orchard and vineyards and we’re building out a suite of technologies that we can then leverage from our production and precision ag business into those segments to create the value for customers in a similar manner of more precisely placing chemicals and nutrients.

And in some instances it’s on our own machines, but also in a lot of instances it’s on non- Deere crops. And so being able to take advantage of the technology suite that we’ve got to create value for them were focused in that business. And then we have a turf business that’s a part of that which is commercial landscapers, homeowners, golf courses where we create a series of products that enable us to help create value for them and doing the job faster.

So, I worked in that business for a very long time in my career and on our consumer space, for example. I love having a very nice looking yard, but I don’t want to do it. So, I outsource it to a commercial landscaper that does it for me. And so, we create the machines to be able to do that for them. And then we have our construction and forestry business. So again, all the machines that are in place for earth moving.

You mentioned the timber. So our forestry business that helps harvest lumber around the globe to produce  pulp and paper. And then we have a road building business through an acquisition called Verkett that  gave us a leading position in building roads around the world.

So those I would say are the main business units of Deere today that encapsulate our global operations and then we have some supporting services like our aftermarket business so the part support that’s mission critical for our customers and then we have our financial services business that I mentioned so we really cover the gamut.

When people think of John Deere, you mostly think of farming but didn’t really realize that you were in the lawn and turf and really the timber business as well as road building.

And then in the center of all of that we have what we call our technology stack and that’s really the organization that builds and develops the leading technologies to create the value for customers that we then incorporate into each of these customer segments and product portfolios that I mentioned earlier.

Well, let’s move into technology and I think we can start with the See and Spray technology which is very exciting.

It’s an exciting technology. It’s one that we’ve been working on for quite some time. It’s really helping customers tremendously save on inputs with our technology. We’ve got a series of cameras systems computing on the machine itself. highspeed computing and machine learning capabilities that as a customer is going through the field at 15 miles an hour with their self-propelled sprayer.

We have the technology on the back of the sprayer that’s controlling the nozzle system on the boom that’s only spraying the weeds. And  I’ll use the analogy I go back to being the kid that was 8 years old in a field in central Illinois and we used to walk beans. I don’t know if you walk beans, but we walk beans to kill the wheats. And I always had this dream that I said, “Why can’t we have like a laser beam that would just shoot down the field and only kill the weeds. So I don’t have to be out there walking beans as a kid.

And what’s exciting now nearly 50 years later is the technology exists and we have machines now traversing through fields only killing weeds and that is saving our customers nearly 60% chemicals and in today’s environment that is a significant portion of their P&L and that’s really helping them save money in a time where commodity prices are the challenging and that’s helping them improve their profitability especially at this period of time.

That also not only is it saving them money, it’s also more sustainable for the environment because we’re putting down less chemicals. And so it’s a win-win from being able to improve profits, but also the environmental impact is very positive. And we’re doing that through incorporating these leading technologies into our machines ultimately to create this value for customers.

So does the customer have to program for its specific crop or does the machine just know exactly, okay, this is soy, this is corn, this is what it is, this is how much distances between the rows and knows exactly what to do?

Yeah, it knows. So, we’re spending an enormous amount of time and energy and investment to train the models. As we said, it’s got a machine learning model. So, it’s we’ve taking these machines across thousands and thousands of acres to educate the model on what’s a weed, what’s a soybean,  we train it into different crops and then once we feel confident on where that  particular performance is then we will make it available to customers.

And so right now we’re in soybeans and cotton and we intend to expand that across all of the crop segments that customers produce. And so  it takes some time to get the machine learning capabilities in place, but as it gets faster as we continue to develop into each crop because we learn from one to apply it to the next. And so that’s what’s super exciting about the technology.

It’s the pace of with which it improves and the ability for us to then take that not only to different crops but we take it to different geographies. Crops grown in central Illinois or Iowa slightly different than what we see growing in Brazil. So we need to train the capabilities for those particular applications in that and we’re doing that as well. So we intend to take this capability not only across crops but across the world in terms of offering to customers

Is there something or someone on the tractor monitoring them, making sure that they don’t veer and go astray?

Yeah, so these are it’s designed for a self-propelled sprayer. So, it’s a dedicated machine form that does spraying. You still need to have a person in the cab that’s operating the product, but we have other technologies that are enabling customers to do things in an autonomous way.

And that’s another key pillar of our strategy going forward from a technology perspective to help address some of the challenges customer face and that’s tough.

We’ll talk about the automation in a little bit. When you’re spraying, one question one would have is: is there drift a little bit over to the crop so the crop has to be Roundup Ready or it has to have that, as well?

So there are there are special nozzles that we have that help reduce drift. Drift is a concern for many customers. We have a pulse width modulation system on our sprayers that increase the droplet size so that it reduces the drift and we’ve launched that technology probably about 10 years ago that  is now widely used by our customers and it really addresses that concern you just had around drift because there are some chemicals that are very concerning for customers in terms of drift.

Let’s say you’re spraying  Roundup Ready soybeans and you’ve got a corn field next to you. You got to make sure that reduce that drift otherwise you’ll have a negative impact. So our technologies and our products are positioned for customers to be able to do that to the best of their ability.

And then how about nutrients? Does the same machine do nutrients as well?

Nope. We will be able to do nitrogen and you can do a myriad of other opportunities but  those are still in development but today it’s really focused on glyphosate and other weed management chemicals.

So you were talking about when you were younger and you were walking through soy and you were spraying the weeds and you thought well wouldn’t it be great if there was a laser that would get rid of weeds. There are some tractors out there that have robotic weed pullers and I don’t know have if the laser is available but is that something you’re moving towards is eliminating the weeds without any spray?

We see those opportunities. A lot of startup companies today that are looking at mechanical weeding solutions. A lot of those are primarily focused in the European markets. We have not specifically targeted any investments in that space primarily because the productivity of those machines for the customers that we want to serve in our primary markets like the US and Brazil and corn and soybean producers whereas the main lead investment areas for our technologies.

It’s really not hitting the productivity levels that those customers are looking for. So, we’ve really started, we’ve really stayed focused on the CN spray and the machine learning and the cameras and the computing capabilities that deliver on that productivity that those customers are looking for.

So, now let’s move on to automation. I was at a conference somewhere and someone was on their phone and he’s like, “Yeah, I’m farming my field.” And I was like, “Wow, that’s interesting.” So, he was on his phone and could program his tractor. So that’s what you see as the future is farmers can stay home and have a nice dinner and their tractors will just be moving through the fields 24/7?

Yeah, it is  definitely a vision we have for our future and what customers are able to do. You know, if we think about our customers we serve today, labor is becoming a greater challenge for them. Finding qualified labor to do the work and because of that we’ve really made some investments in automation of jobs so that you can put less qualified workers in the cab, but also in fully autonomous solutions.

 And that’s what’s exciting is to see where we’re going with this technology opportunity to really create a whole new opportunity of value for customers. And that’s getting the operator out of the cab over the long haul. Not only are we doing that in our large ag customer space, we’re doing it across the portfolio.

And I don’t know if you saw the most recent consumer electronic show that we participate in where we showcased our focus on autonomous solutions not only for our large ag producers but for orchard and vineyards and for our construction customers. And what the unique opportunity Deere has is we have this centralized tech stack that is developing the capabilities and then we take that and leverage it into the various customer applications.

And so there we had the same technology opportunity move from large ag producer We had the same camera systems and computing capabilities on a small zero turn mower for a commercial landscaper. We had that same technology stacked into an orchard and vineyard application for customers to blast spray or mow through the vineyards and orchards.

And then we had an example of that same technology being applied to earth marine business with dump trucks being autonomously maneuvered through a job site. And so that’s the power I think of what Deere is able to provide is making some investments around one customer segment but then leveraging that across many and creating a whole new stream of value for them.

That’s incredible. So you have the same technology for a lawn mower that you do for a huge combine and then for cutting down trees. And how is that programmed and how do you teach the machine what to look out for or what not to run into where to go? And you’re using satellite imagery or using Blue River technology?

So, we’re using an acquisition that we made back in 2017, Blue River. It is a machine learning capability that combined with the camera system that we’re developing to place on each of the machines, those images that are being captured, we’re really looking at what’s in front and around the machine. And  if we see people or animals, we stop and then determine if the area is now free and then allow the machine to proceed forward. And again, like I talked about in the CNS spray opportunity where we’re educating the algorithms to discern what is weed and what is crop in all of the various crops.

We’re doing the same thing from an autonomy perspective to learn more about what do obstacles look like in a corn field, what do obstacles look like on a golf course, what do obstacles look like on a job site. So that we educate that to understand when those obstacles arise, stop the machine. and then allow it to clear and then allow it to be. And so that’s really the work that we’re doing, not too dissimilar from what automotive industry is doing.

And I think what’s unique is we’re sharing a lot of the same challenges automotive has, but we’re also having additional complexity because we’re doing jobs. We’re not just moving people from point A to point B. We’re out tilling the soil. We’re planting the seed. We’re spraying the crop. We’re  mowing the turf. So we’ve got to also ensure that the job is being done to the level of satisfaction that the customer expects and that’s an additional complexity we have in this whole new autonomous world.

I think that’s just absolutely incredible and I think you’re way more advanced than automated driving because driving you have all these nuances. What does the stop sign look like? What if the stop sign is bent…is it still a stop sign? You have to put so many other inputs into the driving aspect, but you still have a lot of inputs on the farmer.

The difference between a farm and my backyard and the golf course – there’s just a huge variety. So, the technology, did you have to buy or acquire or hire a lot of programmers to do this? I mean, how did you come about just going from making a machine, thinking about a great engine to now programming the machine to do everything that one can do without someone sitting in the cab?

It’s been a journey building the technology capabilities I would say over 20 plus years. It started with initial investment we made in a company called NavCom in 1999 that gave us the global positioning capabilities to drive really basic what we call autotrack and that was just driving the machine straight through the field and reducing the overlap of the implements that increase productivity and then we fast forward to today or in the near term where we talked about the Blue River acquisition in 2017 that gave us machine learning capabilities.

In 2019, we bought a company called Bear Flag that also was working in the autonomy space and in 2020 we purchased a company called Harvest Profit that helps customers identify really their P&L income statements for their operations and that those are some of the basic tenants of  elements of our technology stack in addition to our own development opportunities of us going out and hire ing software engineers to do the work of embedding a lot of the electronic capabilities into the machines.

Building the capability of getting the data from the field into the cloud and then  a team of folks to help us analyze the data and help support customers in decisioning and managing their operations from their phone. And like you mentioned at the very beginning of this question, I’ve been in numerous conferences where the customer I’m talking to will show up with his phone. He’ll say, I’ve got my operations going on. And they’ll open up their operation center and they’ll show me where their tractors are and their combines and what they’re doing. And it’s changing the game for many of our producers that they don’t need to be in the farm every single day. They can do it remotely.

And so it’s really freeing up their time to do other things that are more  productive for them or more value added for them. But it ensures that the job is still getting done. We’ve really, I would say, been on a very long-term journey that we’re accelerating here. within the past five or six years but  and we’ll continue to accelerate that as we see more and more opportunities for customers.

So what are you going to do with artificial intelligence and how are you going to utilize that going forward? I mean you certainly are using it to an extent right now for machine learning and trying to program the machines for today. But what do you do with all the data and how do you do any predictive analysis or where are you taking that?

AI is relatively new and I think companies are trying to figure out exactly how to make the best use of it and what questions to ask and again how to do predictive analysis. We are at the forefront of our artificial intelligence. You know the key opportunities that we see right now is how do we help do the job better.

