The Report Behind the Headlines: What Agricultural Economists Are Actually Saying About the U.S. Farm Trade Downturn

A 155-page report on the U.S. farm economy recently made its way into the political news cycle for a rather remarkable reason. The report, Surviving the Farm Economy Downturn: 2026 Update, contains a sentence that is unusually direct for agricultural economic analysis connected in any way to USDA: “The lower prices are the result of lost export market opportunities due to Trump administration policies aimed at leveling the export playing field with our trading partners and increased competition from abroad – especially from Brazil.” When I first encountered the report through a Reason article, that sentence stopped me in my tracks.

Having spent years writing and reviewing agricultural analysis at USDA, my first reaction was not necessarily surprise at the economic argument. Agricultural economists at the USDA have been discussing lost export markets, trade disputes, China and Brazil, high production costs, and deteriorating crop margins for years. What surprised me was the suggestion that USDA itself had published such a conclusion. Career economists at USDA operate in an environment where economic analysis and policy messaging are two very different things. Explicitly attributing deteriorating agricultural markets to the policies of a sitting administration would be extraordinarily sensitive language for an official USDA publication. During my years at the agency, writing something like that in a public report or official talking points would have been highly unusual. So, I went looking for the original report, and that changes the story considerably.

This is not a USDA report

Despite USDA's connection to the project, Surviving the Farm Economy Downturn was not written by USDA economists. It was developed by 36 agricultural economists from the Southern Extension Economics Committee and other subject-matter experts. The publication contains 24 articles organized into six areas: Setting the Stage; Crop Market Outlooks; Livestock; Agricultural Lending, Credit and Crop Insurance; Strategies; and Resiliency. Each article was double peer-reviewed. USDA's National Institute of Food and Agriculture (NIFA) helped fund the work through the Southern Extension Risk Management Education Center. The report itself makes clear that its findings should not be interpreted as an official determination or policy of USDA or the U.S. government. And that distinction is important.

USDA-funded research allowed independent agricultural economists to examine the farm economy, including the effects of government policy, without turning their conclusions into official USDA policy statements. After reading the report itself, another distinction becomes important: reducing 155 pages of agricultural economics to a story about the President, tariffs, and collapsing exports misses much of what the economists are actually saying. The report is considerably more nuanced.

The farm economy really is in a downturn. But not all of agriculture is.

One of the most useful observations comes almost immediately. This is primarily a crop-sector downturn. The authors describe crop farms as struggling financially, with some producers cutting expenses, restructuring debt, or seeking additional income. According to the report, livestock agriculture is in a different position. Beef cattle operations in particular have benefited from exceptionally strong cattle prices. That distinction matters whenever we talk about “the farm economy" because there isn't one farm economy. A cattle producer experiencing record prices and a cotton producer selling into a market characterized by weak prices, enormous export dependence, and expanding Brazilian competition can technically appear in the same national farm-income statistics while experiencing completely different economic realities. The authors also caution against simply calling the current situation another 1980s farm crisis. The 1980s crisis combined falling farm income, extremely high interest rates, loan defaults, and collapsing farmland values. The current downturn has different characteristics. Today's crop problem is more accurately described as a cost-price squeeze. Commodity prices have retreated substantially from their post-pandemic highs while many production costs remain elevated. Interest expense adds another layer of pressure, particularly for crops requiring more working capital per acre. That means a farmer does not necessarily need historically terrible commodity prices to lose money. Prices merely have to fall faster than costs. That is essentially what happened.

How did we get here?

The report's crop-market section provides useful context that gets lost when the story is reduced entirely to trade policy. The extraordinary profitability of 2021 and 2022 resulted from several forces occurring simultaneously. Global agricultural supplies tightened. COVID-era logistical disruptions affected normal trade flows. Fiscal and monetary stimulus supported demand and asset values. China made substantial agricultural purchases following the Phase One agreement. Then Russia's invasion of Ukraine disrupted global commodity markets further. High prices did what high prices normally do. They encouraged production, and U.S. farmers planted aggressively; Brazil continued to expand, and Black Sea exports proved surprisingly resilient despite geopolitical disruptions. Eventually, supply caught up. Commodity prices moved downward. Production costs did not adjust nearly as quickly. The result was margin compression beginning around 2023 and becoming considerably more painful thereafter. Trade policy is therefore part of this story. It is not the entire story.

