Food Sector

The U.S. Bureau of Labor Statistics’ September 2024 report indicated a 2.5% annual increase in the Consumer Price Index through August 2024. The food category ended with a +2.1% increase for the 12 months ending in August. During the same period, food at home and food away from home had annual increases of +0.9% and +4.0%, respectively.¹

In the food-at-home category, cereals and bakery products as well as fruits and vegetables experienced annual declines of -0.3% and -0.2%, respectively; however, other food sectors are still experiencing increases such as meats, poultry, fish and eggs (+3.2%); nonalcoholic beverages (+1.3%); and dairy and related products (+0.4%).

Food away from home continues to experience higher increases, with a +4% annual rate through August 2024. Both full-service and limited-service meals and snacks reflected annual increases of +3.8% and +4.3%, respectively. Consumption patterns in restaurants have been strong despite some fatigue in consumer spending as menu prices notably increased postpandemic.

Trade and Legislation

In 2025, the United States is projected to have the largest agricultural trade deficit in decades. According to the U.S. Department of Agriculture (USDA), net trade is projected at a deficit of -$32 billion in 2024 and -$42.5 billion in 2025. The total value of agricultural exports in 2025 is forecast at $169.5 billion compared with imports at $212 billion. Based on those forecasts, agricultural imports are projected to grow at an annual rate of 6.4% compared with 2.7% for agricultural exports in the past decade. Although exports in 2025 are expected to be lower for the third consecutive year, the value is projected to be still higher than the five-year average of $165 billion.

The 2025 projected annual decline in export value is mainly the result of lower prices for oilseeds (-6%), corn (-7%), cotton (-18%), and beef (-11%), even though volume for those products is projected to increase from 2024. Grains and feeds, oilseeds and derived products as well as livestock, poultry and dairy account for 64% of total agricultural exports. International shipments of horticultural products are projected to expand in 2025 by approximately 3%, which includes tree nuts (+4.5%).²

Agricultural exporters and importers began October by experiencing a U.S. East Coast port strike because the International Longshoremen’s Association (ILA) and the United States Maritime Alliance had not agreed to a new contract set to expire at the end of September. The ILA union was seeking higher wages (+70%), higher starting wages, higher contributions to retirement plans, improved health-care benefits and requirements to prohibit automation that would risk more job losses. More than 70% of the value of agricultural exports and 75% of the volume were transported through ocean ports in 2023. The most significant impact was projected for containerized agricultural exports, which account for 30% of exports, with the remaining 70% exported in bulk carriers. East Coast ports handle nearly 46% of containers. On the imports front, 73% of all agricultural imports shipped via ocean are in containers, and the East Coast ports handle nearly 72% of those imports. According to the American Farm Bureau Federation, an estimated $1.4 billion in value for imported and exported products via containers is handled through ILA-controlled ports every week. Consumers could be affected with higher prices and supply shortages in the short term if the strike lasted for several days or weeks. This transportation strike comes after a Canadian rail strike threatened to affect the movement of goods between the United States and Canada in August, but the rail strike was resolved after a few days.³

Uncertainties about the upcoming U.S. presidential election are beginning to cause concern among various growers and trade groups due to the election’s potential to ignite another round of tariffs and trade barriers that could negatively affect exports of major grains, soybeans, tree nuts and other products to key importer countries and regions across the world. One of the presidential candidates has also threatened a major agricultural equipment manufacturer—with regard to the potential increase in tariffs that will be imposed—with a proposed move to build new tractors in Mexico.

As part of national security initiatives, the House of Representatives passed a bill that restricts the purchase of agricultural land by citizens of China, Russia, North Korea, or Iran. The bill was sent to the Senate for a vote before the end of the session. Several legislators have indicated that foreign landownership by those countries poses significant risks to the U.S. economy, especially to lands near U.S. military bases. The Foreign Investment Disclosure Act of 1978 requires foreign investors to notify to the USDA of any purchases of agricultural land. Legislators are expected to propose new bills to continue addressing the risks and impacts of the involvement of these countries in the area of agricultural biotechnology and other areas of the agricultural industry.⁴

The Commodity Futures Trading Commission has released final guidance for the trading of voluntary carbon credit derivative contracts to standardize and foster transparency and liquidity for market participants as well as to crack down on price manipulation. Voluntary carbon markets relates to the issuance, buying and selling of carbon credits, on a voluntary basis. Carbon credit derivatives give an issuer the right to emit one metric ton of carbon dioxide or a similar amount of greenhouse gases. Regulators in both the Americas and Europe had major concerns about a practice known as greenwashing, which involves deceptive practices by companies exaggerating their environmental credentials.⁵

Environmental Conditions

Major adverse weather events continue affecting the agricultural sector. In late September, Hurricane Helene had impacts on various agricultural areas across northern Florida and southeastern Georgia. Those regions encompass a wide variety of farm operations such as dairy farms, pecan orchards, poultry houses and row crop farmland (i.e., cotton, corn, peanuts and other vegetables). The Category 4 storm reached winds of 140 mph before landfall and weakened to 65 to 100 mph depending on the path of the storm.