You know the See & Spray capabilities, the autonomy capabilities, other automation of job steps is another application for us to take advantage of. You know you mentioned about the customer’s data. We’ve been very firm in saying that the data that that we’re collecting is the customer’s data and so they choose who they want to share that data with and we enable that sharing of data to happen but it’s all at the decision of the customers.

where does AI go in agriculture? I think we’re still trying to figure that out. We have an enormous amount of data and insights and so how do we help customers at the end of the day make better decisions in their operations? How do they better optimize their machine performance? We have an enormous amount of data just on the machines themselves. in terms of regular maintenance  engagement with their dealer.

We have data around the execution of the job and ultimately the yields that come out of all of those job steps during the course of a growing season. And so we’re starting to work with customers to say what are you looking for in your future? What are the problems that you’re facing? And how can we work with you with the data to help solve those problems? And I would say we’re at the infancy of that right now, but it’s definitely going to be impactful for customers. And it first starts with building a robust data set that I think we’re uniquely positioned to have to be able to then create those insights for the long term.

I would think it would be helpful when it comes to variant weather patterns, flooding, droughts, you could reprogram or you’d have to reprogram your machine to adhere to very wet circumstances but still get the same yield that you would want to get for just a regular year.

Yeah, it’s interesting. We just were at a recent farm show and using the data in a macro level, we’ve actually been able to help educate customers that if you plant soybeans earlier, it actually has a positive impact on yield and by 5%. And so, and that’s meaningful for producers, especially in today’s environment, that just the day or the planting window that you start  has a meaningful impact on what your actual yield outcome is.

And we’ve done that based on  us looking at the data to say, “Hey, there’s an opportunity here, customer, for you do something different. And that’s one example of how we’re using data to help customers do the job better.

Or if it’s a very wet spring and it’s planting season, maybe you would reconfigure the tractor to plant differently. So, why would a farmer choose John Deere over your competitors? You’ve given us all sorts of advantages, but your competition must be doing some of the same things that you’re doing.

That’s a great question, and I have a great deal of respect for the competitors that we compete with in our industry. You know, we’re all out trying to serve our customers, but I think why the customers choose Deere and I think it’s really a combination of several factors.

One, it’s the quality and the performance of our products that are in the field day in day out. It’s the technology that we have incorporated into those machines. It’s the seamless flow of data into the John Deere operations center that helps them manage their operations more efficiently and effectively. And I think the final piece is really around our dealers and the dealer network that we’ve established around the world is I believe second to none in terms of how we support our customers in the field.

And at the end of the day, we can have all the great technology and we can do all great things, but the machine has got to work in the field. And that’s what our dealers do every day is ensure that the customers have the product and the technology they need to do the job. And they’re there if something happens, they reduce the downtime and ensure that customers are up and running, especially during critical times during the course of the year, planting, harvest, spraying, and customers rely on those dealers. They’re one of their trusted advisers.

So, I think that combination of product, technology, and channel really differentiates Deere in the markets that we serve, and that’s what helps us garner the support from customers, and I’m very thankful for the customers that do business with us.

Is there any question that I didn’t ask you that you would like to answer or leave our listeners with any other key insights?

You know, I say deer’s been around for nearly 200 years. We want to be around for at least another 200 years and we’re going to do that by staying maniacally focused on the customers and how do we continue to reinvent ourselves year-over-year to understand the challenges that customers face.

We’re committed to make the investments necessary to create that value for them. We want to continue to be their trusted partner on this journey of helping them create the value in their operations. We want to do that through the products that we create, the technologies, and the combination of those together supported by our channel that at the end of the day gives them the confidence they need to do out and do the job.

And especially in challenging times, we’re there for them to  help them be more productive and more sustainable for the future. And at the end of the day, we got a growing population to feed and we want we are excited to be a part of that and more importantly to partner with our customers to make that happen.

Well, thank you very much, Aaron, for making the world a better place through our farmers and through sustainability and having everyone have a better yield and enable us to feed a growing population on existing land. We won’t need to put more land under plow because of John Deere.

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What Are Consumers Doing about Food Costs?

The U.S. Department of Agriculture’s Economic Research Service (ERS) in late February announced an expected increase in at-home food costs of 3.3 percent for this year. That’s well below the roughly 11 percent hike we saw during the Covid peak.

But 3.3 percent is still well above the less than 2 percent increase in 2024 and the comparable 20-year average of food price increases.

The simple message behind all the numbers: consumers can expect the cost of their food to continue rising. It is in the news everywhere: “Food Prices are Rising Again” at the Wall Street Journal, “Why are food prices still high, five years after COVID?” on Axios, “US Inflation Seen Elevated in February, with higher Food Prices,” at Bloomberg, and “Foods to stock up on before tariffs raise prices again” at the New York Post…everywhere we look, there’s a headline about it.

The message didn’t surprise me as much as start me thinking.

I’ve read report after report from various government agencies and scholarly tomes on why costs have gone up, and even a few marketing reports about altered consumer behaviors.

What about us?

But what about the ordinary everyday food shopper?  What do he and she really think, and how have they responded to the food price inflation and spot shortages and other disruptions along our food chain?

Overall food prices rose 23.6 percent from 2020 to 2024 – almost one quarter.

USDA projects another 3.3 percent in 2025.

Source: USDA, Economic Research Service (ERS) using U.S. Department of Labor, Bureau of Labor Statistics, Consumer Price Index data; and forecast from the ERS Food Price Outlook data product.

We’ve been fighting this battle since Covid. So the real people I live with have had time to adapt.

How have they changed the way they think about the food they buy, and what they actually do when it comes to selecting the food they serve their families?  Not the cold, sterile language of some government bureaucrat with acres of spreadsheets and mountains of data, or someone in an ivory tower focused on economic theories, or some VP of Marketing in Manhattan with grand plans for profitably accommodating the food-buying masses.

Real, everyday people.

So I started asking my own questions of a random collection of people I encountered in my own food forays. I asked simple questions and then just listened to what an incredible array of different neighbors and strangers had to say – men and (mostly) women, young and old, affluent and the paycheck-to-paycheck set. What I heard was illuminating.

I offer my observations from this effort for whatever you choose to make of it. I don’t pretend it is a comprehensive, serious academic exercise, or to boast a sample size that can be defended as statistically valid.

It’s what real people of all stripes had to say about how they go about buying the food their families need, from one miniscule slice of the Great American Public here in the mid-South.

But maybe you can see something of yourself or your community in what these folks had to say. And maybe Dirt to Dinner will ask people in other places what they have to say, too.

Q1: How often do you shop for food?

Responses varied widely. Shoppers for families generally said weekly, single consumers said several times per week but not daily.

  • I don’t just drop in the store as often as I used to. I go when I need to.
  • I go every two weeks. It’s a lot to spend, but that way I can discipline myself more to manage how much I spend. I have a list either written down or in my head and I stick to it.

“I’ll make a big buy every week or so, and just drop in if I need something specific, like milk or a loaf of bread. But not for a big buy.

And I don’t get side-tracked… in and out.“

Q2: How much do you spend on average – each trip, over a week, or a month?

The Bureau of Labor Statistics in 2023 estimated the average consumer spends $6,053 per year on food – or $116.40 per week.

Our responses varied, according to the individual circumstance, but answers of $100 to $200 per week per person were typical.

  • It’s just me. But I still seem to spend $100-200 a week.
  • I’ve got a hard-working husband and a teen-age boy and girl. Spending $800 or $900 is nothing, and that’s being very, very careful in what I buy.
  • I can’t come in here without spending at least $80. and that’s just for a little.
  • Depends on how many of my son’s friends he brings home at supper time.
  • Oh, I don’t know a specific number. I just know it’s the biggest part of what I have to spend.
  • $116? Please tell me where those people live.  

Q3: How much have your food costs changed, especially since COVID? A little, a lot, how would you describe the increase?

Consumers thought less in terms of specific numbers than one big idea: they’ve gone up a lot.  When pressed for a number, most said 20-30 percent, and some as much as 40.

  • At least 20-30 percent.
  • Forty percent? Maybe more.
  • Seems like it’s up at least half since Covid.
  • How much? I don’t know. But it’s a lot, I know that.  I see it at the check-out every time I come in here.

Q4: How much has it affected your household budget? Is food taking up a bigger share of what money you have available, or have you cut back on how much you spend on food?

Food has become a larger share of household budgets – sometimes substantially so. Feeding the family remains a priority.

  • I’m spending more and more of my budget on food. It’s at least a quarter of it.
  • It’s not an option. My boys have to be fed, and they eat a lot.
  • We used to buy what we want. Now we buy what we need.
  • I try not to think about it. But I know it’s more all the time.

“I pay more now for food than I do on my mortgage.

It costs me more to feed my family than to put a roof over their heads.“

Q5: Has it changed the way you shop – the foods you select, the brands you choose, how if at all?

Rising food costs have prompted a major shift away from spontaneous, impulse buying toward a much more planned and thoughtful approach to shopping.

  • Mostly I look for sales. If it’s a good deal, that’s what we eat.
  • I look for cheaper or other kinds of meat… a lot more chicken, and maybe hamburger instead of better cuts of beef.
  • Meat-free meals? Not with two teen-age boys.
  • I go with a lot more of the store brands than I used to.
  • If you don’t plan it out, you’re going to spend a lot more. If you don’t plan it out, it’s going to be difficult to stick to any budget.
  • If you don’t have a list and stick to it, you’re in trouble.

Q6: What are you doing to stretch your food dollar?

“Shopping smarter” was a universal response, but far from the only one. Cheaper cuts of meat and protein was another.

  • I pay attention to the ads. I’ll go to more places to take advantage of sale prices, not just one store.
  • I use coupons a lot more than I used to.
  • I’ve cut back on things that really aren’t all that important to feeding my family – you know, impulse items like all that stuff at the check-out, and things that I normally don’t buy.
  • I’ll still buy the brand names. But they better be on sale.
  • I’m buying a lot more in bulk – potatoes, rice, beans, that sort of thing – and doing my own cooking. I’m going back to the Granny way of doing things.
“My home garden gets bigger every year.“
  • We eat the left-overs, even if it’s just a little. We waste a lot less food than we used to.
  • We always talked about using left-overs. Most often, we would push it in the back of the refrigerator and take it out when it turned green or blue and throw it away. Now we talk a lot less about our good intentions and actually try to do it.
  • I’ve got family in Iowa who farm. I have them send me meat. Even with shipping it I come out way ahead… just cut out that guy in the middle.

Q7: Do you expect prices to hold relatively steady, go up or go down in the coming weeks and months?

These consumers are cynical – or conditioned by almost five years of food cost increases.

They seem resigned to costs that will continue to rise – and rise substantially.

  • What do you think? Of course they are going to keep going up. Nothing I can do about that.
  • All depends on inflation.
  • How much more? I bet in three years they are up 30 percent from today.
  • Why will they keep going up? I don’t know. They just will. It’s not just food. It’s everything.
  • Depends on what Donald Trump does. He said he would bring food prices down. When are we going to see that?

Q8: Who is responsible for the run-up in food prices?

Responses were varied, with “the middleman” earning the most common response.  Farmers got a universal free pass.

  • I don’t know any one thing. It’s probably a lot of things.
  • Probably the big food manufacturers.
  • I know it’s not the farmer. I know farmers, and they aren’t getting rich right now.
  • Seems to me like the spirit of greed is alive in the land.
  • Anybody who thinks it’s the farmer is just wrong.

Q9: How often do you go out to eat? How much do you spend on food away from home? 

Eating out is still popular, but a lot more thought and planning goes into it.

Rising dining-out costs make it a bigger event than before, and if the cost is too great, people cut back or stay home. 

  • We’ll go out on weekends now and then, but not during the week. And we try to leave the kids home when we do. That saves us a lot of money.
  • We think about it before we do, and we look at how much it’s likely to cost. If it’s too much, then I just fix food at home.
  • Going out is more of a special event for us now. But we still do it. We don’t just get in the car and head out anymore without planning a bit.
  • Sometimes you just have to go out. You’re tired or busy or whatever. But you don’t go off the deep end with it, unless it’s a special occasion. And I mean special.
  • We still go out once a week or so. But we think about it more. We go to places we know we can bring food home if we don’t eat it all… not the fast-food places anymore. And it’s probably better for us, too.