Why trade matters so much more than many Americans realize

The report's chapter on trade contains one of its most important statistics. Agricultural exports now account for approximately 35 percent of U.S. farm income, up from 28 percent in 1996, but even that national figure hides enormous differences among commodities. For 2020–2025, the report estimates the share of U.S. production exported at approximately:

Commodity	Share of U.S. production exported
Cotton	85.9%
Sorghum	55.5%
Wheat	44.0%
Soybeans	43.0%
Rice	42.1%
Pork	25.1%
Corn	16.5%
Poultry	14.9%
Beef	11.0%

That table explains why agricultural trade policy has consequences far beyond ports and export companies. If approximately 43 percent of soybean production needs foreign buyers, losing a major customer creates a very different problem than it would for a commodity overwhelmingly consumed domestically. Cotton is an even more extreme example. Nearly 86 percent of production during the period examined was exported. For those industries, foreign demand is not an optional bonus. It is part of the basic structure of the market.

The extraordinary disappearance of China

This is where the report becomes particularly interesting. Overall U.S. agricultural exports declined from $176.4 billion in 2024 to $171.4 billion in 2025, a reduction of about $5 billion. That is meaningful, but hardly a collapse of the entire U.S. agricultural export system. The much more dramatic story is China. According to the report, U.S. agricultural exports to China fell from $24.4 billion in 2024 to only $8.4 billion in 2025, a decline of nearly 66 percent in a single year. Pull the timeline back slightly further and the change becomes extraordinary. U.S. agricultural exports to China reached approximately $38.1 billion in 2022. By 2025 they were $8.4 billion. That is a decline of $29.7 billion, or approximately 78 percent, from peak to trough. The authors conclude that the recent export slump is overwhelmingly concentrated in the loss of the Chinese market. Other major destinations generally held relatively steady or expanded. Mexico is especially important here because, while China declined, Mexico continued to grow and has become one of the largest markets for U.S. agriculture. So saying simply that “U.S. agricultural exports collapsed” obscures what actually happened. A more precise description is that the United States experienced an extraordinary contraction in one exceptionally important export market while much of the rest of the agricultural export portfolio performed considerably better. That distinction matters because it tells us where the vulnerability lies.

Then there is Brazil

China cannot be analyzed without Brazil, and this may ultimately be one of the most consequential parts of the report. Brazil is no longer simply another agricultural exporter competing with the United States only occasionally. It is a global agricultural powerhouse competing across soybeans, corn, cotton, beef, poultry, sugar, coffee, and other commodities. The report specifically identifies Brazil's expanding production capacity and deepening relationship with China as forces reshaping global agricultural trade. That is an important distinction from tariffs, because a tariff can, in theory, be removed tomorrow.

Brazilian soybean acres will not disappear tomorrow. Brazilian infrastructure does not disappear. Established relationships between Chinese buyers and Brazilian suppliers do not automatically return to their previous state. New export terminals, crushing plants, roads, railways, and production capacity represent structural changes. That makes market loss potentially more consequential than the immediate value of foregone exports. The question is not simply whether U.S. agriculture can regain access to China. It is whether the United States can regain market share after competing suppliers have expanded to fill the gap.

Cotton offers a warning

The report's cotton analysis illustrates this competitive problem particularly well. The United States historically dominated world cotton exports and exported the overwhelming majority of its production, but Brazil surpassed the United States as the world's largest cotton exporter beginning in 2024, according to the report. The authors point to Brazil's ability to produce cotton at a lower cost while offering comparable quality. At the same time, U.S. cotton producers face elevated production costs, interest expenses, weak prices, and trade uncertainty with China, the world's largest cotton-consuming country. U.S. exporters have successfully diversified toward markets including Vietnam, Bangladesh, Pakistan, and Turkey. That is encouraging, but diversification does not eliminate the underlying competitive challenge. The report notes another structural headwind: global consumption of man-made fibers is growing faster than that of cotton. So cotton's problem cannot be reduced to tariffs either. It involves trade policy, Brazil, production costs, global stocks, China, and changing consumer demand.

That pattern repeats throughout this report.

The United States has also entered the era of agricultural trade deficits

The report makes another unusually direct statement: The United States is now “firmly in an era of U.S. agricultural trade deficits.” For decades, agricultural trade surpluses were almost taken for granted. According to the report, the United States generally recorded agricultural trade surpluses from 1990 through 2018. The balance turned negative in 2019, briefly returned to surplus in 2020 and 2021, and moved decisively back into deficit after 2022. For 2025, the authors estimate agricultural exports at $171.4 billion and imports at $213.1 billion, resulting in a record $41.7 billion deficit. But here again, there is more to the story than weak exports. Imports matter.