In some areas of eastern Georgia, large pecan trees 40 to 50 years old have been reported completely destroyed, and farmers are beginning cleanup efforts to salvage, if possible, any of their crops slated for harvest in October. In response to the disasters, legislators have begun the process of requesting federal assistance to support farmers as well as others affected by the storm. In Florida, the commissioner of agriculture has already announced an interest-free loan program in support of farmers, ranchers and growers to restore and clean up vegetative debris in the aftermath of Hurricane Helene.

More than 100 environmental groups together sent a letter to three of the major U.S. banks—Bank of America, Citigroup and J.P.Morgan—urging them to stop financing livestock production due to climate concerns. The groups argue that those three banks account for more than 50% of the $134 billion in loans to meat, dairy and feed corporations, and industrial livestock is a high-emitter sector that threatens goals to reduce greenhouse gases and undermine the environmental commitments signed under the Paris Agreement. The international treaty agreement, signed in 2016, seeks to address commitments by various stakeholders to mitigate climate change and to hold increases in global average temperature to well below 2 degrees Celsius.

The U.S. government’s efforts to fund programs focused on the expansion of domestic biofuels and clean energy continue to gain traction. According to the USDA, an estimated $600 million has been used for funding more than 4,500 clean energy projects and more than $180 million for 200 projects to expand domestic biofuels. Farm waste such as almond shells and fruit peels has also begun gaining the attention of private investors and research institutions with regard to investigation of how such farm waste products can serve as potential sources to create bioproducts and biofuels. Although research for this new biomanufacturing industry is only at an early stage, it could have the potential to create ancillary income for farmers in the future.⁶

Financial Conditions

The recent reduction in interest rates could alleviate some of the weaker financial conditions for growers in various commodity sectors. Loan demand for agricultural real estate has been lower due to higher interest rates and higher liquidity built through years of stronger economic conditions, but agricultural operating loans continued to increase in most regions as liquidity starts compressing, according to the Federal Reserve Board of Kansas.

Agricultural Technology

Artificial intelligence (AI) is paving the way for development of technologies that could help automate the harvesting of fruit products that today require a significant number of humans. In September, the Citrus Research Board of California signed a funding agreement with an Israel-based company to develop a citrus-harvesting robot that is expected to initially harvest oranges for the fresh market. Enhancements to visual imagery for agricultural robots powered by AI will be essential for future farmland technologies that will generate agronomic insights and improve harvesting and other labor-intensive farm activities.⁷

Companies working on the development of new and better food products through the use of gene editing continue to gain interest from multinational agribusinesses. One example is a new joint venture between Corteva, Inc. (NYSE: CTVA), a global company involved in the manufacture and sale of a diverse portfolio of seeds, crop protection and digital services, and Pairwise, a company focusing on the use of CRISPR (clustered regularly interspaced short palindromic repeats) technology or genome-editing tools to (1) develop new varieties of fruits such as seedless blackberries and pitless cherries, vegetables and other crops that will have to adapt to different climate conditions in the future; (2) increase productivity; and (3) become more resistant to major diseases.⁸

REFERENCES

1. ^{CPI Home : U.S. Bureau of Labor Statistics (bls.gov)} 
2. ^{USDA ERS - Outlook for U.S. Agricultural Trade} 
3. ^{Port Strike Could Sink Access to Foreign Markets | Market Intel | American Farm Bureau Federation (fb.org)} 
4. ^{House Votes to Limit Foreign Ownership of U.S. Agricultural Land (agriculture.com)} 
5. ^{CFTC Approves Final Guidance Regarding the Listing of Voluntary Carbon Credit Derivative Contracts | CFTC} 
6. ^{Biden–Harris Administration Invests in Domestic Biofuels and Clean Energy as Part of President Biden’s Investing in America Agenda | USDA} 
7. ^{Research Funded for Citrus-Harvesting Robot – Technology, Citrus Industry magazine} 
8. ^{Corteva, Pairwise Join Forces to Accelerate Gene Editing, Advance Climate Resilience in Agriculture}