“I like going out to eat. But I make sure my boyfriend pays.“

What did people say?

So what are my headlines from this non-scientific exercise?

  • My friend and neighbors think more about what to purchase and plan ahead to make smarter decisions about what to buy. They make food shopping even more thoughtful than before, and they look to avoid impulse buying.
  • They adopt a remarkable array of ways to save money and shop smart. Some use coupons aggressively. Shopping the sales at multiple retailers was a frequent practice. Cheaper alternative cuts of meat is a common responses. Buying more food in bulk and more in-home food preparation came up again and again. Growing more food in the home garden also is popular in this part of the world.
  • They still go out to eat. It’s a fact of modern life. But they increasingly think about it more, plan ahead and look for good deals. They think about the total cost before hand.
  • They focus a lot more on reducing the amount of food they waste. Eating more of their left-overs was an almost universal comment.
  • They continue to worry. Maybe it’s the explosion in egg prices that have rocked my area, but the people I spoke with seem resigned to continuing food price increases. Food cost inflation, to them, is the new norm, not an episode.
  • They don’t know who to blame. But they definitely don’t blame the farmer or rancher.
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Why are biofuels important?

Biofuels have become an increasingly important component of both U.S. agricultural and energy policies, with reaches in farming, sustainable energy production, and food security.

Building on our biofuel podcast with Colin Murphy of UC Davis and our sustainable aviation fuels article, Dirt to Dinner will look at the complex biofuels story with a new series of articles on the subject. Let’s start with the basics…

What are biofuels?

When driving your car, you might picture your engine consuming ancient crushed plants and sea creatures as the fuel bringing you to your destination. But do you also picture your engine burning liquid corn?

Biofuels are a sustainable fuel that affects all aspects of transportation.

Biofuels are a petroleum-alternative fuel that gives you the ability to drive, fly, or receive your Amazon delivery while using corn, soybeans, algae, beef tallow, or even used cooking oil as fuel in the gas tank.

Biofuels capture the solar energy that drives photosynthesis in plants and ultimately, animals, and converts it into energy. Emitting fewer carbon emissions than petroleum, the stock materials for biofuels are referred to as “biomass.”

Corn and soybean oil are major sources for the raw material needed to produce biofuels. But myriad other materials can also be sources of biomass, including wheat, sugarcane, canola and other naturally grown renewable crops and products.

What are the types of biofuels?

Biofuels are made into two products: ethanol and jet fuel.  Ethanol is made through fermentation, mainly from the sugar in corn and some plants. Diesel is made from fats in cooking oils, animal fats, and oilseeds.

The U.S. Energy Information Administration (EIA) notes these primary types of biofuels:

  • Ethanol: an alcohol fuel blended up to 20% with petroleum gasoline for vehicles.
  • Biodiesel: a biofuel usually blended with petroleum diesel for consumption. Biodiesel can be made from a variety of oily materials, animal fats, vegetable oils, recycled cooking oils, even algae. Regular diesel engines can handle up to 20% of biodiesel. This category represents the second-largest share of U.S. biofuel production and consumption at 9 percent in 2022.
  • Renewable diesel: a fuel chemically like petroleum diesel fuel used as a drop-in fuel or a petroleum diesel blend. This means that it can replace 100% of petroleum diesel without damaging the engine – and it doesn’t freeze. A bonus in long, cold winters. It accounts for about 8 percent of total U.S. biofuel production and 9 percent of consumption (2022).
  • Biogas: a fuel that can supply the power grid. This process breaks down material such as agricultural waste, manure, municipal waste, sewage, and food waste with an anaerobic digestor to create methane. This is like natural gas and is used as such.
  • SAF: a sustainable aviation fuel that comes from corn, oilseeds, algea, fats, oils, and in the future, garbage. These ‘feedstocks’ are used to replace Jet A engine fuel. Today’s jet engines can only take on 50% of their fuel as SAF without changing their configuration. Right now, the market is not even 10%.
  • “Other” biofuels: a catch-all grouping that covers such things as renewable heating oil, renewable naphtha, renewable gasoline, and other biofuels that are in various stages of development and commercialization. Biomass is rich in the complex hydrocarbons that characterize jet fuel and other products.

The biofuels industry often refers to the evolving mix of types in terms of “generations”.  First generation biofuels are made from edible biomass. Second generation biofuels are derived from non-edible biomass, including rice husks, straw and even sawdust. Third generation refers to algae biomass, and the fourth algae that is genetically engineered specifically for biofuel production.

How are biofuels used today?

Biofuels are used as energy sources, most commonly but not exclusively in transportation-related fuels.

The ethanol blended into gasoline probably is most visible and recognized biofuel for the average person. Some form of biofuel has been around almost from beginning of civilization, but the modern biofuel world has been built around the development of the internal combustion engine.

Ethanol was first used as far back as 1826 to power an engine, and its production actually taxed by the federal government to help fund the Civil War. It also proved to be an attractive fuel source during the 1920s and 1930s, and especially during World War II to help contend with gasoline shortages. (For additional detail on the history of ethanol, visit the Energy Information Administration at https://www.eia.gov.)

Beginning in the 1970s, anyone remember those long gas lines during the OPEC oil crisis?) and through to today, rising petroleum costs and ambitious environmental objectives have helped fuel legislative efforts to expand biofuels and in particular ethanol. Because of air pollution, and today’s global warming, numerous scientific and environmental groups made reduction in the use of fossil fuels a top priority.

For example, comments made in Science Direct seemed to summarize the case for finding alternative sources of energy – and the reasoning behind public policy that supported development of a viable ethanol industry:

Over 80 percent of the world’s energy requirement was met by coal and natural gas in 2014. The 2014 United Nations Environment Emission Gap Report estimated that the road transportation sector produced 54 gigatons of greenhouse gases that year and is expected to produce 87 gigatons of greenhouse gases by 2050, posing a threat to public health, transportation, and the environment.

Government-mandated use of ethanol has driven a steady expansion in ethanol demand. At this time, as much as 82 percent of the biofuel produced in the United States is in the form of ethanol, with 72 percent added gasoline for vehicle use. The remaining uses of ethanol are random categories such as solvents, cosmetics, pharmaceuticals, antifreeze, plastics…the list is endless.

Further growing biofuel’s demand is its utility in the energy space. Bioenergy helps generate heat and electricity, with sources generating an estimated 150 gigawatts of power in 2023, according to Statista. That’s the same amount of wind-power generated in the United States in 2023. Or to use a transportation analogy, the same power generated by 620,000 base-model Ford Mustangs!

A Growing Market

Crude oil daily production averaged 13,228 barrels a day in 2024 with biofuels accounting for 1,375 barrels, an uptick from 2023’s 1,299 and 2022’s 1,203 barrels.

In 2023, over 98 percent of U.S. gasoline contains at least 10 percent ethanol, representing about one-tenth of the fuel used in all U.S. vehicles.

Analysis by the consulting firm McKinsey predicts demand for sustainable fuels will quadruple by 2050, with the sustainable fuel making up as much as 37 percent of all energy used in the transportation sector.

The USDA estimates the value of exports of U.S. biofuels in 2024 reached $5.1 billion, with a three-year average of biofuel exports at $5.2 billion, with most going to Canada and Europe.

Fuel ethanol accounted for the largest share of gross and net exports of biofuels. But the value of biodiesel and blends enjoyed a noteworthy three-year average of $1.3 billion.

The University of Michigan’s Center for Sustainable Systems projects annual increases in biofuel demand in the range of 10 to 11 percent. 

Grandview Research analysis placed the size of the global biofuel market at $99.5 billion in 2023, with an expected compound annual growth rate of 11.3 percent from 2024 to 2030.  Grandview estimated the U.S. biofuel market at $31.93 billion in 2023, with a CAGR of 11.8 percent between 2024 and 2030. 

In plain terms, the biofuel market is huge – and growing.

The Global Perspective

The rising global concern over climate change also helped spark an increase in use of biofuels around the world. The biggest biofuel-using countries all around the world are the United States, Brazil, Canada, and most European countries, Australia, China and Thailand.

The enormous productive capacity of the U.S. agricultural system has become a major factor in meeting the rising global demand for biofuels. Brazil also is a major player in global biofuel production and trade, capitalizing on its enormous growth in production of crops, notably soybeans.  (Soybean oil is an especially important source of biomass.)

In our next look at biofuels, Dirt to Dinner will dive into the importance of biofuels for American farmers – the increasing proportion and variety of crops going for biofuel production, and the economic implications of that market growth. 

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Avian Flu Drives Soaring Egg Prices

Let’s set the stage with a scene from a modern marriage:

Me:  Honey, your birthday is next week, and it’s a big one.  Let’s do something really, really special to celebrate.

My wife:  Sounds great!  What do you have in mind?

Me:  Well, I was thinking of taking you out and buying you the biggest omelet in the city. Three, four, maybe even five eggs.

My wife:  Really?  Are you sure we can afford it?

Me:  We’ll find the money.  And besides, I’ve been putting a few bucks aside every week for the past three months just for this.

My wife [eyes filling with tears]:  Oh, my dear, dear husband.  Do you love me that much?

Me:  Yes.  Yes, I do. 

That scene isn’t as far-fetched as it sounds.  Eggs are one of the protein staples of the modern diet, with Americans eating about 23 dozen eggs each year. They have soared in price as a nasty strain of avian flu has led to the death of millions of hen layers and other birds across the United States and the rest of the world.

The most pernicious form of avian flu, known as H5N1, is devastating to affected birds.  Mortality rates can be as high as 90-100 percent. Even milder forms of the flu can lead to significantly reduced egg production. And with lower yields come reduced supplies and higher prices – per-dozen egg prices now at an average of $4.95…and anticipated to climb 20 percent higher as we move further into 2025.

As noted by www.moneynotmoney.com:

“The absolute price of eggs has increased by $1.54 (80.63%) in the last decade, and $2.61 (310.71%) since 1980.

Even when adjusting prices for inflation, egg prices are still higher than they were in 1980. And not just a bit more expensive, we are talking about a significant increase no matter how you look at it!”

How widespread is avian flu?

A form of avian flu, called highly pathogenic avian influenza (HPAI), was noted by USDA’s Animal and Plant Health Inspection Service (APHIS) as far back as February 2022.  This particular H5N1 strain was first noted on March 25, 2024, and has been growing ever since.

Last December, USDA said that since 2022 the bird flu had been detected in more than 125 million birds across 569 counties in all 50 U.S. states, in both commercial and private facilities.

On January 23 of this year, USDA further noted that an additional 98 flocks had been infected in the past month alone, with another 15 million birds affected.

Data from the Centers for Disease Control (CDC) also point to the enormous effect of the disease – citing 1,572 reported outbreaks across 641 counties, with 159,307,978 affected in poultry flocks and aquatic birds.

The United Nations says the bird flu has caused the deaths of more than 300 million birds worldwide – involving not just laying chickens but ducks, geese and other kinds of birds as well.

Why are egg layers more at risk than broiler chickens?

The avian flu virus can afflict both egg layers (hens that lay eggs) and broilers (chicken produced for your dinner plate) produced for meat.  But so far, the disease has been most damaging to layers, since they live for much longer: a healthy laying hen will start to produce eggs at around 18 weeks old and, on average, five-to-six more years following.

USDA reported in January that avian flu HPAI has been detected in commercial broiler flocks in three states – Georgia, Maryland and Virginia.

Broilers also face rigorous testing by APHIS before they leave any farm and additional testing when processed.

The damage to broiler flocks so far has been small enough that supplies closely match demand – meaning minimal price effects. Broiler meat prices are up only about 1 percent from a year ago.