America's agricultural trade deficit is not simply an export problem

This is an issue we have examined extensively at Demetrica. The composition of U.S. agricultural exports and imports is fundamentally different. U.S. exports remain heavily dependent on bulk commodities such as soybeans, corn, wheat, and cotton, as well as products such as meat and tree nuts. Imports are much more heavily concentrated in consumer-oriented products. Americans import fruits, vegetables, coffee, beverages, and numerous other products demanded by a wealthy consumer market. Some cannot be produced domestically in sufficient quantities due to climate, seasonality, labor availability, production costs, or simple consumer preferences.

The report offers a striking example. In 2025, U.S. imports of beer, wine, and distilled spirits exceeded $22 billion, while exports of the same products were only about $3.5 billion. That difference alone accounted for a substantial portion of the agricultural trade gap. So a growing agricultural trade deficit cannot automatically be interpreted as evidence that American farmers suddenly became uncompetitive.

It can reflect weak bulk exports.

It can reflect strong consumer-oriented imports.

It can reflect commodity prices and exchange rates.

It can reflect changing domestic production.

And it can reflect all of those things simultaneously.

That distinction remains important in the newest USDA numbers. USDA's August 2026 agricultural trade outlook now forecasts FY2026 exports at $179.5 billion and FY2027 exports at $186.5 billion. But imports are also forecast to rise, from $204.5 billion to $211.0 billion. Consequently, a $7 billion increase in projected export value improves the projected deficit by only about $500 million. Trade balances have two sides.

The report's China story also requires some historical context

There is another reason the report cannot accurately be summarized as an indictment of one administration's trade policy. The same publication that attributes some current lost export opportunities to the administration policies also credits the first Trump administration's Phase One agreement with China as an important part of the recovery from the previous 2014–2019 farm downturn. The crop chapter similarly identifies China's large purchases following Phase One as one of several forces that supported the subsequent commodity price boom. In other words, the report itself presents a more complicated history.

Trade agreements can create opportunities.

Trade disputes can disrupt them.

Foreign competitors can capture markets.

Global production responds to high prices.

Exchange rates change competitiveness.

Weather changes supply.

Government policy changes incentives.

And agricultural markets adjust.

That is considerably less satisfying as a political slogan. It is considerably more useful in agricultural economics.

Government payments are masking part of the crop-sector stress

Another particularly useful part of the report asks a simple question. If the current downturn is serious, why doesn't it look worse in the national net farm income? The authors' answer is government assistance. Their inflation-adjusted farm-income comparison shows that the current downturn does not appear particularly severe when viewed solely at aggregate net farm income. But Congress and both the Biden and Trump administrations provided ad hoc assistance to agricultural producers. Those payments support income even when underlying market returns are weak. This creates another statistical problem. National farm income can look relatively healthy while particular crop producers remain under substantial financial stress. Add historically strong cattle prices, and the aggregate becomes even less representative of what a row-crop producer may be experiencing. Again, there is no single “farm economy.”

The financial squeeze reaches beyond commodity prices

The second half of the report is less likely to generate political headlines, but it may be more immediately useful to farmers.

Credit matters.

Working capital matters.

Interest rates matter.

Cash flow matters.

Crop insurance matters.

Relationships with lenders matter.

And eventually, for some operations, restructuring or exiting the business becomes part of the discussion. Higher interest rates are especially important because modern crop production requires substantial operating capital. A crop with high per-acre expenses exposes producers not only to fertilizer, chemical, seed, machinery and land costs, but also to the cost of financing those inputs. The authors therefore repeatedly return to liquidity, debt management, communication with lenders, crop insurance and careful evaluation of alternative enterprises. Their message is not particularly glamorous. Surviving a downturn often means controlling what can actually be controlled while waiting for the factors farmers cannot control—commodity markets, weather, global demand, interest rates and policy—to change.

Is this another 1980s farm crisis?

The report takes the comparison seriously but does not simply conclude that history is repeating itself. There are similarities: financial pressure, weak crop margins, higher borrowing costs and rising concern about farm solvency, but important differences remain. The 1980s involved a severe interaction among debt, extraordinarily high interest rates, falling farm income, loan defaults and collapsing farmland values. Today's situation is different. Government support has been substantial. Farm balance sheets are different. Livestock conditions are much stronger. And the financial stress is concentrated much more heavily in the crop sector. That does not make today's problems insignificant. It means that describing every agricultural downturn as “the next 1980s” can obscure more than it explains.

