Economic Outlook: Farmer Mac economist provides outlook on ag economy for second half of the year
The 2025 Wyoming Agricultural Bankers Conference was held at Eastern Wyoming College in Torrington May 14-15.
To kick off the second day of the event, Farmer Mac Senior Economist Blaine Nelson provided an economic outlook for the ag industry for the second half of 2025.
“We had a very volatile beginning of the year and a lot of it is due to President Donald J. Trump,” Nelson states. “You may love the guy or hate the guy, but he’s the president and he’s making a lot of changes. So we need to embrace this as ag lenders and understand what it means for the folks we work with.”
Tariffs
To begin, Nelson touched on the hot button topic of tariffs.
While he admitted he wouldn’t be able to offer accurate predictions on tariff rates in coming weeks and months, Nelson did provide insight into why the Trump administration has pushed tariffs on U.S. export countries so aggressively.
“In my personal opinion, I believe the new administration is justified in trying to open up some of these markets to U.S. agricultural products – exports are a huge deal to us,” he stated.
Nelson said he believes other motivation for the administration’s actions is their desire to keep China from sidestepping tariffs by shipping products through other countries. To prevent this, he said the administration has simply “slapped tariffs on everyone.”
“Tariffs have started to have an impact. When we look at the shipping container traffic just off of the nation’s southwest coast, we see a huge drop,” Nelson explained. “Some may say this is old news. We’re going into a 90-day reprieve on tariffs with China. We are early in Trump’s term, and if there is any prediction I feel 100 percent confident about it’s that we are nowhere near the end of the game with China in terms of our trading relationship.”
“Trump is just trying to put maximum pressure on China and a lot of other bad actor countries to come to the table and give us better market access,” he added.
Nelson reiterated he believes tariffs will put the U.S. ag industry in a better space by opening up markets.
“U.S. producers can compete across the world on a level playing field, but there has to be a level playing field,” he said. “I want to highlight, in the medium-term, tariffs can be a triple threat – we can pay more for inputs, we can see lower output prices and we can create a stronger dollar.”
DOGE cuts
According to Nelson, another way Trump has been shaking things up is through sweeping cuts made by the Department of Government Efficiency (DOGE) to create a “more efficient federal government.”
“I can absolutely get behind what DOGE is doing, but one of the things Farmer Mac is concerned about is if the pendulum is swinging too far in certain areas,” he stated.
Nelson said the Farm Service Agency (FSA) alone has seen a 36 percent reduction in staff, which is a major concern for the ag industry.
Consumer spending
Broadly speaking, Nelson noted U.S. consumers “remain on stable financial ground,” but there is concern consumer sentiment is dropping.
“Consumer spending makes up the vast majority of the U.S gross domestic product (GDP). When we think about if the U.S. is growing, a lot of it tends to rest on the consumer,” Nelson said. “We do continue to grow, the consumer continues to spend and, overall, consumer financials remain relatively strong.”
However, Nelson believes media headlines are causing a vicious cycle of falling sentiment.
“The concern is we do not want this to become a self-fulfilling prophecy where consumers are actually doing relatively well financially but they start to believe what they read in the media about not doing well. Then they change how they’re spending, and all of a sudden, if enough of them stop spending money, the U.S. GDP starts to decline, economic growth slows and it becomes a snowball rolling down a hill,” he said.
“The Federal Reserve has actually been cited saying consumers, from a behavioral standpoint, are doing some weird things, but we are just going to have to monitor it,” he added.
Farmland values
To conclude his presentation, Nelson touched on nationwide farmland values, which have started to plateau.
While citing data from the U.S. Department of Agriculture’s August 2024 land value survey, Nelson noted landowners in Wyoming have seen a trend similar to other states.
“We saw this nice run up in property values and interest rates were low. Folks were very excited about the economy in 2021-22. Then we start to see a plateau effect where landowners point back to where they might have been if the long-term historical growth rate had occurred,” he explained. “Where we see the most positive values are for things like pasture and cattle.”
Along these lines, Nelson noted the cattle and livestock sector, overall, have continued to outperform the rest of the broader market.
“Obviously, feed costs have come down at the expense of our row crop producers, but it has been beneficial to the livestock sector overall,” he continued. “In terms of cattle, we will continue to watch retail demand for beef, which continues to incline like crazy. Domestic and foreign consumers really want U.S. beef, and it obviously has a huge positive impact on things.”
Nelson also pointed out the bigger implications caused by drought and producers’ sentiment to not restock the nation’s herd, as well as record-high prices across all sectors.
Hannah Bugas is the managing editor of the Wyoming Livestock Roundup. Send comments on this article to roundup@wylr.net.