Avian flu’s migration beyond birds

To add to the complicated picture, the virus also can affect other animals.

Infection among 929 dairy cattle has been reported across 16 states, with more than three-quarters in California. Isolated and small numbers of infections have also been reported in cats, pigs and even an alpaca.

By any measure, it’s a devastating disease, with resulting concerns about not just the cost of eggs but also the risk to humans and other mammalian species.

Scientific American notes that CDC reports that 67 human cases of H5N1 have been confirmed, most involving mild symptoms. (One case involving the death of a patient with underlying health issues has been recorded in Louisiana.)

CDC notes that such cases involve direct contact between the human and an infected animal, including cows. Cows pass large amounts of the virus in their milk, but pasteurization has been shown to kill the virus.

Is it safe for us to consume eggs right now? Fear not.

As Good Housekeeping reported: “The risk of getting the H5N1 bird flu virus from eggs is minimal to none, and safe storage and cooking of eggs reduces any potential risk,” says Geeta Sood, M.D., ScM, assistant professor of medicine in the Johns Hopkins Medicine Division of Infectious Diseases at Johns Hopkins University in Washington, DC.

What does all this mean for egg prices?

We eat a lot of eggs. USDA’s Economic Research Service (ERS) notes that per-capita egg consumption in the United States averaged 284 eggs in 2024.  Before the pandemic, the numbers were even higher – in the range of 294.

Swings in egg prices are nothing new.  But the most recent increases have been abnormally high, at a time when high food inflation has been a hot topic among consumers and politicians.

Both Joe Biden and now Donald Trump have made control of food price inflation a major goal. The devastating loss of layers – and the significant costs of decontamination, implementing stringent new safety precautions against disease and rebuilding flocks – are adding to the economic pressures facing producers across our food chain.

That’s a Lot of Eggs…

U.S. table egg production totaled 92.6 billion in 2022, a 3 percent decrease from 2021.  The U.S. had 308 million commercial laying hens at the end of 2022, down 4.5 percent from 2021. The daily rate of lay averaged 82 eggs per 100 layers in 2022. On average, each laying hen produces 300 eggs per year.

Meanwhile at the grocery store…

The Bureau of Labor Statistics (BLS) reports that average egg prices in January increased a whopping 19.5 percent from December, rising to an average of $4.95. “This was the largest increase in the eggs index since June 2015 and it accounted for about two thirds of the total monthly food at home increase (in food inflation),” according to BLS.

A local supermarket worker described the retail situation in simple terms: “Eggs come in on Friday’s truck.  By Monday, they are pretty much gone.”

But buying that dozen eggs at the supermarket is only one way the avian flu is contributing to higher food costs.

Eggs are a key ingredient in many prepared foods and an extremely popular food eaten in restaurants, diners and other out-of-the-home dining. Higher egg prices inevitably are passed along in all these venues, adding to the poor consumer’s economic woes.

What’s being done about it?

Avian flu has generated extensive interest from farm to consumer, with a variety of responses.

Layer producers deal with the threat of avian flu with a carefully tiered series of steps worked out with federal and state authorities.  When the avian flu is detected, the first step is to quarantine the flock and any equipment that may be around the birds. The flock is then humanely euthanized.

The farm where diseased birds were found is thoroughly disinfected, and the entire farm tested for 21 days to confirm that it is free of the disease. The surrounding area also is monitored and tested for the disease.

The farm community has aggressively sought to get ahead of the disease with extensive prophylactic actions, careful monitoring and testing, and even the personally painful and economically difficult decision to eradicate entire flocks.

Media and industry communications also have sought to raise public understanding of the complex issue and the steps being taken to assure a safe food, in order to avoid over-reaction.

Scientists in various government agencies and the private sector continue to work on understanding the disease and effective methods to combat it. Some of the most aggressive efforts have been focused on development of an effective vaccine against avian flu. That’s not a new idea. But it’s proven to be less straight-forward than it might seem on the surface.

Various avian flu vaccines have been developed since the first avian flu outbreaks in Southeast Asia in 2001-02 and have been used in countries around the world, with mixed success.  For example, China and Egypt have used vaccines against the disease, although recurrent outbreaks still happen.

Research in the United States also has produced encouraging results, with one HPAI vaccine produced by Zoetis in February received conditional approval from USDA’s Center for Veterinary Biologics (CVB).

H5N1 & trade implications

But the widespread use of vaccines against the avian flu remains a highly contentious issue. The major reason: use of vaccines could trigger import restrictions for poultry among foreign customers.

Existing and long-standing trade agreements contain stringent requirements for what can and cannot be present in imported foods. Such requirements have been actively used around the world both as a food-safety precaution – and frankly, as a means of protecting national industries.

U.S. agriculture knows this phenomenon all too well.  Poultry industry leaders and politicians have been wary of rushing to vaccines, preferring to emphasize prophylactic measures instead.

Poultry is the most-consumed livestock product in the world.

The United States is the world’s largest producer and second-largest exporter of poultry meat. According to USDA data, U.S. broiler exports over the past decade have averaged 7.1 billion pounds per year. USDA’s Foreign Agricultural Service (FAS) estimates the three-year average of poultry meat and products at $5.66 billion.

Egg exports, including both shell eggs and egg products, last year exceeded 234 million dozen. The three-year average of egg and egg-product exports from the United States is $741 million.  Farmers today need the income that comes from poultry and egg trade.

Statista notes that the United States imports about 15 million dozen eggs each year, compared to exports of almost 16 times that amount – and more compared to some other market analysis. Part of the disparity can be traced to simple matters of handling and consumer reaction. In the United States, eggs are carefully cleaned and refrigerated, while most of the rest of the world prefers to leave eggs unrefrigerated.

How long will this go on?

One of the oldest adages in economics (and especially the agricultural world) reads: “the cure for high prices is high prices.”

Egg prices are most likely to moderate when the layer industry has had time to adapt to an extraordinary set of challenges. New facilities must be built and existing ones cleaned, sanitized and modernized with the latest and best sanitary equipment.

Aggressive and where possible better disease control practices must be implemented.  High egg prices perversely provide the economic incentives to prompt all those actions.

There also is the issue of the time needed to rebuild flocks.  Replacing lost layers will proceed when the remedial protective actions have been completed.  It makes no sense to invest in more animals if the proper precautions have not been taken. And once they are replaced, it will take months for the new birds to begin producing eggs.

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How Will Tariffs Affect Overseas Trade?

Click Play to listen to our generated podcast. Click on links for transcript and our full podcast library. 

 

As we dive into the complex world of ocean freight’s role in U.S. food imports and exports, it’s clear that the agricultural trade and transport landscape is facing some pretty choppy waters ahead.

The Current State of U.S. Agricultural Trade

Before we delve into the potential impacts of new tariffs on ocean transport, let’s take a snapshot of where U.S. agricultural trade stands today.

According to the latest data from the U.S. Department of Agriculture’s Economic Research Service (USDA ERS), U.S. agricultural exports for fiscal year 2025 are forecasted at a whopping $170 billion.

That’s a lot of soybeans, corn, and beef making their way to dinner tables around the world.

On the flip side, we’re also bringing in quite a feast from abroad. U.S. agricultural imports for the same period are projected to reach $212 billion.

From avocados to wine, our taste for international flavors continues to grow, leading to the largest trade deficit seen in over 65 years.

As an FYI, Garland’s recent post, Tariffs: Economic Boost or Negotiating Tool? does a great job exploring tariffs and their economic and political implications — we highly recommend the read.

The Ocean Freight Connection

Now, you might be wondering, how do all these agricultural products travel around the globe? The answer is primarily by sea. Ocean freight plays a crucial role in the movement of agricultural goods, both in and out of the United States.

Exports

If you’re surprised by this, you have good reason: while container shipments only account for a quarter of U.S. agricultural exports by volume, they represent over half of the value of our total exports. That’s a lot of high-value goods sailing the seven seas. The destinations receiving the bulk of these goods are China, Canada, and Mexico.

The busiest port in the U.S., the New Orleans Port Region, moves almost 40% of all U.S. waterborne ag exports alone.

Most of these exports were bulk grains and products, like corn, soybeans, animal feed, and rice. Other significant exports from this port include soybean and corn oils and frozen poultry.

But Gulf ports like New Orleans don’t just export ag products.

In fact, the value of ag exports is a small portion of the total value of all goods. Because of the relative proximity of products to Mississippi River, these Gulf ports constantly crank out enormous amounts of oil and gas, chemicals, and ores, providing a cost-efficient transport corridor. Houston and New Orleans alone account for about 65% of total U.S. oil and petroleum exports.

Imports

The European Union and Mexico are the second and third largest countries in terms of agricultural imports into the U.S. Products received from these partners are mostly comprised of tropical fruits, sugar, soybeans, and packaged grocery and beverage items.

New York and Philadelphia rank highest on the receiving end for 2023, accounting for 17% and 7% of imported goods, respectively.

Trump’s Tariff Proposal: A New Trade Storm Brewing?

Now, here’s where things get interesting.

President Trump plans to impose 25% tariffs on Mexico and Canada set to take effect in March 2025, postponed from February 1. This ongoing negotiation has the attention of food producers, as Mexico has become one of our largest trading partners and increasingly important export markets for U.S. farmers in recent years, with most goods traveling overseas.

Trump has also directed federal agencies to review trade pacts with China. This has many farmers recalling Trump’s first term in office. As a result of retaliatory tariffs from the onset in summer 2018 through the end of 2019, the USDA ERS reported that U.S. agricultural export losses exceeded $27 billion, with soy and pork producers hit particularly hard.

China’s swift retaliation accounted for about 95% of the value lost, but our losses were significantly mitigated by an outstanding trade agreement with China to purchase U.S. soybeans, leaving many questioning how losses might affect us next time around.

Potential Outcomes on U.S. Ag Trade

In what ways could these tariffs affect U.S. farmers and exporters? A number of things could happen that disrupt our current flow of goods, both incoming and outgoing. And these factors affect one another, leading to thorny diplomatic situations with various scenarios to navigate.

Let’s break down these potential situations:

  • Reduced Competitiveness: New tariffs could make U.S. exports less competitive on the global stage. This could open the door for competitors like Brazil to gain more market share, particularly in soybean exports.
  • Retaliation Risks: If history is any guide, we might see retaliatory tariffs from affected countries. During the 2018-2020 U.S.-China trade war, U.S. soybean exports to China plummeted from $14 billion in 2016 to just $3 billion in 2018 – a staggering 78% decrease.
  • Market Disruptions: The tariffs could disrupt established trade flows. For instance, Mexico is a major supplier of fresh fruits and vegetables to the U.S.
  • Price Fluctuations: Tariffs could lead to price increases for a wide variety of food and beverage products, affecting both consumers and the food industry.
  • Potential Export Losses: During the previous trade war, U.S. agricultural producers faced approximately $27 billion in lost exports between 2018 and 2019, with soy and pork producers hit particularly hard.

For more information on these scenarios, refer to our article, Tariffs: Economic Boost or Negotiating Tool?

Freight Impacts from Trade Tensions

Now, let’s consider how these potential tariffs might affect ocean freight costs. It’s a bit like predicting the weather – there are many factors at play, but we can make some educated guesses based on past experiences and current trends.

  • Demand Fluctuations: If tariffs lead to reduced trade volumes, we might see a decrease in demand for shipping services. This could potentially lead to lower freight rates in the short term.
  • Route Changes: Tariffs might cause shifts in trade routes as countries seek new markets or suppliers. This could impact shipping patterns and potentially affect freight rates on certain routes.
  • Uncertainty Premium: The uncertainty created by trade tensions and changing policies could lead to volatility in freight rates as shipping companies try to navigate the new landscape.
  • Capacity Adjustments: If trade volumes decrease significantly, shipping companies might reduce capacity by idling ships or slowing vessel speeds. This could eventually lead to higher freight rates as supply adjusts to demand.