What farmers can actually control

The report eventually shifts from diagnosis to survival. Its recommendations span credit management, crop insurance, alternative crops, cooperatives, land management, value-added agriculture, transition planning and long-term resilience. The common thread is straightforward.

Know the operation's true production costs.

Protect working capital.

Communicate with lenders before a problem becomes a crisis.

Evaluate alternatives on expected margins rather than simply commodity prices.

Understand crop-insurance coverage.

Avoid assuming that the crop that worked historically remains the most profitable use of every acre.

And distinguish temporary financial stress from a structural business problem.

That final distinction may be the hardest one. Commodity agriculture is cyclical. Low prices eventually discourage production. Weather disrupts supply. Demand grows. High-cost producers adjust. Markets rebalance.

But not every change is cyclical. Brazilian agricultural expansion is structural. Changes in Chinese sourcing are becoming structural. Higher land costs can become embedded. Export competitors can make permanent infrastructure investments. Changes in consumer demand can persist. Farm businesses therefore have to distinguish between conditions they can reasonably wait out and conditions requiring adaptation.

What has changed since the report was written

There is one important limitation readers should keep in mind. The report was completed in May 2026 and published in June. Agricultural markets and trade policy have continued moving since then. USDA's latest quarterly trade outlook is now the August 2026 edition, not the February forecast referenced in the report. USDA currently forecasts FY2026 agricultural exports at $179.5 billion and FY2027 exports at $186.5 billion.

That does not make the report outdated. It means readers should treat its market numbers as a snapshot of conditions when the authors completed their analysis rather than as September 2026 forecasts. The structural questions it raises—China, Brazil, export dependence, production costs, credit conditions and crop profitability—remain highly relevant.

What the headline misses

After 155 pages, the most important conclusion is probably that there isn't one explanation for the current farm downturn. Trade matters enormously. For several major U.S. crops, foreign markets absorb 40 percent or more of production. Losing a major customer therefore affects far more than export statistics. It changes domestic availability, prices, basis, farm revenue and ultimately planting decisions. China matters enormously. The fall from roughly $38 billion in U.S. agricultural exports to China in 2022 to $8.4 billion in 2025 represents an extraordinary loss of demand.

Trade policy matters too. The authors explicitly connect some lost export opportunities with current U.S. trade policy and trade tensions.

But Brazil matters.

Production costs matter.

Interest rates matter.

Global supply expansion matters.

China's long-term diversification of suppliers matters.

Commodity-specific fundamentals matter.

And government payments matter because they can keep aggregate farm-income statistics looking considerably healthier than the underlying economics of crop production.

The biggest mistake would be choosing one of those explanations and pretending the others do not exist.

The bigger story is competitiveness

This brings us back to the sentence that initially caught my attention. Had USDA career economists officially published a report declaring that Trump administration policies were responsible for lost agricultural export opportunities, that would have been an extraordinary development. That isn't what happened. USDA NIFA helped fund the research. Independent agricultural economists conducted it, peer reviewed it, and published their conclusions. The distinction between “USDA says” and “USDA-funded economists say” is not semantic. It changes both the institutional meaning of the report and the context in which its conclusions should be read.

There may actually be considerable value in that arrangement. Independent researchers can examine government policies alongside market fundamentals and say plainly what their analysis leads them to conclude, without making those conclusions an official USDA policy statement. That is particularly noticeable today because USDA's own quarterly Outlook for U.S. Agricultural Trade has become dramatically short. The August 2026 edition is only 11 pages and consists largely of forecasts and tables, with no commodity-by-commodity analytical narrative that historically helped readers understand why the numbers were changing. The tables still tell a story, but somebody has to read them. The larger story emerging from this 155-page report is not simply tariffs. It is not simply China. And it is not simply a farm crisis. It is competitiveness. American farmers are producing in a world in which export markets matter enormously to farm income, while Brazil has become a substantially larger competitor, China has demonstrated that it can redirect enormous volumes of agricultural purchases, production costs remain elevated, and some of America's most export-dependent crops have limited domestic alternatives capable of absorbing lost foreign demand.

Trade disputes can accelerate those pressures, but they did not create all of them. And resolving a trade dispute does not necessarily reverse all of them. Once another country expands production, builds infrastructure, establishes commercial relationships and captures market share, getting that market back can be considerably more difficult than losing it in the first place. That distinction may not fit neatly into a headline, but for farmers deciding what to plant, lenders deciding what to finance, agricultural businesses planning investments, and policymakers trying to understand the consequences of trade decisions, it is the distinction that matters most.