The Bigger Picture: Beyond Tariffs

While tariffs are grabbing headlines, it’s important to remember that they’re just one piece of the complex puzzle that is international trade.

Several factors beyond tariffs can significantly influence U.S. agricultural exports and ocean freight costs.

Of course, there are the immediate costs of maintaining these ships and its transport across the world. Operators of these vessels must contend with the ever-changing costs of fuel, accounting for about 40% of total costs. Insurance and labor also factor in, but the fees associated with port and custom fees also command a significant chunk of its operations.

External factors out of the operator’s control make the industry far murkier. The overall health of the global economy plays a crucial role in determining the demand for U.S. agricultural products. And this is largely driven by the supply and demand cycle of the industry —  a constant balancing act between volume of goods and ocean freight capacity. Add in the effects of unpredictable weather patterns and crop yields, and you’ve got the perfect conditions for volatile capacity constraints.

Additionally, fluctuations in the value of the U.S. dollar can impact the competitiveness of U.S. exports in international markets. And the ever-changing landscape of environmental standards for shipping can also have implications for freight costs in the coming years, as the industry adapts to more sustainable practices and technological innovations.

But timing is everything when it comes to the ocean freight market. Because of these variables, operators will often book freight far in advance as an economic hedge for rising costs. This means the shorter-term factors cited above are a bit secondary to the market’s perception of overall economic drivers.

Looking Ahead: Navigating Choppy Waters

As we look to the future, it’s clear that U.S. farmers and exporters may need to brace for some chop ahead. The potential implementation of new tariffs could reshape the landscape of agricultural trade, impacting everything from commodity prices to shipping routes.

However, it’s not all doom and gloom. The resilience and adaptability of the U.S. agricultural sector have been tested before, and farmers have shown remarkable ability to weather economic storms. Moreover, the increasing global demand for food provides a strong foundation for U.S. agricultural exports in the long term.

And it’s important to note that tariffs can be used as a negotiation tool, as well as instigating action from our trading partners. Should Canada and Mexico curtail illegal immigrants coming across the U.S. border, tariffs would be expected to dissipate. We would also expect a similar change to tariffs with China, should fentanyl and other dangerous substances cease to enter the U.S.

As consumers, we might see some changes in the prices and availability of certain products, particularly those that rely heavily on imports or exports affected by the tariffs. However, the diverse and robust nature of the U.S. food system should help mitigate major disruptions.

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Tariffs: Economic Boost…or Negotiating Tool?

What is Trump doing with tariffs?

Trump is using tariffs to bring jobs back to America, keeping illegal immigrants from crossing the Canadian and Mexican border, and preventing cheap Chinese exports from flooding the market.

During Trump’s first term, he imposed import tariffs on $380 billion worth of products. In recent remarks, he described a range of proposed tariffs being phased in at 2 to 5 percent per month during 2025. In his 2024 campaign, the Presidential candidate spoke of imposing a 10 to 20 percent tariff on all U.S. imports. Mexico and Canada – two of the United States’ largest trade partners, would face additional 25 percent tariffs, and China an additional 10 percent. This follows yet another threat to impose a 60 percent tariffs on goods from China.

Just recently, Colombia would not accept two planes full of deportees from the United States. President Trump threatened the Colombian government with tariffs on exports to the U.S.; Colombia then backed down and a trade war was averted.

What is a tariff and why do nations impose them?

A tariff is simply a tax that is imposed on goods entering or leaving a country. Tariffs may be imposed on exported and imported goods, although import tariffs are by far the more common practice.

They have been used throughout history for a variety of reasons – to raise revenues, or to protect a domestic industry or group from external competition or unfair trade practices.

In our modern world, tariffs have become a powerful lever in international diplomacy – an economic tool for winning concessions from other nations and achieving a greater “balance” in international relations.   

President Trump appears to be motivated by all these considerations.

When used properly, they can level a global playing field by creating jobs at home, thus increasing the GDP per capita.  For instance, in his first administration, President Trump threated Europe with tariffs if they implemented carbon and digital services taxes to U.S. industries.

As of January 22, 2025, President Trump said he would add new tariffs and sanctions against Russia if Putin refused to negotiate an end to the war with Ukraine.  President Trump has also threatened tariffs against China to stop the fentanyl flow into the U.S.

Tariffs can be a valuable tool in driving U.S. economic growth. More expensive imports help domestic industry to rebound and grow, they argue, through expanded market opportunities.  And when those industries grow, they generate more tax revenue.

When goods are taxed without a ‘higher purpose’ then they can be destructive and reduce economic value. If goods are taxed without better access to markets and security, then the consumer pays more without the benefits.

Regardless of the final scale of tariffs, it’s clear that they stand to become a factor in the U.S. and global economy.

What effects do tariffs have on buyers and on sellers?

Tariffs on imported goods are paid by the importer.  The added costs of the imported goods are usually passed along to the consumer.  For example, an analysis by the Public Broadcasting System (PBS) during the first Trump tariffs in 2018-2020 estimated the cost of the tariffs amounted to about $800 per household.  The Federal Reserve and Congressional Budget Office placed the tab a bit higher – between $500 and $1,700 per household in 2020. 

The latest proposed tariffs are estimated to have comparable, if not larger, effects on consumers. A study by the Peterson Institute for International Economics estimated President Trump’s tariffs would cost the average U.S. household about $2,600.

Let’s use the 25% tariff for Mexico and Canada as examples. They are the United States’ first and third largest suppliers of agricultural products. The EU is number two. To stem the tide of immigration, President Trump has announced that if the Mexican and Canadian governments don’t curtail illegal immigrants coming across the border, their exports to the U.S. will be that much more expensive. Mexico depends on the U.S. for trade. In 2022, 77% of their $549 billion in products were sold to the U.S.

For U.S. food consumers, the most immediate effect of higher tariffs would fall on foods we source from Canada and Mexico – notably fresh produce, fruits and vegetables, alcohol, grains, and some meats.

The U.S. has increasingly relied on imports for our fruits and vegetables. In 2023, the U.S. imported 55% of fruits and vegetables, up from 37% in 2000. The United States imports 34% and 73% of fresh fruits and vegetables, respectively in 2022. 

But others in the food chain also stand to be affected. Food manufacturers (and retailers) who rely on foreign supplies of key ingredients face the tough choice of absorbing the higher cost – or passing some or all the higher costs on to consumers. 

With the talk of tariffs still more speculation than fact, it is impossible to create any credible estimate of how much the proposed tariffs actually will raise food costs. 

But what is known is that the Department of Agriculture already estimates food price increases of just under 2 percent for 2025 — lower than the historical average of 3 percent — with the largest cost increase coming for food consumed away from home. 

That is before any tariffs are imposed.

Why should farmers and consumers care about new tariffs?

But consumers aren’t the only segment of the economy that stand to be affected. Just ask anyone on an American farm, or anyone else along our complex food chain from dirt to dinner.

U.S. agricultural exports to China in 2018-2019 fell by 76 percent, or roughly $25.7 billion, according to Statista, by most accounts due to a de facto tariff war.  The US tariffs to China were put in place to protect US companies, but China retaliated by placing tariffs on US soybeans, sorghum and pork.

The effect could have been even worse were it not for a U.S.-China trade agreement that obligated China to purchase a $80 billion of U.S. agricultural goods. China only partly fulfilled its obligations (77%), it turned mainly to Brazil to supply their soybeans and corn. This shifted historical global trade patterns and sent a bearish ripple through the U.S. and global markets on which producers rely.

The American farmers – notably producers of the highly sought corn and soybeans that form the backbone of our global food and feed industries – faced enormous economic pressures.  The Trump Administration responded to the clamor with compensatory payments of $28 billion in 2018-19, and two more tranches of $19 billion in April and $14 billion in September.

The proposed new tariffs come at a time when the farm economy is already facing tough going.  As the Department of Agriculture noted in January 2025: “In inflation-adjusted 2024 dollars, net farm income is forecast to decrease by $9.5 billion (6.3 percent) from 2023 to 2024. Net cash farm income is forecast to decrease by $5.7 billion (3.5 percent) from 2023 to 2024.”

The poor economic conditions facing farmers as low commodity prices and continuing cost increases squeeze their profitability prompted Congress in December to add $31 billion in emergency funds in the last-minute extension of the farm bill. The prospect of a contentious trade war is pouring gas on the smoldering embers of economic concern.

Why are tariffs back on the national agenda?

Supporters of the new and higher tariffs argue the action is justified for several reasons.

First, the United States needs the income. Washington is a voracious master, demanding more and more money every year.

And in fact, we need more than we currently have.

The federal deficit in 2024 is estimated at $1.83 trillion, surpassed in our national history only by the pandemic years of 2020 and 2021. This leaves our current debt to GDP ratio at 129%, to be outdone by Japan, Venezuela and Sudan.

With more middle school math, that means every American would owe $5,273.78 to make good on 2024’s shortfall.  For a family of four: $21,095.10. And that’s just for the year’s deficit. The accumulated U.S. debt is much, much larger – clocking in at $93,500 per person.

What else can be accomplished with tariffs?

For anyone who has followed President Trump, it comes as no surprise that he has made greater fiscal discipline a priority for his administration.

To President Trump, tariffs also offer a powerful incentive to other countries to act more aggressively on matters within their national boundaries that have pernicious effects on the United States. As a businessman, President Trump seems to value the power of simple economics over media-focused diplomacy.

By creating significant economic costs to these nations, he seems to reason, the United States can incentivize foreign governments to be far more active. This includes dealings with such things as out-of-control cartels flooding the United States with drugs and danger for U.S. residents — and fomenting their own domestic unrest, violence, fear and desperation that drive rampant illegal immigration to the United States.

President Trump just used this tactic this week when negotiating with Colombia to accept deported migrants to avoid the U.S. imposing punitive tariffs and other penalties.

Who stands to be most affected by tariffs?  This is not a simple subject.  But if Canada and Mexico stem the tide, then the 25% tariff will be removed. And maybe the threat of more tariffs with Russia will help end the war.

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How Not to “Buy Now!”

The documentary BUY NOW! has ignited important conversations about the impact of consumerism on waste and environmental degradation.

The Scale of Food Waste

The documentary highlights startling statistics, such as the fact that nearly one-third of all food produced goes uneaten each year, amounting to approximately 1.3 billion tons annually.

It also illustrates the systemic inefficiencies in food supply chains, from overproduction and spoilage during transport, to the rejection of perfectly good produce due to cosmetic imperfections.

BUY NOW! also draws attention to the environmental toll, emphasizing the greenhouse gas emissions associated with wasted food decomposing in landfills and the squandering of water, energy, and labor invested in food production.

Food waste is a staggering global issue. This represents not only a waste of resources but also a significant contribution to greenhouse gas emissions when food ends up in landfills. Addressing this issue requires systemic change as well as individual action.

What Can Consumers Do?

Reducing food waste starts at home.

The documentary does a good job of equipping consumers with practical tips at the end of the film, showing how individual efforts can complement systemic change.

Here are actionable and specific steps individuals can take:

Plan Meals and Shop Smart:

  • Use apps like Mealime, Paprika, Yummly, and Plan to Eat to organize meal plans and ensure groceries are used efficiently.
  • Make a detailed shopping list and stick to it, avoiding impulse buys.
  • Consider batch cooking and freezing portions to reduce the chance of food going bad before it’s used.
  • Schedule a “fridge clean-out meal” each week to use up items that are close to expiring.
  • Store your food properly to reduce spoilage and lengthen shelf life.

Embrace Imperfections:

  • Purchase “ugly” produce from companies like Misfits Market or Imperfect Foods.
  • Learn to read labels correctly: “best by” indicates peak quality, not safety, and “use by” typically refers to safety for perishable items. Many foods are safe to eat beyond their printed dates if stored properly.

Use Leftovers Creatively:

  • Reimagine leftovers with recipe inspiration from websites like Love Food Hate Waste, or the Supercook app, which suggests recipes based on ingredients you already have.
  • Use vegetable scraps to make stock or soups, and freeze excess stock in ice cube trays for easy use.

Compost:

  • Use composting services like CompostNow, Lomi, or ShareWaste.
  • To start composting at home:
    • Get a bin or designate an outdoor pile.
    • Layer “greens” (fruit and vegetable scraps) with “browns” (dry leaves or cardboard) for balance.
    • Avoid composting meat, dairy, or oils unless you have a specialized system.
    • Turn the pile occasionally to aerate it, speeding up decomposition.

Donate Excess:

  • National organizations like Feeding America and Food Rescue US accept donations of surplus food.
  • Support local food banks and initiatives like community fridges.
  • Apps like OLIO connect neighbors to share surplus food within their communities.

By adopting these strategies, consumers can play a critical role in reducing food waste and supporting a more sustainable food system.

How CPG Companies Are Making a Difference

BUY NOW! doesn’t shy away from critiquing the role that major corporations, including those in the CPG sector, have played in contributing to waste and environmental harm. However, it also acknowledges that some of these companies are learning from past mistakes and stepping up to the challenge.

While their efforts are not without shortcomings, there has been a notable shift in recent years toward adopting more sustainable practices. It’s important to highlight these positive changes, as they show how companies can leverage their influence and resources to drive meaningful impact.

Many CPG companies are stepping up to address food waste and sustainability issues. Here are some of their noteworthy initiatives:

Reducing Food Waste in Supply Chains

  • Unilever: The company uses AI-powered systems to optimize inventory and reduce waste in manufacturing and distribution.
  • Nestlé: Partners with food rescue organizations like Feeding America to redirect surplus food to communities in need.

Minimizing Carbon Footprints

  • General Mills: Committed to net-zero emissions by 2050, they’ve invested in renewable energy sources like wind farms and optimized their logistics to cut transportation emissions.
  • Kellogg’s: Introduced carbon footprint labeling on packaging to encourage sustainable consumer choices.

Promoting Regenerative Farming

  • Cargill: Partnering with farmers to implement regenerative agriculture practices, such as cover cropping and reduced tillage, to improve soil health and sequester carbon. Cargill has also committed to advancing sustainable water management and supporting local farming communities.
  • Danone: Actively supports regenerative agriculture practices, including no-till farming and cover cropping, through its farmer partnerships.
  • PepsiCo: Announced a $216 million commitment to expand regenerative farming practices across 7 million acres by 2030.

Sourcing Locally and Responsibly

  • Ben & Jerry’s: Sources dairy from local farms that adhere to sustainable and ethical practices.
  • Clif Bar: Prioritizes organic and locally sourced ingredients to minimize its environmental impact.

Innovating with Upcycled Ingredients

  • ReGrained: Upcycles spent grain from brewing beer into snack bars and baking flour.
  • Rubies in the Rubble: Creates condiments using surplus produce that would otherwise go to waste.

Collaborative Efforts for Greater Impact

BUY NOW! primarily focuses on corporate responsibility and does not delve deeply into the role of consumer decision-making in addressing food waste.

While CPG companies undoubtedly have a significant influence and bear responsibility for their practices, it is equally crucial to acknowledge that governmental policies that incentivize sustainable practices and consumer behavior are also paramount in driving demand and reducing waste. The choices individuals make—from buying only what they need to support brands that prioritize sustainability—can amplify or diminish the impact of corporate efforts.

For readers interested in delving deeper into the topic of food waste, here are some recommended reads from Dirt to Dinner that highlight the complexities of food waste and offer some other actionable steps to address the issue:

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Here’s how cows can ‘go green’

This past summer, we read about Danish farmers paying a carbon tax on their cows and pigs. Starting in 2030, they will pay about $43 per ton of carbon dioxide emissions equivalent. But despite cows and pigs 9% contribution to global methane, cows can actually play a positive role in climate change.

Just like this example illustrates, dairy cow and cattle farms are often criticized for their methane emissions and manure runoff, which are believed to significantly contribute to climate change.

However, let’s challenge this assumption by exploring how farmers manage their farms and ranches to positively impact the environment. Here are some ways farmers and ranchers are reducing methane output and enhancing environmental sustainability.

Land management

Many of us outside of the ag sector are surprised to learn that livestock and dairy cows are one of the best tools for land management.

Ranchers who allow their cattle to graze on grasslands practice regenerative agriculture, which benefits the environment in multiple ways. Grazing animals contribute nutrients to the soil, promoting healthy plant growth and supporting native wildlife. Additionally, healthy soil absorbs rainfall more effectively, reducing water runoff into roads, streams, and wetlands.

Research from the Soil Health Institute highlights that livestock grazing improves soil health by increasing organic matter and enhancing soil structure, which helps retain moisture and nutrients. This method of land management not only sustains livestock but also promotes a balanced ecosystem.

Emissions reduction

A study by The Nature Conservancy, “Reducing Climate Impacts of Beef Production,” shows that ranchers who manage both grasslands and livestock can cut emissions by up to 50%. This approach is particularly effective in the U.S. and Brazil.

When cattle graze, their hooves help mix seeds into the soil, and their manure acts as a natural fertilizer, promoting plant growth and creating a carbon sink. For example, Texas rancher Meredith Ellis sequesters 2,500 tons of carbon annually, equivalent to removing 551 cars from the road.

A 2020 meta-analysis published in Global Change Biology supports these findings, indicating that managed grazing systems can significantly reduce greenhouse gas emissions compared to conventional farming methods.

Pasture management

While 95% of cattle begin their lives on grass, they typically finish in feedlots. There’s a debate over which system is better for the environment.

Surprisingly, grass-fed cattle emit approximately 20% more methane than feedlot cattle because it takes longer for them to reach market weight.

Animal Nutrition

Animal nutrition companies are actively researching ways to reduce methane emissions through diet. Studies have shown that specific feed additives can reduce methane emissions by 30% to 50%. According to a 2022 study in Animal Feed Science and Technology, optimized feedlot diets result in less methane production compared to roughage-heavy grass diets.

Most recently, a study published in the Proceedings of the National Academy of Sciences showed that a pelleted form of seaweed added to the animal feed can reduce methane by an average of 38% without adversely affecting the animal.

Dairy digesters

The dairy industry has utilized anaerobic methane digesters for years to manage waste and reduce emissions. These systems capture methane from manure, converting it into electricity for the farm or selling it back to the grid.

California’s commitment to reducing dairy methane emissions by 40% by 2030 is largely driven by the implementation of digesters. According to a report by the California Air Resources Board, farms using these systems are greenhouse gas-negative, meaning they offset more emissions than they produce.

Carbon-neutral cows

Contrary to popular belief, cows are effectively carbon-neutral emitters over time. When cows consume plants, they intake carbohydrates containing carbon.

Through digestion, some of this carbon is released as methane, which is a potent greenhouse gas but only remains in the atmosphere for about eleven to twelve years. It then breaks down into carbon dioxide and water through hydroxyl oxidation.

A 2021 study published in Frontiers in Sustainable Food Systems explains that this cycle ensures that the methane emitted by cows is part of a short-term carbon cycle, balancing out over time.

Interested in learning more?

One of our favorite sources for learning about this topic is Dr. Frank Mitloehner, a professor and air quality specialist at University California, Davis.

Dr. Mitloehner is a leader in helping governments understand cattle, methane emissions, and solutions to mitigate climate change. He has a practical and optimistic approach for solving cattle’s contribution to climate change. You can listen to his podcast with Damien Mason on The Business of Agriculture.

For further reading and detailed research, refer to:

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New Ag Leadership Faces Tough Agenda

The shock waves from Donald Trump’s surprisingly big victory in the presidential election were still rippling across Washington when speculation began about what the change in administrations will mean for agriculture.

Change is in the Air

No matter how many of the rumors prove to be true, it’s certain the changes at the White House — and on Capitol Hill — will usher in a new and somewhat different approach to policies and programs for farmers and everyone else along the food chain from dirt to dinner.

The most immediate effect when the 119th Congress now set to convene January 2, 2025, will be a shift in committee chairs from Democrat to Republican in the U.S. Senate. The Agriculture Committee, now with Sen. Debbie Stabenow (D-Michigan) as chair, will see the top spot likely pass to the current ranking Republican committee member, Sen. John Boozman (R-Arkansas).

“It is clear voters have demanded new leadership in the Senate and a return to the agenda President Trump has fiercely championed,” Boozman said after the election results were announced.

Boozman continues, “I look forward to helping the president-elect and this incoming Republican Senate majority restore prosperity, border security and public safety. The Senate Agriculture Committee will refocus on strengthening our rural communities and we will provide farmers and ranchers the policies and support they desperately need to remain viable.”

Rep. Glenn Thompson (R-Pennsylvania) is expected to retain the chair. Thompson’s long family history in the dairy industry has been highly valuable in his more than a decade as an agriculture committee member, and as ranking minority member.

Nonetheless, efforts to enact the long-overdue Farm Bill in the lame-duck session planned for the final weeks of 2024 aren’t expected to produce legislation. Key legislative issues with higher political priorities – such as continuing government funding and hurricane relief – will make strong demands on the limited time remaining this year.

Just as important, the two parties remain divided on several key Farm Bill issues, mostly on where and how to spend the enormous amounts of money involved in the omnibus legislation, including funding for the increasingly expensive Supplemental Nutrition Assistance Program (SNAP, now at about $113 billion per year) and ambitious green-oriented programs.

Who Will Be Secretary of Agriculture?

Several well-known names have been floated as possible replacements for current Secretary of Agriculture. But few if any observers are ready to place a big bet on any individual as the Trump team evaluates and begins to fill all cabinet positions — including State, Treasury, Defense, Attorney General, Interior, Agriculture, Commerce, Labor, Health and Human Services, Housing and Urban Development, Transportation, Energy, Education, Veterans Affairs, and Homeland Security.

At the top of the Ag Secretary speculation list is Rep. Thomas Massie (R-Kentucky). Massie has commented publicly that he is “open” to taking the top USDA spot in the next Trump Administration. Massie’s growing close relationship with Trump supporter Robert F. Kennedy, Jr., also has been carefully noted by observers of the Washington political jungle.

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“President Trump’s resounding victory secured a mandate for big ideas like reversing chronic disease, conserving our land and empowering farmers,” Massie said in post-election comments cited by the Lexington Herald-Leader. He went on to note that no offer had been made from the Trump team as yet, despite suggestions of his leading candidacy from another prominent name in agricultural circles – Joel Salatin.

“I’ve been contacted by the Trump transition team to hold some sort of position within the USDA and have accepted one of the six Advisor to the Secretary spots,” Salatin wrote in his blog.  “My favorite congressman, Thomas Massie from Kentucky, has agreed to go in as Secretary of Agriculture.”

Salatin has gained fame – some say notoriety – for his maverick approach to farming and farm policy in general.  He is a prolific author on food issues, an active farmer and self-professed “Christian libertarian environmentalist capitalist lunatic farmer.”

Consider just a few of the titles of Salatin’s list of publications:

  • Folks, This Ain’t Normal: A Farmer’s Advice for Happier Hens, Healthier People, and a Better World  – sustainability and food production, local food systems
  • The Sheer Ecstasy of Being a Lunatic Farmer – farming in real life, and the benefits of sustainable farming
  • Everything I want To Do Is Illegal: War Stories from the Local Food Front – the different ways food policy shapes our food-choice freedom
  • The Marvelous Pigness of Pigs: Respecting and Caring for All God’s Creations – the link between pig raising and closeness to God
  • You Can Farm: The Entrepreneurs Guide to Start & Succeed in a Farming Enterprise – farming opportunities for true entrepreneurs

His family cleared land and set up successful diversified farming operations in Venezuela before coming to America, where they began farming in 1961 in Virginia. As a high school student, Salatin began his own business enterprise, selling a variety of farm products in local markets.

Salatin today operates Polyface Farm in the Shenandoah Valley of Virginia, raising livestock and selling meat, and generally promoting a “totally free market… without government regulations.”  His works champion policies designed to give farmers more control, allowing individual leadership in conservation and responsible environmental stewardship. His outspoken views and energy seem to resonate strongly with the Trump camp, regardless of his future official or unofficial role within the new administration.

But Massie remains far from the only name mentioned for the USDA top spot

Another contender may be former Rep. Mike Conaway, the former chair and ranking member of the House Agriculture Committee, who left Congress in 2021. His supporters cite two important advantages for the former West Texas legislator.  One is his robust experience in dealing with the last Farm Bill and all its political machinations.

Perhaps equally important, Conaway served as chair of the House Ethics Committee and the House Intelligence Committee during its investigation of Russian interference in Trump’s 2016 campaign. His leadership in presenting a finding of no collusion between Russia and the Trump campaign was noted then – and no doubt remembered by a President who values and rewards loyalty.Southerners note that in his last Administration,
Trump tapped former Governor George “Sonny” Perdue as USDA Secretary. Perdue served just as loyally through the tumultuous period of trade relations between the United States and China, even as the rising tensions cut deeply into exports of U.S commodities to China. USDA estimated that the tariff wars accounted for 95 percent of the $27 billion decline in farm exports between mid-2018 and late 2019. USDA also noted that soybeans made up 71 percent of the lost trade.
Perdue moved on to become chancellor of the University System of his home state of Georgia. But another Georgia name also has surfaced in the leadership discussions – Vincent Mearl Duvall – know far and wide in national agricultural circles as “Zippy” Duvall. (The noteworthy nickname allegedly is linked to his Caesarian birth.)
Duval is a third-generation farmer, beginning in dairy and expanding into production of beef cows, broilers, hay and other commodities. In his spare time, he also is President of the American Farm Bureau Federation – the largest general farm organization in the United States. He comes from a major agricultural state producing 40 different commodities and has traveled extensively across all parts of the U.S. farming system.
His supporters also note that his professed strong religious faith is very much in line with the values espoused by the President-elect. “I’m going to get up every day and do that, for you. We are the strength and the hope for this country and all around the world because we will provide the nourishment. There’s no human right more precious than the right to eat,” he told Farm Progress. “I believe we’re here as farmers to be stewards to God’s great works.”

What Challenges Will the New Ag Leadership Face?

Whoever wins the leadership derby will face a daunting list of challenges.

Farmers worry about soft commodity prices and tough competition for foreign sales. Most also point to the uncertainties created by the failure to pass the omnibus Farm Bill, and the continuing deadlock on spending priorities and decision-making authorities for remaining unspent “green” dollars authorized by the Inflation Reduction Act of 2022.

But the elephant in the barnyard in a new Trump Administration is clearly trade.

The President-elect repeatedly stated his intention to impose tariffs on imported goods — including a possible blanket 60 percent tariff on imports from China.

As of Oct. 31, U.S. soybean sales for export to China in 2024-25 were a 16-year, non-trade-war low.

Further, China accounts for only 44% of total U.S. soybean sales, an 18-year low when once again excluding the trade-war years of 2018 and 2019.

– Reuters, November 8, 2024

In 2022, China was sending $536 billion in exports to the United States; last year it had dropped to $427 billion. U.S. exports to China totaled about $150 billion.

Lower-level tariffs for other imports also have been reported, but regardless of the final level of any such new tariffs, the farm community fears resumption of another disruptive and costly trade war with the world, and in particular China. The lingering effects of trade conflicts with China in the first Trump Administration are still with farmers, particularly soybean farmers. With higher tariffs on sales to the United States, China simply turned to other suppliers.

Brazil has emerged rapidly as a major competitor for the United States in international markets, including the important China market. Brazil in 2022 passed the United States as the world’s largest soybean producer, with 120.7 million tons of bean production, compared with 116.4 million for the United States. Brazil’s soybean acreage is projected to grow to 117 million acres in the coming year. The United States is projected to harvest 86.1 million acres, according to USDA.

The United States and Brazil supply over 80 percent of soybean global exports, while China accounts for about 60 percent of total soybean imports. Soybeans are the largest agricultural commodity exported to China by both the United States and Brazil. Over the last five years, Brazil has come to depend on the China market, with almost 75 percent of their exported soybeans headed to China.  For the United States, that figure is more like 50 percent.

Trump’s first administration kept farmers onside with generous subsidies to offset lost U.S. sales to China from the trade war. Soybean farmers received $5.4 billion more in aid than they lost in price impact, a University of California-Davis study found.

 Another trade war could cost soy farmers $3.6 billion to $5.9 billion in annual production value, depending on how the dispute plays out, according to an October study from the National Corn Growers Association and American Soybean Association.

For corn, Brazil overtook the U.S. as China’s top supplier in 2023, just one year after Beijing approved purchases from the South American agricultural powerhouse.

 – Reuters, November 7, 2024

Biofuels: The other elephant in the room

The nomination of former New York Rep. Lee Zelden as head of the Environmental Protection Agency (EPA) adds to the evidence of a much stronger focus on strengthening U.S. energy production through expanded oil and gas production. Zelden has publicly noted President-elect Trump’s desire for EPA to play a significant role in re-establishing what he called “energy dominance.”

Zelden was among many Republicans voting against the 2022 Inflation Reduction Act and previous green-focused Biden legislative initiatives. Environmental advocacy groups have given him very low approval ratings – unlike President-elect Trump’s high opinion of him.

Agriculture’s greatest stake in Zelden’s role as EPA head may be his approach to the standing focus on biofuels as a key element of Biden’s green agenda.  Currently, roughly 40 percent of U.S. corn goes into production of ethanol and other biofuels, and as much as 46% of the U.S. soybean crop.

Any shift toward greater reliance on traditional fossil fuels as a cornerstone of U.S. energy policy has the potential to create significant bearish pressure on commodity prices – at a time farmers already cite the adverse effects of soft commodity prices on their economic vitality.

Added to the possibility of economic fallout from renewed trade tensions with China under a new Trump administration, the farm community is closely watching the growing roster of policy leaders sharing Trump’s views and priorities – and perhaps holding its collective breath.

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Witnessing Helene’s Wrath

To all my Dirt-to-Dinner friends,

Thanks to everyone for the many, many expressions of concern and support following the devastating effects of Hurricane Helene.

My part of North Carolina was hit especially hard, with epic flooding and devastation that simply wiped away many of the small towns here and left cities like Asheville reeling from destruction almost beyond description. The photo on the right shows Helene’s impact on my hometown.

Remember just how widespread and damaging this storm has been for us.

Helene brought a 500-mile path of death and destruction from Florida to the southern Appalachian Mountains. Our state Department of Health and Human Services placed the death toll from Helene at 95 across 21 of our 100 counties – with another 200 still missing.

Almost three million people lost power across the affected states, including me, for eight days.  A gaunt work crew from far-off Ohio sent to restore our power politely declined our offer of some camp-stove instant coffee. Too many people still need our help for us to spend time drinking coffee, one of them said without a hint of pretension.

As if farming wasn’t bad enough this year…

Like most southern states, Georgia has a robust and diversified agricultural production system. But Helene brought four months’ worth of rain in barely two days to some areas of the state. Winds estimated at 79-111 miles per hour helped devaste a huge swatch of the Peach State’s prime production areas.

Georgia Agriculture Commissioner Tyler Harper commented on the hurricane’s effect on Georgia’s farms and farm families:

“Every commodity in our agriculture industry has been impacted by this storm. You got poultry houses that are leveled, pecan trees that are down.

“That means we’ve lost that crop, not only for this year but we’ve lost that crop for years to come.”

Preliminary estimates by the state’s Agriculture Department, the Forestry Commission and University of Georgia placed the total economic damage to the state’s agriculture at $6.5 billion.  Harper estimated that about 30 percent of the overall economic output from Georgia’s farming industry was lost and with nothing to sell, the families and workers that make the state’s agriculture what it is are in need of help.

Atlanta television station WBS reported that the American Farm Bureau estimated Georgia had suffered a 75 percent loss in the pecan crop, and 80 percent in the poultry industry. Other reports said as many as 100 poultry houses no longer exist. That’s a huge hit for a sector that accounts for about one-third of the state’s agricultural economy.

Corn is the most widely grown crop in the state, notably in the southern half of the state. Autumn crops of produce also are critical, with one farmer estimating his losses alone at $7 million – with most of those crops not covered by crop insurance. Peach farmers also report extensive damage to their trees.

The storm brought notable immediate and lasting damage to at least two of the state’s most important crops: cotton and pecans. Cotton helps clothe us. Pecans are a mainstay of confections and notably holiday cooking. Cotton accounts for $1 billion of the state’s farm economy, pecans another $400 million. Both crops provide examples of the potential consequences of extreme weather events to producers almost anywhere.

Helene devasted as much as a quarter of the state’s entire pecan acreage. Pecan trees can take as long as 25 years to reach full maturity – meaning it will take years for the lost trees to be replaced.

According to Lenny Wells, the University of Georgia’s extension pecan specialist:

“”What we are hearing from most growers is that large trees (40-50 years and up) have suffered about a 70 percent loss and younger trees have suffered somewhere around a 40 percent loss. When I say loss, I am referring to trees blown completely down.

“These numbers are yet to be confirmed but from what I have seen myself and gauging by what we saw from Hurricane Michael a few years ago, I don’t believe these numbers are an exaggeration. I have heard from people in the damage area who have five or six trees left standing, and several who have no trees left standing.”

Cam Hand, the school’s extension cotton specialist, painted an equally somber picture:

“It seems like across the state, we lost somewhere between 35 percent to 40 percent of our (cotton) crop. … And there are fields worse than that and some that aren’t that bad, but that’s what the number looks like. And we’ve still got a long way to go on getting data and seeing the reductions in fiber quality associated with this storm.”

Let’s not forget another of the state’s key crops, supporting an industry worth an estimated $2 billion: peanuts. Georgia plants about 770,000 acres of the 1.8 million acres of peanuts grown in the United States and accounts for 53 percent of total consumption, according to industry figures. Officials are still calculating the extent of Helene’s damage to Georgia’s peanut crop. They also somberly note that Helene’s path cut through not just the state’s peanut-growing areas but the heart of the prime peanut-growing acres across the southeast.

And here in North Carolina, corn is one of our most important crops. The latest government reports show that we’ve completed 72 percent of our corn harvest, compared with 84 percent complete at this point in the last harvest season. But weather has taken its toll throughout the year, from dry conditions in the summer to torrential rains this autumn.

Only 12 percent of North Carolina’s corn crop is rated as “good,” another 11 percent “fair” – and a whopping 77 percent either “poor” or “very poor.”

I can’t think of a better barometer of the critical role of weather in our food system – here or anywhere else.

I’m pleased to report that we are recovering

In fact, perhaps the biggest ray of sunshine in all of this – if there is one – is the remarkable way people have pulled together to deal with the situation. No one has simply given up, and I’ve encountered precious few individuals prepared simply to wait for help from some government agency or an anonymous distant benefactor.

Neighbors are banding together to clear debris, and the sound of chain saws throughout the day from all directions tells me we’re out there thinking about the future, far more than about the past.

Thanks, everyone, but we are well on our way for getting through this.

As I watched all this unfold around me over almost an entire month, I’ve also noticed that the agricultural community is doing its part in the relief effort. I suppose farmers are more used to dealing with the vicissitudes of weather than we complacent consumers. Excessive rain, extreme heat, drought and the pests that come with them are part and parcel of the farming way of life. Finding ways to cope with them is the flip side of the farming coin.

The good news about agriculture, if there is any, is in the spectacular efforts of farmers to get ahead of the storm.

Thanks to the accurate heads-up provided by weather experts in the days before Helene came ashore, many farmers were able to get into the fields to speed the normal pace of the traditional farm harvest season that is underway at this time of the year. Key southern crops have been hit – some hard – but by and large an alert farming community helped cut the extent of devastation in real and meaningful ways.

But there’s still much to do

Even so, Helene’s effects on agriculture in the Southeastern United States are almost beyond comprehension.

Broken buildings, mud and silt are everywhere, still.

Roads are still closed. Downed trees, snapped power poles and drooping electrical cables line what roads are open. Obviously, some level of disruption to normal flow of crops and animals to market of course can be expected, creating spot shortages and sometimes lack of available supplies.

A visit two days ago to a prominent Asheville supermarket showed the effects in real time.

Weeks after the storm, the items on the previously robust aisles are sparse and picked over, and huge swatches of store shelves remain empty. Eggs and dairy products are in limited supply, and good luck finding any 2% milk.

Frozen food cases are bare, after extended periods without the power that makes them possible. 

“Bear with us,” the harried store manager told me. “We’ll be back. Count on it.”

That’s the voice of resilience and optimism.

The logistics system that delivers supplies and takes crops and animals to market has been severely disrupted in many areas, where roadways and bridges no longer exist. The famous Blue Ridge Parkway and other scenic attractions in this part of our state are completely shut down and will be for some time.

Local roadways are just gone in many places. The vital east-west Interstate 40 corridor remains closed in long stretches from Asheville to the Tennessee border, with eastbound lanes swept away by rains and mudslides. For those who don’t know our local geography, that’s roughly 50 miles.

It’s still possible to see farm equipment bogged down in fields that weren’t simply muddy. They were quagmires if lucky, and submerged if not. Thank the heavens above for the past week of sunny, dry conditions.

Advance weather notices helped many farmers avoid calamity.  But the sheer speed of the rising waters and the extraordinary levels of water on historically safe fields and city streets took all of us by surprise, nonetheless. This was a near Biblical event for people in this area, none more so than our local farming community.

The floods, tragically, have left hundreds of my fellow state residents dead or missing.

Finding a new path amidst the devastation

On top of that, uncounted animals also are dead or missing. Some of the luckier animals were stranded around this area, and supplies of hay and feed completely lost or rendered inaccessible. I’m told by my local farming friends that dairy farmers have faced enormous challenges dealing with their herds, without reliable delivery of feed, supplies and the ability to move product…or the power they need for milking and other management duties. Truckloads of hay from Pennsylvania and other somewhat drier distant areas have helped fill the gap for animal feed.

The peculiar thump of helicopters in the skies above delivering food, water and emergency supplies for desperate people and animals has become a normal sound of the day – and music to our ears.

Pastureland was flooded and remains wet, weeks after the storm. Some poultry houses no longer exist. Many barns, out-buildings and other elements of the farming infrastructure are left damaged, in rubble, or simply vanished down the turbulent river flows. I sense that we’re transitioning from a period of emergency response to a slower, more deliberate process of rebuilding and recovery. It will take months, perhaps years, to repair and recreate all the resources needed to move food from dirt to dinner. But we’re going to do it.

This may be the best example of “regenerative agriculture” that I’ve found so far.

As I’ve watched all this unfold around me, I also tried to take a look at how other areas hit by Helene have fared. The picture is much the same, across large portions of Georgia, South Carolina, North Carolina and Tennessee, not to mention the Florida Panhandle and parts of Kentucky, Virginia and West Virginia.  (Florida has its own story to tell about hurricanes, which probably deserves special attention.) But as a loyal Carolinian with a well-documented southern bias, I’m sensitive to what all this means for southeastern farming and ranching, and the key crops that form the foundation of our farm economy.

How we can help

And maybe more of concern to the average consumer, the effects of Helene on the poultry industry are significant. For example, the National Chicken Council (yes, there is a national chicken council) notes that Georgia, North Carolina, Arkansas, Alabama, and Texas were the top five states for liveweight broiler production in 2023, accounting for 55.5 percent of total U.S. federally inspected production. Replacing the productive capacity for broilers, layers, eggs, turkeys and other poultry lost because of Helene won’t happen overnight.

If anyone wants to offer help to the people ravaged by Hurricane Helene, please visit CharityNavigator’s Hurricane Helene Support page for an overview of various charitable organizations helping in the relief effort.

Thanks again for all your support and concern. We all appreciate it more than we hope you will ever know.

– Garland

 

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Do price controls work?

The Harris/Waltz campaign promises to bring down American’s grocery costs. One of their strategies is to pass the ‘first-ever federal ban on price gouging.’

Price gouging is, in times of short supply or inflation, companies, or individuals, raise the price of their goods above and beyond what is fair and economical. For instance, during Covid, some people bought personal hand sanitizer dispensers for $1.00 and resold them for over $7.00. Or, during an inflationary period when prices are rising, companies charge more than their basic profit margin.

Many states already have ‘price gouging’ laws that prohibit ‘excessive’ or ‘unconscionable’ prices in the wake of a declared emergency, such as a hurricane or other natural disaster. These laws purport to protect consumers against companies’ exploiting a surge in demand for necessities, including food and energy, caused by an emergency.

Whatever the merits of those laws, they appear to be quite different than the generalized price controls proposed by the Harris/Waltz campaign.

Price Controls in a Global Food System

Price controls are not a simple solution. If uncontrollable costs increase the price of food, then food producers and consumer product companies will suffer because their goods sold have to remain competitively priced.

Because countries are interdependent on each other for food prices, what happens around the globe reverberates to the grocery aisle…

  • a drought in Argentina can affect corn prices in the U.S. because there is less global corn available,
  • the price of your chocolate dessert has increased because the Ivory Coast and Ghana governments raised the farmgate price for cocoa buyers, or
  • the potential longshoreman strike could affect the price of your bananas or tomatoes coming in from Mexico or Holland.

The list of potential situations affecting the price of food in our grocery aisles is endless.

Price Controls in Your Neighborhood

Let’s take a simple example of a lemonade stand to demonstrate pricing controls.  Your children want a new iPhone, and you tell them that they need to earn it themselves. One hot sunny summer day, your son and daughter decide to create a lemonade stand to keep your neighbors cool and hydrated. “Our lemonade will be unique”, they said. “It is sugar free and has electrolytes.”

You help fund a big table, two chairs, lemons, electrolyte powder, stevia for sweetness, plastic cups, and a blender for mixing.  You calculate that if they sold 100 cups of lemonade, they could charge their customers $1.25 per drink.  That way, they would cover their costs of $0.75 a cup and make a 50-cent profit on each cup. If they sold all 100, that would be $50 for the day. In a little over two weeks throughout the summer, they would have the new iPhone in time for school.

You walk around the neighborhood and see that other neighbors also have lemonade stands, each with unique features, such as cinnamon, hot chilies, or even icy slushy blueberries and strawberries in their drinks. But you notice that the lines are longer around some and see that many prices are only $1.00 a cup.

You wonder: are your children charging too much?  So you go back and encourage them to drop their price to $1.00, knowing that at least they should make $25.00 for the day. This will take most of the summer, but an iPhone is still in their future. Life is good.

And here come the price controls: the town government decided that the lemonade around the neighborhood is too expensive.  Thinking it is helping those who cannot afford to pay $1.00 a cup, the town puts a ceiling of $0.70 a cup.  This creates a loss for everyone whose cost is about the same at $0.75 a cup. The lemonade vendors, your children included, fold up their chairs and that is the end of neighborhood lemonade.

The government goes back to reconsider their price ceiling and decides to help the lemonade vendors.  They increase the ceiling to $0.90. They also put in a price floor of $0.80. With a small profit margin realized, a few optimistic lemonade vendors are back in business. Your children are hanging in there.

Suddenly there is frost in Florida and the price for lemons have doubled. The price floor doesn’t help as the lemonade vendors have a higher cost of goods than they can sell on the market. Their cost to produce lemonade is now $1.25.  This is way over the price floor of $0.80 and over the price ceiling of $0.90.

Lemonade is now a nostalgic memory. There will have to be plan B for an iPhone.

Price Controls Gone Awry

On a much more serious scale, here is what happened when governments tried price controls in Venezuela, Russia, and even in the United States.

Hint: It didn’t work then, either.

Price controls are often associated with Communist countries, as it involves more government intervention than Western Democracy often practices. Despite the best intentions to maintain cheap prices, history has shown that price controls tend to backfire with severe shortages of consumer necessities across a nation.

Venezuela

Venezuela struggled during the 2008 commodity and financial crisis and due to price controls and overall poor governance, they have still not recovered.  In 2008, due to weather, crop shortages, and oil prices, global prices for rice and wheat escalated by over 200% and 100%, respectively.

President Chavez announced, “there is a food crisis in the world, but Venezuela is not going to fall into that crisis”.   He passed the Law for Fair Costs and Prices which put price ceilings, floors, and audits on companies.

Like the lemonade stands, many of these companies went out of business due to negative margins.  As a result, production dropped, food availability on the grocery shelves suffered, and there was a significant food crisis.

The number of undernourished people escalated to 6.5 million in 2020 from .7 million in 2013. Venezuela has still not recovered As of June 2024; it is estimated that there are 550,000 Venezuelan’s who have migrated to the U.S.

It is no wonder. Their Global Food Security Index score is 106th out of 113th in the world, and is ranked 18th out of 19 South American countries.  Only Haiti is below them.

Soviet Union

In the 1980s, President Mikael Gorbachev, had good intentions to keep food and consumer goods prices low to ensure they were affordable for the public. Gorbachev implemented price controls as a staple economic policy aimed at stabilizing prices and preventing inflation. However, these controls often led to significant issues, notably shortages of goods and a decline in product quality.

One of the main reasons these controls failed was that the fixed prices didn’t reflect the actual costs of production. Companies and producers of food lost their incentive to supply the grocery store when they had a loss.  This led to empty store shelves. The black market flourished because people had to eat and went to the black market which set its prices based on basic economic supply and demand. It ended up undermining the state price controls.

Gorbachev caved and he removed controls and settled for a basic market economy. Then, when price controls were lifted, there was hyperinflation, and prices rose by over 2,000%! There is nothing quite as predictable as basic supply and demand for market efficiencies.

United States

If you were born in the 1960s, you will remember the 1970s gas shortage while trying to fill your car with gas. Once again price controls imposed by President Nixon didn’t work. There was a 1973 OPEC oil embargo and in response the U.S. government-imposed price controls to keep gas affordable for the customer.

However, these price caps led to unintended consequences. Gas prices were $0.36 a gallon. When going to parties, I remember contributing $1.00 for three gallons of gas. Of course, this was way below the cost of production, so the oil companies stopped producing oil because they lost money for each gallon of gas. This also prevented them from investing in new drilling or additional resources.

This also led to VERY long lines at gas stations and at-home stocking of gasoline.

Would History Repeat Itself?

“We economists don’t know much, but we do know how to create a shortage.

If you want to create a shortage of tomatoes, for example, just pass a law that retailers can’t sell tomatoes for more than two cents per pound. Instantly you’ll have a tomato shortage. It’s the same with oil or gas.”

― Milton Friedman, Nobel Prize-winning economist and statistician

While governments can be tempted to control the price, the complex relationship between government policies, producer incentives, and consumer needs shows that market dynamics reign and cannot be ignored.

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Media Madness and the Search for Truth

How far down the rabbit holes of news and media do you want to go? The depths seem endless, especially as we approach another election.

Thankfully, our dear friend and media savant, Garland West, sheds some much needed insight to light a path of rationality back into our overzealous media consumption habits.

Now, it’s up to us to put Garland’s wisdom into good use so we may become well-informed, rational and responsible citizens.